ORN - Earnings call transcript Q4 2018 | Orion Group Holdings, Inc.

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Operator

Good morning and welcome to the Fourth Quarter 2018 Orion Group Holdings Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Graham. Preston ahead. go Please

Preston Graham

morning, and welcome call full-year Good Holdings' and Orion fourth quarter XXXX everyone you. to and Group webcast. Thank earnings conference

President Robert today Chief Officer. and me are Stauffer, Financial Group Joining Mark Interim Chief Executive our Tabb, Holdings' Officer; Vice President Orion and

prepared highlight format the our update market outlook. for results call, which Mark about XX we've and Regarding in allocated and the minutes of remarks, Robert will our

open then questions. call the will We for

other that of described EBITDA, GAAP net please be predictions and statements available call, turn revenues, differ an performance negotiation, we measures release projections those and call tables President backlog, well During other the assumptions morning. estimates indicator our expenditures. non-GAAP revise Officer. materially in as inclusive will SEC, no our risk filings regarding, call Commission, share, of please factors Investors projects of statements as are actual we any our By also definitions the our to whether press awards, a new risks Mark press Also, course and this the website. are quarterly things, expenses and to projections issued capital These among regarding our of gross obligation per to conference those adjusted that most reconciliations make materially at including differ over to refer or profits, adjusted EBITDA in on undertake from forward-looking result that, www.oriongroupholdingsinc.com. of including is results earnings reconciliation Please note subject accompanying statements. from in website I within or to financial income, current and update developments end release which of as uncertainties, cause future past or The future markets, this the providing under our Moreover, for otherwise. G. annual the the the to administrative XX-K with Also, to are our to and pending gross cause and could margin, earnings and the are like statements, margin margin, Executive to that actual And information, refer forward-looking results can Mark? with necessarily results. this not and may that the comparable expectations, Regulation found Chief our discussion EBITDA rules additional and section this would Securities Exchange Stauffer, EBITDA measures growth, and

Mark Stauffer

good results we Thank of full-year more XXXX. morning, provide our financial for joining business. Then, you, our XXXX Preston, sectors to will discuss our and I our then I'll with everyone. and fourth quarter, our our fourth and for discuss and an capitalization seeing the in quarter current our what discuss outlook Today return with Robert thoughts detail. market Thank begin you in you our performance overview expectations for around we will will call. share are

dedication our while hard day every we to thanking co-workers safely nearly by strategic number continued As for our to start always, I'd -- customer's meet all efforts towards strive and It's like company. their work, combined our to needs, objective. our X,XXX through our commitment focusing

of which through when unfortunately final were results results heavy result as press operations timing well as earnings of several Marine of As were as our the in of by this delays our for commencement release reported in announced during we in rains reported patterns morning, a of shifts the we weather throughout disruptive and we month quarter year, the QX quarter. our risk impacted fourth These weather-related quarter the and they concrete issues were the that November. Texas third in began persisted XXXX indicated projects

Marine our schedules, quarter on by impacts gross included from overruns as receivable in for and other of reserves well our accounts the customer impairment resulting delays production. fourth customer profits to created as certain on write-downs customer projects non-cash Additionally, segment results charges goodwill, cost on

orders We change are for seeking these through cost recovery overruns.

recovery financial However, on in maximizing customers we stakeholder our for industrial this specialty and time. construction while value. cannot being a company Despite we focused providing of sectors, on strategy our assure at we quarter, building infrastructure, the challenges across position remain fourth and the premier maintaining the healthy focused solutions encountered executing a

began as We transformation we to also the our the all-time with operational company, we backlog year. become progresses. and add the focused We XXXX backlog underway throughout at continued since remain end XXXX evident on which high will increasingly of the believe have

our for improvements prior at results to full-year to results with posted expect significant in year levels the the XXXX. least relative XXXX in We returning

will I discuss Robert 'XX. QX for call Now financial results turn over to the to the

