Orion Group Holdings Reports Fourth Quarter and Full Year 2023 Results

Rhea-AI Summary

Orion Group Holdings, Inc. reports financial results for Q4 and full year 2023, showing contract revenues of $201.6 million and $711.8 million respectively. GAAP net loss for the year was $17.9 million. Adjusted EBITDA improved to $14.8 million for Q4 2023. The company expects continued financial growth in 2024 and beyond due to strategic initiatives and market opportunities.

Positive

• The company reported contract revenues of $201.6 million for Q4 2023, up 2.8% from the previous year.
• GAAP net loss for the full year 2023 was $17.9 million, with adjusted net loss of $11.4 million.
• Adjusted EBITDA for Q4 2023 improved to $14.8 million, a significant increase from the previous year.
• Backlog and contracts awarded after Q4 totaled $883 million, showcasing growth potential.
• The company expects further financial improvements in 2024 and beyond, driven by strategic changes and market conditions.

Negative

• None.

Insights

Financial Analyst

The financial results from Orion Group Holdings indicate a mixed performance, with an increase in contract revenues to $201.6 million for the fourth quarter, yet a GAAP net loss of $4.4 million. The adjusted net income presents a more favorable view at $2.6 million, suggesting that certain non-recurring costs have significantly impacted the GAAP figures. The adjusted EBITDA margin improvement from 1.6% to 7.3% year-over-year is a positive sign of operational efficiency and cost management.

However, the reported increase in SG&A expenses, both in absolute terms and as a percentage of revenues, may raise concerns about the company's overhead and its impact on profitability. The backlog decline from $877.5 million to $762.2 million quarter-over-quarter might be perceived as a potential risk for future revenue, although the $121 million in new project work awarded post-quarter could mitigate this concern.

From a financial perspective, the amendments to the credit facility, particularly the reduction in interest rates, could lead to decreased financial expenses and improved net income in future periods. The planned asset sale of the East West Jones properties for $34 million, with the intent to reduce debt, also indicates a strategic move to strengthen the balance sheet.

Market Research Analyst

The construction industry often experiences cyclical demand influenced by economic conditions, government spending and private sector investment. Orion Group Holdings' increased backlog year-over-year, particularly in the marine segment, reflects a potentially robust demand for their specialized construction services. This is further corroborated by the CEO's statement on industry tailwinds, which could indicate an uptick in infrastructure spending or favorable market conditions for Orion's business.

Moreover, the company's strategic initiatives, such as the disciplined bidding strategy and investment in business development, are aimed at capturing a larger market share and improving competitive positioning. As the company prepares for an expected stronger financial performance in 2025, stakeholders should monitor the industry trends and Orion's ability to convert its backlog and pipeline into revenue while maintaining or improving margins.

Construction Industry Analyst

Orion Group Holdings' focus on margin improvements and project execution quality, as evidenced by the gross profit margin increase, is a critical factor in the construction industry where project overruns and low margins can significantly affect profitability. The company's shift towards higher quality projects may indicate a strategic alignment towards more profitable, albeit potentially riskier, ventures.

Additionally, the wind-down of the Central Texas concrete operations could signal a realignment of business focus or a response to market conditions within that segment. The marine segment's strong backlog, particularly with the Pearl Harbor project, highlights the company's presence in strategically important and potentially high-margin projects. Understanding the specific drivers of the backlog composition and the risks associated with these projects will be crucial for assessing the company's future performance.

HOUSTON, Feb. 28, 2024 (GLOBE NEWSWIRE) -- Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported its financial results for the fourth quarter and full year ended December 31, 2023.

Highlights for the quarter ended December 31, 2023:

• Contract revenues of $201.6 million
• GAAP net loss was $4.4 million or $0.13 per diluted share
• Adjusted net income was $2.6 million or $0.08 per diluted share
• Adjusted EBITDA was $14.8 million
• Backlog and contracts awarded subsequent to quarter end totaled $883 million
  

Highlights for the year ended December 31, 2023:

• Contract revenues of $711.8 million
• GAAP net loss was $17.9 million or $0.55 per diluted share
• Adjusted net loss was $11.4 million or $0.35 per diluted share
• Adjusted EBITDA was $23.8 million

See definitions and reconciliation of non-GAAP measures elsewhere in this release.

