Orion Group Holdings Announces Three Contract Awards Total Value Approximately $63 Million

Rhea-AI Summary

Orion Group Holdings (NYSE: ORN) announced three new contracts worth $63 million, set to begin in Q3 2024.

The contracts include a $28 million project for Costco's new Port Saint Lucie Depot in Florida, a $15 million data center project in North Texas, and a $20 million marine construction project for Port Tampa Bay.

The Costco project involves constructing a 550,000 sq. ft. facility and nearly 3 million sq. ft. of concrete paving, marking Orion's 16th project with Costco. The data center project supports AI infrastructure, and the Port Tampa Bay project aims to enhance port operations with a new berth for bulk materials.

These contracts reflect Orion's role in significant infrastructure projects and its growing footprint in both the concrete and marine construction sectors.

Positive

• Three new contract awards worth $63 million.
• Expansion in Florida with a $28 million project for a Costco Depot.
• Orion's 16th project with Costco and among the top ten largest recent projects.
• A $15 million data center project in North Texas, supporting AI market growth.
• A $20 million marine project for Port Tampa Bay to enhance port operations.
• No lost time incidents for two consecutive years, highlighting safety culture.

Negative

• None.

Insights

Financial Analyst

Orion Group Holdings' announcement of three new contracts totaling $63 million is significant. The contracts span both the Concrete and Marine segments, highlighting diversification in revenue streams. The largest of these is a $28 million contract for constructing a Costco distribution center in Florida. This project stands out not only for its size but also for its alignment with Costco, a repeat client. Consistent contracts with a major retailer like Costco suggest a strong and ongoing business relationship, which can signal stability to investors.

Financially, securing these projects can improve quarterly revenues and help mitigate potential seasonal fluctuations typically seen in the construction industry. The start dates in Q3 2024 and the nine to twelve-month duration mean revenues will likely be spread across several quarters, offering some predictability in earnings. However, investors should also consider the execution risks inherent in large-scale construction projects, such as cost overruns and delays that could impact profitability.

Market Research Analyst

The data center project in North Texas, valued at around $15 million, is particularly intriguing given the increasing demand for data centers driven by Artificial Intelligence (AI) applications. The hyperscaler client, though unnamed, indicates Orion's capability to attract significant, high-tech infrastructure projects. This is a growing market and Orion’s established history with 19 previous data center completions is a strong testament to their expertise and reliability. This positions Orion favorably within a high-growth sector, potentially driving long-term revenue increases.

Additionally, the marine construction project for Port Tampa Bay, valued at $20 million, underscores Orion’s strategic involvement in essential infrastructure upgrades. As ports are important for trade and economic activities, this project aligns with broader economic growth trends and port expansion needs. Each of these elements, when viewed collectively, indicates a robust and diversified project pipeline, enhancing Orion's market position.

Construction Industry Expert

The projects announced serve as a strong indicator of Orion Group Holdings' competitiveness in the construction market. The Concrete segment, particularly the $28 million Costco depot project, showcases Orion's capability in handling large-scale, complex infrastructure projects. Tilt-wall construction and substantial concrete paving are labor-intensive and require precise engineering, underscoring Orion’s technical competency. This 16th project with Costco further cements Orion's reputation, potentially leading to more such projects in the future.

In the Marine segment, the Port Tampa Bay project involves specialized marine construction activities, such as creating berths and breasting dolphins. These are complex tasks that require unique skills and knowledge of marine environments. Involvement in such projects not only enhances Orion's portfolio but also showcases their engineering prowess in diverse construction environments, from land-based infrastructure to marine setups. The combination of these projects emphasizes Orion’s broad capabilities and positions them well in the competitive construction market.

HOUSTON, June 24, 2024 (GLOBE NEWSWIRE) -- Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”, “Orion”), a leading specialty construction company, today announced three contract awards, two in its Concrete segment and one in its Marine segment. Each of the three projects is scheduled to start in the third quarter of 2024 and run for nine to twelve months.

Orion Concrete was awarded a contract valued at over $28 million by Costco Wholesale through Southeast Industrial Construction as General Contractor. The project is for the new construction of the Port Saint Lucie Costco Depot Phase 1, a pivotal distribution center located in southeast Florida, one of the nation’s fastest growing regions. This facility will be one of Costco’s largest distribution centers to date, Orion’s 16^th project with Costco, and one of the top ten largest Orion Concrete awarded projects in recent years.

Orion Concrete won the project through a competitive bid process. The scope of work includes placement of over 100,000 cubic yards of concrete to construct a 550,000 square foot tilt-wall dry/cold storage facility and nearly 3 million square feet of concrete paving. The new facility will serve the state and is located in South Florida – a region with a population of over 9 million people.