Robert Tabb

compared XXXX the by fourth fourth for million million. result adjustments. in as SG&A potential percentage change in XXXX the million orders of XXXX. from costs project percentage recognize a associated on The $XX $XX.X reflected and part compares reflects revenues as in quarter or quarter quarter reduced being accounting or SG&A fourth continued Mark, SG&A XX.X% changes from were where million or you, claims negative XXXX aforementioned were initiatives. profits had able the impacted gross of Texas sales profits million. projects. the million were future was the without revenues, of to the Thank as million are gross revenues rules. expense us. reported for the of profits down adjustments certain for were fourth saving project resulting $XX.X we thanks, in The completion $XX.X the joining as of included of SG&A adjustments Revenues This quarter increase year-over-year XXXX quarter Marine Fourth to cost patterns XXXX to to recognize in as everyone $XX.X Revenues $XX.X fourth Gross estimates well. negative in project of by weather $XXX.X quarter well dollars a revenues. XX.X% quarter in dictated for as a were which

a Over the leverage course of of expense to SG&A percentage as revenue. our expect XXXX, we gain over

same we the reported business quarter to the loss loss $X.XX year-ago. per of period earnings pre-tax, million earnings compare Goodwill between -- also for split our XXXX net million income results In following: share our per basis, fourth tax. the or which share $X.XX diluted $XX.X $XX.X a after diluted and net results, an adjustments For million income compared the quarter as $XX.X adjusted loss On of release, or million impairment Marine net million of we XXXX, net million a $XX.X of of share. a fourth $XX.X million loss even roughly These year million both for And prior adjust accounts a loss $X.X for $X.X adjusted provided receivable pre-tax, project $X.XX $X.X tax. business pre-tax, in and adjusted EPS to tax which of $X.X million associated was with an $X.XX, after segments. was per after Marine million reserves $X respectively. of of

or margin to adjusted fourth in XXXX the $X.X adjusted adjusted net impacts for EBITDA EBITDA $XX.X out legislation. million X.X% of compared quarter last XX.X% quarter adjusted income representing tax Our backs was a last EBITDA of Fourth year. the million, favorable year's of XXXX of margin net

EBITDA XXXX, with and revenues million EBITDA an a $X.X of XXXX. margin quarter of million of adjusted Marine in adjusted $XX.X of Marine XX.X% and compares our of quarter XX.X%. This with our at our to $XX.X with had two segments. adjusted million million fourth results Looking segment our In of EBITDA segment to margin $XX.X respect for revenues of the the of fourth

quarter of million, $XX.X of X.X% $XX for the Our in to in Concrete million margin a quarter negative revenues XXXX. of segment the as Adjusted of million $X.X negative the XXXX XXXX. Concrete was as fourth quarter the representing X.X% and quarter had $X.X compared million fourth in to segment XXXX fourth compared EBITDA fourth

type, of terms in XXXX. XX% segment's generated segment's compares sector local fourth comprised fourth XXXX. breakup fourth government from quarter Marine the XX% versus by sector. of XX% revenues private from and XXXX the was private of The in customers of customer respectively and quarter Concrete XXXX sector fourth In quarter from comprised agencies, XX% were state and private quarter to from the XX% were revenues while of federal This government XX% the

of ratio of book-to-bill quarter been of For $XXX we’ve fourth successful a on rate and quarter. XX.X% win XXXX, were and on in worth a opportunities million the X.XXx This resulted million. the for $XXX

XXXX XX.X% and we bid win million ratio $X.X full-year of book-to-bill the won X.XXx. a For which of and in to projects equates $XXX rate on a billion

Concrete As XX, XXXX, approximately our million of with of with contract of $XXX segment. million million, associated work under a was Marine $XXX the had which we of segment and $XXX backlog December

end segment segment. the low Additionally, well or the is growth and total, we this, the have backlog opportunities. positions bid, related related quarter currently of which in over $XXX of us $XX low between fourth million million million million of apparent In XXXX. awarded and projects for to worth $XXX bidder Of Concrete Marine the been is to the have $XX subsequent to are we

Now turning to the balance sheet.