Management Commentary

“We are pleased that our fourth-quarter results demonstrated progress against our strategic plan to deliver profitable growth. Fourth-quarter 2023 adjusted EBITDA was $14.8 million or a 7.3% adjusted EBITDA margin--a significant year-over-year improvement from fourth quarter 2022 adjusted EBITDA of $3.2 million or an adjusted EBITDA margin of 1.6%,” said Travis Boone, CEO of Orion Group Holdings.

“While our 2023 financial performance improved over the prior year, I think we are in the early stages of what our team can deliver going forward. What we accomplished in 2023 has transformed Orion into a more focused, more competitive and more driven company. In a short time, we implemented a disciplined project bidding and delivery strategy; attracted high-caliber business development executives; invested in systems, training and tools; secured a three-year, $103 million credit facility; and closed over $25 million in equipment and real estate sale-leaseback transactions. With these critical building blocks in place, we are prepared to take advantage of our industry tailwinds.”

“In 2024, we expect our financial performance to continue to improve relative to 2023. Given the positive changes we have implemented, the improving market outlook, the quality of our current backlog and the volume of opportunities in our pipeline, we are confident that 2025 will be even stronger than 2024,” concluded Boone.

Fourth Quarter 2023 Results

Contract revenues of $201.6 million increased 2.8% from $196.2 million in the fourth quarter last year, primarily due to an increase in marine segment revenue related to the Pearl Harbor, Hawaii drydock project, partially offset by a decrease in concrete segment revenue reflecting the planned wind-down of the Company’s Central Texas concrete operations.

Gross profit increased to $23.0 million or 11.4% of revenue, up from $10.2 million or 5.2% of revenue in the fourth quarter of 2022. The increase in gross profit dollars and margin was primarily driven by margin improvements in both segments stemming from higher quality projects and improved execution, partially offset by lower margin and mix of dredging revenue.

Selling, general and administrative (“SG&A”) expenses were $17.2 million, up from $13.7 million in the fourth quarter of 2022. As a percentage of total contract revenues, SG&A expenses increased to 8.5% from 7.0%. The increase in SG&A dollars and percentage reflected an increase in IT and business development spending and higher legal costs related to pursuing project-related claims.

Net loss for the fourth quarter was $4.4 million or $0.13 per diluted share compared to net loss of $4.9 million or $0.15 per diluted share in the fourth quarter of 2022.

Fourth quarter 2023 net income included $7.0 million ($0.21 diluted income per share) of non-recurring items. Fourth quarter 2023 adjusted net income was $2.6 million ($0.08 diluted income per share).

EBITDA for the fourth quarter of 2023 was $6.5 million, representing a 3.2% EBITDA margin, as compared to EBITDA of $2.2 million, or a 1.1% EBITDA margin in the fourth quarter last year. Adjusted for non-recurring items, EBITDA for the fourth quarter of 2023 increased to $14.8 million, representing a 7.3% adjusted EBITDA margin, as compared to adjusted EBITDA for the fourth quarter of 2022 of $3.2 million, representing a 1.6% adjusted EBITDA margin.

Backlog

Total backlog at December 31, 2023 was $762.2 million, compared to $877.5 million at September 30, 2023 and $448.8 million at December 31, 2022. Backlog for the Marine segment was $602.5 million, compared to $699.9 million at September 30, 2023 and $216.7 million at December 31, 2022. Backlog for the Concrete segment was $159.7 million, compared to $177.6 million at September 30, 2023 and $232.1 million at December 31, 2022. In addition, the Company has been awarded $121 million in new project work subsequent to the fourth quarter that is not included in backlog at the end of the quarter.

