Orion Marine Group: Pullback in Revenues in the First Quarter

Orion Marine Group Inc, a heavy civil marine contractor, reported a net loss for the three months ended March 31, 2014, of $0.2 million ($0.01 diluted loss per share). These results compare to a net loss of $1.1 million ($0.04 diluted loss per share) for the same period a year ago.

“As expected, we experienced a pullback in revenue in the first quarter as a result of accelerated production in the fourth quarter of last year,” said Mike Pearson, Chief Executive Officer. “However, improvements in production on certain projects in their final stages of completion resulted in some year over year improvement in gross margin in the first quarter. Overall, we are pleased with our start to 2014 and excited about the large projects we will be starting in the coming months and the bid market we see ahead of us.”

First Quarter 2014

– First quarter 2014 contract revenue was $81.3 million, an increase of 8.3%, as compared with first quarter 2013 revenue of $75.1 million;

– The Company self-performed approximately 85% of its work as measured by cost during the first quarter 2014, which compares to 83% in the prior year period;

– Gross profit for the quarter was $7.6 million, which represents an increase of $1.8 million as compared with the first quarter of 2013. Gross profit margin for the quarter was 9.4%, which was higher than the prior year period of 7.8%. During the first quarter of 2014, gross profit margin increased as a result of improvements in production on certain projects in their final stages of completion;

– Selling, General, and Administrative expenses for the first quarter 2014 were $8.0 million as compared to $7.7 million in the prior year period;

– The Company’s first quarter 2014 EBITDA was $5.4 million, representing a 6.6% EBITDA margin, which compares to first quarter 2013 EBITDA of $3.8 million, or a 5.1% EBITDA margin.

Backlog of work under contract as of March 31, 2014 was a record $255.3 million, which compares with backlog under contract at March 31, 2013 of $150.4 million. Additionally, the Company is currently the apparent low bidder on approximately $88 million of work.

“Despite continuing to face some underutilization of our dredging assets in the first half of the year, we remain optimistic in our outlook for the remainder of 2014 and beyond,” said Mark Stauffer, President. “Demand from the private sector continues to be a strong driver of both equipment utilization and bid opportunities. We expect to further capitalize on the expanding private sector demand in the upper Houston Ship Channel in the second half of the year by providing our customers with dredge material placement services in our recently purchased placement area. We are currently in the process of site preparation and expect to begin receiving dredge material in the third quarter of this year. Additionally, local port authorities continue to expand and refurbish their waterside infrastructure in anticipation of larger ships transiting the expanded Panama Canal, currently scheduled to complete in 2015. Despite these strong catalysts, we continue to see an inconsistent pace of Army Corps lettings, which affects our dredge asset utilization. We are hopeful that as we move into the second half of 2014, we will see a material increase in bid lettings from the Army Corps of Engineers.”

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Press Release, May 2, 2014