quarter we XXXX, debt credit. related the million nearly ended revolver and outstanding, $X loan. to in million million line of million the $XX with related XX, cash and hand December of on $XX $XX revolving the access $XX had of As We our was total under to of to approximately which million was term

to EBITDA quarter the to of we first December the back release, adds recently quarters requirement mentioned leverage XXXX. and costs various increases ending provides amended the to project-specific second The in adjusted the and our As credit back months for XX, for adjusted press before calculation XX third effective the for of in amendment agreement quarter EBITDA reverting XXXX XXXX. that of Xx trailing our X.XXx

revolver quarters $XXX company up revolver below until caps two to Xx the which million on for million ratio are may at allowed. is Additionally, to full make draws the the consecutive its amendment $XX the time leverage the draw

we strategy. our with amendment We lenders provide execute quarters our have flexibility as need the will during and the support are it pleased we the shown two transformation us this next with

our support solid than adequate more program bidding and is Additionally, remains our activities. to bonding

turn Mark Now, up. call the over wrap I will back to

Mark Stauffer

Thanks, Robert.

which of remain operating to our In maintenance we to our extensive private the infrastructure have both sector, review and facilities our public customers Marine and fundamentals waterways. the in of service deploy areas, we through U.S capabilities to opportunities positive. Marine continue segment, expansion on market Turning our Throughout sectors. with

of We for customers storage associated on to enhance refining, segment growth projects are are areas energy and our refurbishment markets to lines cruise to continue remain site port water and give as from infrastructure bid see opportunities they recreational promising domestically both public the markets. multiple from destinations as important exporting. opportunities we their and bid as well Marine macro they new These to trend. Other as projects Caribbean. us exposure and and project currently authority private as provide existing expand overall related diversity our customers Recreational driven working track with both facilities in downstream the and access

to our demand project. as has million our $XX sets our project project An This meet contract vessels we opportunities continue our market announced opportunities company. we which contributor range at quality and to execute are our sector are we generating skill represents Florida, for of larger well in an expansion The meaningful expect is to to example of to their from addressable to progressing port authorities, been provide XXXX XXXX. services which customer in this leveraging handle currently Finally, September Everglades a expansion the more see is need. high profitable traffic expanding flow. for see and we largest broad industrial base, in plans increased By Port customer's growth and they a of our

combining and environment to Greenfield continue to environment. land-based our other Concrete foundation in expansion by continuing work execute segments are and pursue Marine the talent industrial from other and the We inside and and resources

provide expand We petrochemical have bidding sector to order driven along addressable and opportunities our work to to opportunities Gulf a project expect Coast in this in long-term been build the profitable actively massive potential significant backlog.

multifamily centers for sector continues we drivers. business we Texas centers, to facilities. The educational continued markets serve solid be long-term facilities Within continue the to units, demand and new population medical housing have our distribution drive markets throughout growth where currently our and for operates, and retail business Population expansion, facilities, growth office leading expansion. to concrete demand grocery building in

in Looking have point opportunities sectors, excited we’re of volume at across ahead very of this the all our about us we XXXX. business

is to related over opportunities. about Our outstanding, levels set future adding current for company million are are a and $XXX is of and to our worth related segment high of over million outstanding bid and we optimistic billion tracking opportunities which -- the record given new seeing. bid Overall we're opportunities our the backlog bid $XXX low we Currently healthy Marine and $X.X segment. our for bids of prospects $X Concrete billion we have awards

for important what this While on that profitably. of up a deliver us Orion's is multi-year scale under special committee to We this is a In of of what purposes Performance full-scale project commenced engaged the a revenue services growth consistent the operational January, global growth, enhance or leading assist ensuring of initiative profitable we services Marsal growth. and ability grow past do professional to wealth a Improvement, of business review to and tools this our so our ISG. created Board for to & Directors process, LLC, which basis, opportunities Alvarez order of invest, future firm sets Corporate as to and evaluation is our and processes more we ability in refer

announcement morning, we we review release evaluation the As provide occur update estimate our of in to the we our noted an quarter. conclusion this January earnings process, during will at in and our which second

our Chief However, performance I Shanfelter this high establishing report multiple our and Operating improvement, level Austin developing morning predictability. accountability Interim that significantly believe we Today initiatives improve key appointment efficiency, Orion's Officer. announced to a areas of are also which and the of target. as identifying we we of will We're can

objective we our review a Austin ISG and spans many is as Undertaking Austin's Austin implement of Marsal, XXXX. that publicly joining As of years draw our initiatives of know, in this Board, position our underscores from more our XXXX, will towards drive achieve shareholders Ultimately to and and our we strategic call to Austin our over Alvarez as consistent ISG performance. commitment business company. specialty with I our portion the to will served Interim Prior $XXX for drive the as a and the the you Orion to and evaluation, to and is our our COO it of these experience infrastructure Overall, meeting or appointment wealth progress With and call. significantly plan improvement of put we Q&A President our & traded XXXX towards this Board between deliver EBITDA that, operator and contractor our XX construction engagement in and process of for as value goal. goal initiatives process expectation. exceeding to since CEO career our MasTec, better million our turn begin of was to has on improved over the leading