Balance Sheet Update

As of December 31, 2023, current assets were $271.8 million, including unrestricted cash and cash equivalents of $30.9 million. Total debt outstanding as of December 31, 2023 was $37.2 million. At the end of the quarter, the Company had no outstanding borrowings under its revolving credit facility. On December 1, 2023, the Company and White Oak amended the Company’s credit facility to extend the maturity date for the $15.0 million pre-payment. On February 27, 2024, the Company and White Oak further amended the Company’s credit facility to lower the interest rate on its $65 million revolver by 50 basis points and its $38 million term loan by 100 basis points.

Asset Sales

The Company entered into a contract for the sale of its East West Jones properties in Harris County, Texas. The purchase price is $34 million and the transaction is expected to close in the second quarter of 2024. The Company expects to use the proceeds to reduce debt and for general corporate purposes.

Conference Call Details

Orion Group Holdings will host a conference call to discuss results for the fourth quarter and full year 2023 at 9:00 a.m. Eastern Time/8:00 a.m. Central Time on Thursday, February 29, 2024. To participate, please call (844) 481-2994 and ask for the Orion Group Holdings Conference Call. A live audio webcast of the call will also be available on the Investor Relations section of Orion’s website at https://www.oriongroupholdingsinc.com/investor/ and will be archived for replay.

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.

Backlog Definition

Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress but are not yet complete. The Company cannot guarantee that the revenue implied by its backlog will be realized, or, if realized, will result in earnings. Backlog can fluctuate from period to period due to the timing and execution of contracts. The typical duration of the Company’s projects ranges from three to nine months on shorter projects to multiple years on larger projects. The Company's backlog at any point in time includes both revenue it expects to realize during the next twelve-month period as well as revenue it expects to realize in future years.

Non-GAAP Financial Measures

This press release includes the financial measures “adjusted net income/loss,” “adjusted earnings/loss per share,” “EBITDA,” "Adjusted EBITDA" and “Adjusted EBITDA margin."  These measurements are “non-GAAP financial measures” under rules of the Securities and Exchange Commission, including Regulation G. The non-GAAP financial information may be determined or calculated differently by other companies. By reporting such non-GAAP financial information, the Company does not intend to give such information greater prominence than comparable GAAP financial information. Investors are urged to consider these non-GAAP measures in addition to and not in substitute for measures prepared in accordance with GAAP.

Adjusted net income/loss and adjusted earnings/loss per share should not be viewed as an equivalent financial measure to net income/loss or earnings/loss per share. Adjusted net income/loss and adjusted earnings/loss per share exclude certain items that management believes impairs a meaningful evaluation of the Company’s financial performance. The Company believes these adjusted financial measures are a useful supplement to earnings/loss calculated in accordance with GAAP because they better inform our common stockholders as to the Company's operational trends and performance relative to other companies. Generally, items excluded are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the Company generally excludes information regarding these types of items.

Orion Group Holdings defines EBITDA as net income/loss before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by adjusting EBITDA for certain items that management believes impairs a meaningful comparison of operating results. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for the period by contract revenues for the period. The GAAP financial measure that is most directly comparable to EBITDA and Adjusted EBITDA is net income, while the GAAP financial measure that is most directly comparable to Adjusted EBITDA margin is operating margin, which represents operating income divided by contract revenues. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are used internally to evaluate current operating expense, operating efficiency, and operating profitability on a variable cost basis, by excluding the depreciation and amortization expenses, primarily related to capital expenditures and acquisitions, and net interest and tax expenses. Additionally, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information regarding the Company's ability to meet future debt service and working capital requirements while providing an overall evaluation of the Company's financial condition. In addition, EBITDA is used internally for incentive compensation purposes. The Company includes EBITDA, Adjusted EBITDA and Adjusted EBITDA margin to provide transparency to investors as they are commonly used by investors and others in assessing performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have certain limitations as analytical tools and should not be used as a substitute for operating margin, net income, cash flows, or other data prepared in accordance with GAAP, or as a measure of the Company's profitability or liquidity.