In addition, Orion Concrete was awarded another significant data center project in North Texas by a major hyperscaler. While details cannot be fully disclosed, the scope is in the range of $15 million. The Company has completed 19 data centers to date and continues to pursue mission critical infrastructure projects supporting the surging Artificial Intelligence market.

In the Marine segment of the business, Orion was awarded a $20 million marine construction project by Port Tampa Bay for a new 481 ft by 125 ft Berth 218 to handle bulk materials. The berth will include additional breasting dolphins connected to the shore by walkways and onshore high wind mooring points. The project’s goal is to enhance port operations and serve ongoing economic growth. Port Tampa Bay is a longstanding client with several projects completed over the last 10 years.

“We are pleased to have been selected as a trusted partner on these key concrete and marine construction projects. Since expanding our Concrete business to Florida, the Costco project is the first large award in this region. This most recent data center win is our 20^th to date. As the necessary infrastructure for Artificial Intelligence, we continue to see strong data center demand. Our competitive advantage is not only our experience and the high quality of our work, but also our unmatched safety record, which is extremely important to data center owners. We have an extraordinary culture of safety, and for two consecutive years, our team has had zero lost time incidents,” said Travis Boone, Chief Executive Officer of Orion Group Holdings.

“We are excited to deepen our relationship with Port Tampa Bay, a longstanding client for decades. This project is a prime example of the infrastructure upgrades needed throughout our country’s ports to diversify and expand port capabilities. We are proud to play a role in ensuring Port Tampa Bay, the largest Florida port, continues to serve as a critical hub for the regional economy,” concluded Boone.

About Orion Group Holdings

Orion Group Holdings, Inc., a leading specialty construction company serving the infrastructure, industrial and building sectors, provides services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through its marine segment and its concrete segment. The Company’s marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design and specialty services. Its concrete segment provides turnkey concrete construction services including place and finish, site prep, layout, forming, and rebar placement for large commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas. The Company’s website is located at: https://www.oriongroupholdingsinc.com.

Forward-Looking Statements

The matters discussed in this press release may constitute or include projections or other forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, of which provisions the Company is availing itself. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'seeks', 'approximately', 'intends', 'plans', 'estimates', or 'anticipates', or the negative thereof or other comparable terminology, or by discussions of strategy, plans, objectives, intentions, estimates, forecasts, outlook, assumptions, or goals. In particular, statements regarding future operations or results, including those set forth in this press release, and any other statement, express or implied, concerning future operating results or the future generation of or ability to generate revenues, income, net income, gross profit, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, or cash flow, including to service debt or maintain compliance with debt covenants, and including any estimates, forecasts or assumptions regarding future revenues or revenue growth, are forward-looking statements. Forward-looking statements also include project award announcements, estimated project start dates, anticipated revenues, and contract options which may or may not be awarded in the future. Forward-looking statements involve risks, including those associated with the Company's fixed price contracts that impacts profits, unforeseen productivity delays that may alter the final profitability of the contract, cancellation of the contract by the customer for unforeseen reasons, delays or decreases in funding by the customer, levels and predictability of government funding or other governmental budgetary constraints, and any potential contract options which may or may not be awarded in the future, and are at the sole discretion of award by the customer. Past performance is not necessarily an indicator of future results. Considering these and other uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that the Company's plans, estimates, forecasts, goals, intentions, or objectives will be achieved or realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update information contained in this press release whether as a result of new developments or otherwise, except as required by law.

Please refer to the Company's 2023 Annual Report on Form 10-K, filed on March 1, 2024 which is available on its website at www.oriongroupholdingsinc.com or at the SEC's website at www.sec.gov, for additional and more detailed discussion of risk factors that could cause actual results to differ materially from our current expectations, estimates or forecasts.

Contacts:

Financial Profiles, Inc.
Margaret Boyce 310-622-8247
orn@finprofiles.com

FAQ

What are the recent contract awards Orion Group Holdings received?

Orion Group Holdings received three contracts totaling $63 million, including projects for Costco, a North Texas data center, and Port Tampa Bay.

When will Orion Group Holdings start its new projects?

Orion Group Holdings will start its new projects in the third quarter of 2024.

What is the value of the Costco project awarded to Orion Group Holdings?

The Costco project awarded to Orion Group Holdings is valued at $28 million.

How large is the new Costco Depot facility Orion will construct?

The new Costco Depot facility Orion will construct is 550,000 square feet with nearly 3 million square feet of concrete paving.

What is the scope of Orion's new project in Port Tampa Bay?

The Port Tampa Bay project involves constructing a new berth to handle bulk materials, valued at $20 million.

How many data center projects has Orion Group Holdings completed?

Orion Group Holdings has completed 19 data center projects to date.