Operator

Thank B. the you. [Operator first comes from Rygiel Instructions] Our line of FBR. Alex Riley question with

is Your line now open.

Min Cho

Great. Good Min is Alex. Cho morning. for This

couple you. a for of questions Just

you’re I January, all, the I wet of are of any we not and provide specific obviously, was going guidance, weather quarter that through in weather, but just first First mostly know know here of kind terms to in still February.

delayed projects of If potential the on that of can kind helpful. marine update some were update this would be any provide weather Have or quarter? started, first in you just impact any

Mark Stauffer

. Yes.

in for five, some weather that's pretty to have pattern. improvements had we’ve have has the into Port off, as Marine our six seen XXXX. relative last Florida, Everglades to we So With some in the we underway. the project project but division, respect improvement wet QX, kicked large We’ve large QX, -- months projects we what seen the saw of gotten

expecting segment has in were we as the other QX that to Some in begun the work Marine of get started well.

on expected with start on get we've So QX we in in able the that started to QX. are to relative we that to pleased what been work get and

Min Cho

obviously here. And helpful. backlog backlog, terms nice very of in growth then That’s Okay. your

out timing that’s been a kind the of bit been and with control, backlog your talk projects talk where your about big little just duration backlog? that’s mean, of just out can with some of and I stretching you about comfort but issue somewhat if just overall? you if If the your with you’re the could of a obviously

Mark Stauffer

is segment. lot timeframe, X kind a X Concrete -- most Sure. type still our the work of in particularly months on -- again, in that relatively to Well, of the

of extends Everglades Some as Port project our work, out. example, an larger

anchor have extend XX, that a of projects do number months. out XX, So XX we

we’ve in the One of volatility the as contributed to mentioned, that of and addressing our is Min, been of you Marine segment. kind has issues some

Our that be kind continue projects kind issue That’s permit. customer's reason issue. ability be of of has of of that that driven and of of an to to get volatility start an continues segment, of some to dates on timely the the somewhat in part some our or uncertainty

of working kind process customers but that that brought them that are hard or to can very into effort some with We over navigated, be to we last do down help through that that bureaucratic continues and and process years. that our try work few the uncertainty to slowed all

are last of we a lot improves, to we’ve We hoping were that been year, glad so. we’ve gotten to as get the able work we’re planning that QX, into but late start underlay

Min Cho

that you obviously had your existing the the then million that’s revenue? like the had of laid just where $XXX kind a range goal of I if wondering base of $XXX $X EBITDA million -- kind business. your is longer that to billion And of of provided you financial in and of for Okay. on million $XXX the before was high-end at still potential term out the you

Mark Stauffer

Yes.

Min Cho

going you do achieve is? you you to little anticipated? It And expect do to a right the you’re or now review had margins higher be just through expect do operational you targets bit help than that you expect of implementations, those some in that faster what the

Mark Stauffer

able we achieve to goal be think expect I that do faster. Well, to

to that of terms control bid is that in think be mean But market margins is have us efficiency I and regard definitely the the be in work. this that to And QX. -- we I that. that in as to terms will our helping market to can and part on later of executing in in in remarks think the more say the release about I going things that said it's nature. with the morning, I we going And

position specifically, think efficiency then will forward. and we be But provide to execution talk more a can going in we as move improve on where We I a little to it's begin updates that. definitely

Min Cho

That’s you. right. All me. Thank it for

Mark Stauffer

Thanks, Min.

Operator

you. Thank

Securities. question Jon with the CJS next Tanwanteng of comes Our from line

Your line is now open.