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, 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. In light of 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 2022 Annual Report on Form 10-K, filed on March 16, 2023, 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 

Orion Group Holdings, Inc. and Subsidiaries
Condensed Statements of Operations
(In Thousands, Except Share and Per Share Information)
(Unaudited)

		Three months ended								Twelve months ended
		December 31,								December 31,
		2023				2022				2023				2022
Contract revenues			201,594				196,195				711,778				748,322
Costs of contract revenues			178,627				186,032				650,115				697,580
Gross profit			22,967				10,163				61,663				50,742
Selling, general and administrative expenses			17,160				13,720				69,431				62,503
Amortization of intangible assets			44				310				427				1,239
Gain on disposal of assets, net			(540	)			(409	)			(8,455	)			(4,970	)
Intangible asset impairment loss			6,890				—				6,890				—
Operating loss			(587	)			(3,458	)			(6,630	)			(8,030	)
Other (expense) income:
Other income			49				52				641				199
Interest income			13				33				103				104
Interest expense			(3,985	)			(1,543	)			(11,659	)			(4,456	)
Other expense, net			(3,923	)			(1,458	)			(10,915	)			(4,153	)
Loss before income taxes			(4,510	)			(4,916	)			(17,545	)			(12,183	)
Income tax expense			(145	)			33				330				429
Net loss		$	(4,365	)		$	(4,949	)		$	(17,875	)		$	(12,612	)
Basic loss per share		$	(0.13	)		$	(0.15	)		$	(0.55	)		$	(0.40	)
Diluted loss per share		$	(0.13	)		$	(0.15	)		$	(0.55	)		$	(0.40	)
Shares used to compute loss per share:
Basic			32,528,213				32,060,822				32,346,992				31,402,328
Diluted			32,528,213				32,060,822				32,346,992				31,402,328

Orion Group Holdings, Inc. and Subsidiaries
Selected Results of Operations
(In Thousands, Except Share and Per Share Information)
(Unaudited)

		Three months ended December 31,
		2023							2022
		Amount				Percent			Amount				Percent
		(dollar amounts in thousands)
Contract revenues
Marine segment
Public sector		$	98,275			72.7	%		$	73,006			75.8	%
Private sector			36,888			27.3	%			23,310			24.2	%
Marine segment total		$	135,163			100.0	%		$	96,316			100.0	%
Concrete segment
Public sector		$	2,635			4.0	%		$	7,216			7.2	%
Private sector			63,796			96.0	%			92,663			92.8	%
Concrete segment total		$	66,431			100.0	%		$	99,879			100.0	%
Total		$	201,594						$	196,195
Operating income (loss)
Marine segment		$	4,257			3.1	%		$	234			0.2	%
Concrete segment			(4,844	)		(7.3	)%			(3,692	)		(3.7	)%
Total		$	(587	)					$	(3,458	)
		Twelve months ended December 31,
		2023							2022
		Amount				Percent			Amount				Percent
		(dollar amounts in thousands)
Contract revenues
Marine segment
Public sector		$	292,088			73.8	%		$	237,363			70.0	%
Private sector			103,829			26.2	%			101,850			30.0	%
Marine segment total		$	395,917			100.0	%		$	339,213			100.0	%
Concrete segment
Public sector		$	20,297			6.4	%		$	30,284			7.4	%
Private sector			295,564			93.6	%			378,825			92.6	%
Concrete segment total		$	315,861			100.0	%		$	409,109			100.0	%
Total		$	711,778						$	748,322
Operating income (loss)
Marine segment		$	3,670			0.9	%		$	9,787			2.9	%
Concrete segment			(10,300	)		(3.3	)%			(17,817	)		(4.4	)%
Total		$	(6,630	)					$	(8,030	)

Orion Group Holdings, Inc. and Subsidiaries
Reconciliation of Adjusted Net Income (Loss)
(In thousands except per share information)
(Unaudited)

		Three months ended								Twelve months ended
		December 31,								December 31,
		2023				2022				2023				2022
Net loss		$	(4,365	)		$	(4,949	)		$	(17,875	)		$	(12,612	)
One-time charges and the tax effects:
Net gain on Port Lavaca South Yard property sale			—				—				(5,202	)			—
ERP implementation			568				308				1,378				1,867
Severance			683				4				809				948
Intangible asset impairment loss			6,890				—				6,890				—
Professional fees related to management transition			—				—				—				1,118
Tax rate applied to one-time charges (1)			(1,456	)			(265	)			(642	)			(544	)
Total one-time charges and the tax effects			6,685				47				3,233				3,389
Federal and state tax valuation allowances			277				1,158				3,238				2,114
Adjusted net income (loss)		$	2,597			$	(3,744	)		$	(11,404	)		$	(7,109	)
Adjusted EPS		$	0.08			$	(0.12	)		$	(0.35	)		$	(0.23	)
(1) Items are taxed discretely using the Company's effective tax rate which differs from the Company’s statutory federal rate primarily due to state income taxes and the non-deductibility of other permanent items.

 

Orion Group Holdings, Inc. and Subsidiaries
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations
(In Thousands, Except Margin Data)
(Unaudited)

		Three months ended								Year ended
		December 31,								December 31,
		2023				2022				2023				2022
Net loss		$	(4,365	)		$	(4,949	)		$	(17,875	)		$	(12,612	)
Income tax (benefit) expense			(145	)			33				330				429
Interest expense, net			3,972				1,510				11,556				4,352
Depreciation and amortization			6,996				5,631				23,878				24,057
EBITDA (1)			6,458				2,225				17,889				16,226
Stock-based compensation			209				639				2,042				2,754
Net gain on Port Lavaca South Yard property sale			—				—				(5,202	)			—
ERP implementation			568				308				1,378				1,867
Professional fees related to management transition			—				—				—				1,118
Severance			683				4				809				948
Intangible asset impairment loss			6,890				—				6,890				—
Adjusted EBITDA(2)		$	14,808			$	3,176			$	23,806			$	22,913
Operating income margin			(0.3	)%			(1.8	)%			(0.9	)%			(1.1	)%
Impact of depreciation and amortization			3.5	%			2.9	%			3.3	%			3.2	%
Impact of stock-based compensation			0.1	%			0.3	%			0.3	%			0.4	%
Impact of net gain on Port Lavaca South Yard property sale			—	%			—	%			(0.7	)%			—	%
Impact of ERP implementation			0.3	%			0.2	%			0.2	%			0.3	%
Impact of professional fees related to management transition			—	%			—	%			—	%			0.1	%
Impact of severance			0.3	%			—	%			0.1	%			0.2	%
Impact of intangible asset impairment loss			3.4	%			—	%			1.0	%			—	%
Adjusted EBITDA margin(2)			7.3	%			1.6	%			3.3	%			3.1	%
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.
(2) Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, net gain on Port Lavaca South Yard property sale, ERP implementation, professional fees related to management transition, severance and intangible asset impairment loss. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

 

Orion Group Holdings, Inc. and Subsidiaries
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment
(In Thousands, Except Margin Data)
(Unaudited)