Jonathon Tanwanteng

Good for my taking you questions. morning, guys. Thank

cost customer change one there the first additional regarding that and you The happened -- ongoing also, the you going off on QX sign there? the expect change your exactly work? and is And to Did when be project to on, the estimates what in had impact recoveries there? an overruns do P&Ls is for

Mark Stauffer

remarks There Robert that the incurred point customer back was forced expected of we have order record there's as point We we relative to this where think on the the any cost impacted. talking there. amount -- in through ability complete is We additional of were in a Essentially been our of but we matter change recover can't accelerated amount have we that money us said the go in on on we future kind say excuse to got schedules though with we’ve we the off or pursuing where -- to this assurance we that. for do of we where as just us bill signed recoveries. by point this as cost, is need for not first things in the half to We were Again, expected to those forcing orders, as us particularly to position but the forward. record still impacts point a anything not schedule process a on XXXX, incur to again, account but at We that’s project to we’ve even recognize there in are to me. point, recovery to the a a -- the for we’re anything project. of from expenditures that course project inactions at a we’re that our cost, But, or the reached contract we expected we of future has expense the project we not incurred rules additional to that the kind on why for result about. -- work, record had recover impacts a of kind a we -- point. But acceleration customer cost first put not get the cost we still complete of our it's that the expected at that it can significant any large actions predominant future that impacted of but from future at to

Jonathon Tanwanteng

Okay.

the your able hearing a caused forward delay, clear, be customer that you I’m to and Is causing which be to accelerate what is So project. to the finish to now cost correctly?

Mark Stauffer

correct. That’s

Jonathon Tanwanteng

Okay.

Mark Stauffer

one as we progress project. to this is a we've It's -- and seasonality a see. compounding clear, normally customer. through the an seen kind different bit be multiyear of little from further we that And It’s work. impact from of just would seen what to the we've this And impacts is the work, impacts that a the

work future the at be period. of the to problems to time us it's is recovery. season than in on a compounding on point led would where increased time. on we begins, cost kind issues cost But the for of that at REAs more course in working are point. have at that, at there cost the diligently we versus P&L is that the and we’ve additional really we by forward that than and believe a expected order benefit so to And associated that are costs of again terms expenditures this recovery project in customer. same impact we we that give if the And with terms that project be in we're the opportunity this up of future Again, going At production on we recorded any of essentially on this change spent future of we're right the as sort so And continuing created continue and now project progress where there project. will the that

Jonathon Tanwanteng

Okay, got it.

profit? be would gross recoveries any pure So

Mark Stauffer

Yes.

Jonathon Tanwanteng

it. got Okay,

the have you Okay, helpful. that may you in focus can where may the backlogs just or recoveries progress inclusive would this on then occurring? are, And great. to on, with this year review be margins and that you of That’s not segment performance going expect improved that the given detail be any how

Mark Stauffer

Well, of we expect in also to was of said I than think numbers. relative remarks, adjusted kind saying our EBITDA terms would in obviously performance in of as we’re that be we kind but -- better to it XXXX,

So we we I think, year absent patterns normally unusual to go saw last progresses we year, expect as more see weather our would through like to of a how progression normal relative out. XXXX

have point stated, -- to said the made we we in any kind recovery the our QX XXXX As XXXX do this this that we we in we improvement include said relative our seasonally process remarks about Having any factored always into had does not thought morning EBITDA not is weakest under our recovery always projects. of at as over earlier, expect QX kind of and that, quarter.

Jonathon Tanwanteng

with and by regards stability what That’s they factors? the then as want there helpful. great. be so increase your the mentioned predictable, to far? the consultants, specific predictability ongoing well impacted you uncovered you’re Are less in taking order to of And with profitability? any as these business to external actions the have outside Okay, review more You

Mark Stauffer

many too we're not at There this getting point, again, are into -- details.

will provide QX. in color and additional further some around We this updates

identifying are fair key I morning, several say it's this that think we areas. to remarks we further had

the that quarter. we to in and that will through the as developing more -- into get that, color And on work how initiatives efficiency our will we and flow provide impact are key second execution have of significant we additional again, and the will we several we that think we have us. will on think benefit provide We do

Jonathon Tanwanteng

then And housekeeping great. just question. Okay, one

Given rate the year? run the total D&A that impairments, how change does for the

Robert Tabb

does impacted not It at all.

bit want goodwill now. a to D&A be to we know, those balance going One is goodwill going is related be to forward. items. AXX piece standard sheet, there's putting D&A But will in little going on amortized we’re -- not impact thing accounting to factor that the leases so you more As D&A shouldn’t the where

Jonathon Tanwanteng

Thank great. Okay, you.

Mark Stauffer

You bet.

Operator

Our Instructions] the with Thank next you. [Operator from Capital. of Rodriguez Stonegate line Marco comes question

line open. now is Your

Marco Rodriguez

that you the Thank questions. question the Good on something kind there on is that notice did that of just the that leases morning. for coming increase on about inside very large inside a follow-up quick last in taking a D&A D&A XX%. D&A, Is are it? function Really or else for of I quarter, sequential my of

Robert Tabb

function We Yes, several sheet had to for catch-up in leases. of it's capital a took and leases period. the D&A to balance we the

forward, a leases balance more capital those going you -- they see on So heightened D&A as put as leases sheet. we number the will for

forward, It up, increase Going out. the it will on balance quarter stabilize did in leases won't the spike but we sheet.

Marco Rodriguez

you. Got

rate in million So that’s run from? rate a model that $XX.X good relatively QX, you to had

Robert Tabb

Yes, it is.

Marco Rodriguez

but your bit from fire down you a impacts, about obviously Houston? coming for anything looking here, Got you. impact talked Then -- terms -- sort back of ITC in weather if the there to to you in that prior results that here there If just specific little down questions of any that wondering your is not QX operations? can the was came talk about that related

Mark Stauffer

there channel had work around the ship Initially have not any that channel from sort that work not. from We the site, area. We did up was that Houston of site. ship

yard However, to that out There's in been fire attempting of to sheen that from there week North since and have this our channel that impacted ship we ship the that do to the local East facilities And location of that the that need that just closed sort point, seen of is and job in that of so ship the the appropriately. equipment. floating or addressing aftereffects will, are, if channel that at has or too just we've you We may our soon from lot has is of of mechanical impacts mow closure the that have as West of one of that clean of order lot a channel impact then section on fire kind a a that in dredging that around where sheen, be location. and been you magnitude. news, off closure tell are put channel. We got the we -- Marine to it's with the some or then -- impacts ship of this will does

we know the will ahead we looking that address days we that any about have So to impacts more be will there. that obviously in

Marco Rodriguez

as then your CapEx then Got could if And and sort little trend well. for you trends about through expectations talk the How of flow? a maybe bit progresses cash that related and you. guys' year,

Robert Tabb

of Well, the I as weak -- expectations peaking into back QX. QX and run building a think the Mark to coming past. bit expect QX now what quarter be are in CapEx we’ve done will the weakest little and earlier, its seasonally Cash be QX then rate normal in flow and stated at in we

I that will this progression the we maybe that think is just experienced higher, normal slightly normal in week. depending think we've collections flat from the on the QX, be quarter-over-quarter seasonality last progression, the But before.

Mark Stauffer

this revolver. both we backlog in low with the comfortable feel business. operations We’ve cash from And fundamentals charges, position, to where and of we as and stuff the of very remarks, From that kind still cash with in of think the the we then as a just our impairments course solid the and his in lot we Robert access as are we just have stuff got quarter, follow-up reiterate bid goodwill we said well talked to highest about. what that, a took noncash cash on generation,

in executing we’re So we are executing terms ahead with cash forward. we with comfortable and our working XXXX, in we and where go capital strategy as and think of

Marco Rodriguez

your Thanks time. it. guys. a Got appreciate lot I

Mark Stauffer

bet. You

Robert Tabb

Thanks, Marco.

Operator

Preston session. question-and-answer any Thank you. call This to does Graham turn for would to remarks. Mr. today’s further back I now the like conclude

Preston Graham

Thank We Have quarter. forward next today call the you updating look great to for joining again on you this everyone us morning. a day.

Operator

Ladies in conference. for gentlemen, thank This and today’s you participating today's does conclude program.

may Everyone have all You great day. disconnect. a

Orion (ORN) 26 Mar 192018 Q4 Earnings call transcript