		Marine								Concrete
		Three months ended								Three months ended
		December 31,								December 31,
		2023				2022				2023				2022
Operating income (loss)			4,257				234				(4,844	)			(3,692	)
Other income			49				52				—				—
Depreciation and amortization			5,801				3,841				1,195				1,790
EBITDA (1)			10,107				4,127				(3,649	)			(1,902	)
Stock-based compensation			175				636				34				3
ERP implementation			352				160				216				148
Severance			683				4				—				—
Intangible asset impairment loss			—				—				6,890				—
Adjusted EBITDA(2)		$	11,317			$	4,927			$	3,491			$	(1,751	)
Operating income margin			3.1	%			0.2	%			(7.3	)%			(3.7	)%
Impact of other income			—	%			—	%			—	%			—	%
Impact of depreciation and amortization			4.3	%			4.0	%			1.8	%			1.8	%
Impact of stock-based compensation			0.1	%			0.7	%			0.1	%			—	%
Impact of ERP implementation			0.3	%			0.2	%			0.3	%			0.1	%
Impact of severance			0.5	%			—	%			—	%			—	%
Impact of intangible asset impairment loss			0.1	%			—	%			10.4	%			—	%
Adjusted EBITDA margin (2)			8.4	%			5.1	%			5.3	%			(1.8	)%
		Marine								Concrete
		Year ended								Year ended
		December 31,								December 31,
		2023				2022				2023				2022
Operating income (loss)			3,670				9,787				(10,300	)			(17,817	)
Other income			641				199				—				—
Depreciation and amortization			18,219				16,592				5,659				7,465
EBITDA (1)			22,530				26,578				(4,641	)			(10,352	)
Stock-based compensation			1,958				2,671				84				83
Net gain on Port Lavaca South Yard property sale			(5,202	)			—				—				—
ERP implementation			766				846				612				1,021
Professional fees related to management transition			—				494				—				624
Severance			721				948				88				—
Intangible asset impairment loss			—				—				6,890				—
Adjusted EBITDA(2)		$	20,773			$	31,537			$	3,033			$	(8,624	)
Operating income margin			0.8	%			2.9	%			(3.3	)%			(4.4	)%
Impact of other income			0.2	%			—	%			—	%			—	%
Impact of depreciation and amortization			4.6	%			5.0	%			1.9	%			1.9	%
Impact of stock-based compensation			0.5	%			0.8	%			—	%			—	%
Impact of net gain on Tampa property sale			(1.3	)%			—	%			—	%			—	%
Impact of ERP implementation			0.2	%			0.2	%			0.2	%			0.2	%
Impact of professional fees related to management transition			—	%			0.1	%			—	%			0.2	%
Impact of severance			0.2	%			0.3	%			—	%			—	%
Impact of intangible asset impairment loss			—	%			—	%			2.2	%			—	%
Adjusted EBITDA margin (2)			5.2	%			9.3	%			1.0	%			(2.1	)%
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.
(2) Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, net gain on Port Lavaca South Yard property sale, ERP implementation, professional fees related to management transition, severance and intangible asset impairment loss. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

Orion Group Holdings, Inc. and Subsidiaries
Condensed Statements of Cash Flows Summarized
(In Thousands)
(Unaudited)

		Three months ended								Year ended
		December 31,								December 31,
		2023				2022				2023				2022
Net loss		$	(4,365	)		$	(4,949	)		$	(17,875	)		$	(12,612	)
Adjustments to remove non-cash and non-operating items			16,248				7,249				32,641				27,413
Cash flow from net loss after adjusting for non-cash and non-operating items			11,883				2,300				14,766				14,801
Change in operating assets and liabilities (working capital)			33,796				(1,836	)			2,412				(5,236	)
Cash flows provided by operating activities		$	45,679			$	464			$	17,178			$	9,565
Cash flows (used in) provided by investing activities		$	(3,221	)		$	(3,549	)		$	2,170			$	(9,704	)
Cash flows (used in) provided by financing activities		$	(15,401	)		$	4,132			$	7,806			$	(8,370	)
Capital expenditures (included in investing activities above)		$	(2,231	)		$	(3,957	)		$	(8,909	)		$	(14,584	)

Orion Group Holdings, Inc. and Subsidiaries
Condensed Statements of Cash Flows
(In Thousands)
(Unaudited)

		Year ended December 31,
		2023				2022
Cash flows from operating activities
Net loss		$	(17,875	)		$	(12,612	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			18,844				20,915
Amortization of ROU operating leases			6,763				4,813
Amortization of ROU finance leases			5,034				3,142
Write-off of debt issuance costs upon debt modification			119				—
Amortization of deferred debt issuance costs			1,616				424
Deferred income taxes			(103	)			13
Stock-based compensation			2,042				2,754
Gain on disposal of assets, net			(8,455	)			(4,970	)
Intangible asset impairment loss			6,890				—
Allowance for credit losses			(109	)			322
Change in operating assets and liabilities:
Accounts receivable			14,129				(28,660	)
Income tax receivable			(224	)			3
Inventory			(729	)			(1,485	)
Prepaid expenses and other			(55	)			1,645
Contract assets			(37,619	)			(15,374	)
Accounts payable			(4,507	)			39,370
Accrued liabilities			11,817				(6,630	)
Operating lease liabilities			(6,807	)			(4,748	)
Income tax payable			48				(79	)
Contract liabilities			26,359				10,722
Net cash provided by operating activities			17,178				9,565
Cash flows from investing activities:
Proceeds from sale of property and equipment			11,079				4,880
Purchase of property and equipment			(8,909	)			(14,584	)
Net cash provided by (used in) investing activities			2,170				(9,704	)
Cash flows from financing activities:
Borrowings on credit			106,958				24,000
Payments made on borrowings on credit			(104,431	)			(28,274	)
Proceeds from failed sale-leaseback arrangement			14,702				—
Proceeds from sale-leaseback financing			2,397				—
Loan costs from Credit Facility			(6,537	)			(664	)
Payments of finance lease liabilities			(4,791	)			(2,992	)
Payments related to tax withholding for share-based compensation			(492	)			(440	)
Net cash provided by (used in) financing activities			7,806				(8,370	)
Net change in cash, cash equivalents and restricted cash			27,154				(8,509	)
Cash, cash equivalents and restricted cash at beginning of period			3,784				12,293
Cash, cash equivalents and restricted cash at end of period		$	30,938			$	3,784

Orion Group Holdings, Inc. and Subsidiaries
Condensed Balance Sheets
(In Thousands, Except Share and Per Share Information)

		December 31,				December 31,
		2023				2022
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	30,938				3,784
Accounts receivable:
Trade, net of allowance for credit losses of $361 and $606, respectively			101,229				106,758
Retainage			42,044				50,873
Income taxes receivable			626				402
Other current			3,864				3,526
Inventory			2,699				2,862
Contract assets			81,522				43,903
Prepaid expenses and other			8,894				8,229
Total current assets			271,816				220,337
Property and equipment, net of depreciation			87,834				100,977
Operating lease right-of-use assets, net of amortization			25,696				14,978
Financing lease right-of-use assets, net of amortization			23,602				15,839
Inventory, non-current			6,361				5,469
Intangible assets, net of amortization			—				7,317
Deferred income tax asset			26				70
Other non-current			1,558				2,168
Total assets		$	416,893			$	367,155
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt, net of issuance costs		$	13,453			$	34,956
Accounts payable:
Trade			80,294				87,605
Retainage			2,527				1,198
Accrued liabilities			37,074				18,466
Income taxes payable			570				522
Contract liabilities			64,079				37,720
Current portion of operating lease liabilities			9,254				4,738
Current portion of financing lease liabilities			8,665				4,031
Total current liabilities			215,916				189,236
Long-term debt, net of debt issuance costs			23,740				716
Operating lease liabilities			16,632				11,018
Financing lease liabilities			13,746				11,102
Other long-term liabilities			25,320				17,072
Deferred income tax liability			64				211
Total liabilities			295,418				229,355
Stockholders’ equity:
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued			—				—
Common stock -- $0.01 par value, 50,000,000 authorized, 33,260,011 and 32,770,550 issued; 32,548,780 and 32,059,319 outstanding at December 31, 2023 and December 31, 2022, respectively			333				328
Treasury stock, 711,231 shares, at cost, as of December 31, 2023 and December 31, 2022, respectively			(6,540	)			(6,540	)
Additional paid-in capital			189,729				188,184
Retained loss			(62,047	)			(44,172	)
Total stockholders’ equity			121,475				137,800
Total liabilities and stockholders’ equity		$	416,893			$	367,155

FAQ

What were the contract revenues for Orion Group Holdings in Q4 2023?

Orion Group Holdings reported contract revenues of $201.6 million for the fourth quarter of 2023.

What was the GAAP net loss for Orion Group Holdings in the full year 2023?

Orion Group Holdings reported a GAAP net loss of $17.9 million for the full year 2023.

What was the adjusted EBITDA for Orion Group Holdings in Q4 2023?

Orion Group Holdings reported an adjusted EBITDA of $14.8 million for the fourth quarter of 2023.

What was the total backlog and contracts awarded after Q4 for Orion Group Holdings?

Orion Group Holdings reported total backlog and contracts awarded after Q4 totaling $883 million.

What does Orion Group Holdings expect in terms of financial performance for 2024 and beyond?

Orion Group Holdings expects continued financial growth in 2024 and beyond due to strategic initiatives and market opportunities.