Business Wire | Feb 24, 2021 04:43PM EST

Orion Group Holdings, Inc. Reports Fourth Quarter and Full Year 2020 Results

Feb. 24, 2021

HOUSTON--(BUSINESS WIRE)--Feb. 24, 2021--Orion Group Holdings, Inc. (NYSE:ORN) (the "Company"), a leading specialty construction company, today reported net income of $3.7 million ($0.12 diluted earnings per share) for the fourth quarter ended December 31, 2020. Fourth quarter highlights are discussed below. For full year results please refer to the financial statements starting on page 7.

Fourth Quarter 2020 Highlights

* Operating income was $5.1 million for the fourth quarter of 2020 compared to operating income of $2.7 million for the fourth quarter of 2019. * Net income was $3.7 million ($0.12 diluted earnings per share) for the fourth quarter of 2020 compared to net income of $0.2 million ($0.01 diluted earnings per share) for the fourth quarter of 2019. * The fourth quarter 2020 net income included $0.6 million ($0.02 earnings per diluted share) of non-recurring items and $0.7 million ($0.02 earnings per diluted share) of tax benefit associated with the movement of certain valuation allowances. Fourth quarter 2020 adjusted net income was $3.5 million ($0.12 diluted earnings per share). (Please see page 9 of this release for a reconciliation of adjusted net income). * EBITDA, adjusted to exclude the impact of the aforementioned non-recurring items, was $12.6 million in the fourth quarter of 2020, which compares to adjusted EBITDA of $11.5 million for the fourth quarter of 2019. (Please see page 10 of this release for an explanation of EBITDA, adjusted EBITDA and a reconciliation to the nearest GAAP measure). * Backlog at the end of the fourth quarter was $439.5 million on a fourth quarter book-to-bill of 1.06x.

"We delivered strong growth in profitability and cash flow for the full year 2020," stated Mark Stauffer, Orion's Chief Executive Officer. "Despite the headwinds to the U.S. economy and our business resulting from the COVID-19 pandemic, our adjusted EBITDA increased more than 35% over 2019 and we improved our adjusted EBITDA margin by 210 basis points. This was the direct result of the commitment and resolve of our employees, coupled with the benefits of our Invest, Scale and Grow program, which we initiated in 2019."

"Fourth quarter results were in-line with our expectations. Gross profit improved year over year in both dollars and margin, with gross profit margin improving by 320 basis points. The improvement was driven by production efficiency gains at the project level in both segments. Consolidated adjusted EBITDA for the fourth quarter also increased by 9.2% year over year. Our team's focus remains on continued performance efficiency despite any macroeconomic challenges. We view our ability to generate improved profitability in a difficult market as a testament to Orion's processes, procedures, and focus on bottom line results. We believe that this profitability improvement will be sustainable and scalable moving forward as bidding opportunities begin to normalize."

"While bidding opportunities have been affected in some of our end markets, we still see bidding activity in both of our segments, largely driven by end markets that are continuing operations through the COVID-19 pandemic. As we have said previously, our efforts are focused on targeting the end markets in which we expect to have the best opportunities and on projects that we expect to be the most profitable projects. One of the key strengths of our Company is the wide array of potential users of our broad range of services, enabling us to pursue the most attractive bid opportunities in the end markets that are providing opportunities at any given point in time. This strategy has served us well and we believe it will continue to do so."

"We continue to be confident in our ability to profitably execute our projects in backlog, and in our ability to maintain and grow our backlog level by targeting and winning new bid opportunities. We believe chances for a new infrastructure bill have improved, and if enacted, will be a further catalyst for continued strength in our end-market opportunities. We continue to focus on our liquidity position, which remains strong and provides us with more than sufficient financial flexibility to continue to pursue new awards and execute on existing projects in backlog. Our diverse end markets, broad range of construction capabilities and assets, and our highly experienced and professional personnel make us confident in our ability to deliver increasing levels of profitability and free cash flow, particularly in a post-pandemic environment."

Consolidated Results for Fourth Quarter 2020 Compared to Fourth Quarter 2019

* Contract revenues were $170.2 million, down 14.8% as compared to $199.8 million. The decrease was primarily driven by the timing of projects for the marine and concrete segments. * Gross profit was $21.7 million, as compared to $19.1 million. Gross profit margin was 12.8%, as compared to 9.6%. The increase in gross profit dollars and percentage was primarily driven by production efficiency gains in both segments. * Selling, General, and Administrative expenses were $17.4 million, as compared to $16.3 million. As a percentage of total contract revenues, SG&A expenses increased to 10.2% from 8.2%. The increase in SG&A dollars was primarily attributable to the increased accrual of the annual incentive compensation plan during the current year period as compared to the prior year period. * Operating income was $5.1 million as compared to $2.7 million. The operating income in the fourth quarter of 2020 reflects the aforementioned factors that improved gross profit. * EBITDA was $11.7 million, representing a 6.9% EBITDA margin, as compared to EBITDA of $10.0 million, or a 5.0% EBITDA margin. When adjusted for non-recurring items, adjusted EBITDA for the fourth quarter of 2020 was $12.6 million, representing a 7.4% EBITDA margin. (Please see page 10 of this release for an explanation of EBITDA, Adjusted EBITDA and a reconciliation to the nearest GAAP measure).

Backlog

Backlog of work under contract as of December 31, 2020 was $439.5 million, which compares with backlog under contract at December 31, 2019 of $558.5 million. The fourth quarter 2020 ending backlog was comprised of $202.6 million for the marine segment, and $236.9 million for the concrete segment. At the end of 2020, the Company had approximately $1.6 billion worth of bids outstanding, including approximately $96 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the fourth quarter of 2020, of which approximately $46 million pertains to the marine segment and approximately $50 million to the concrete segment.

"During the fourth quarter, we bid on approximately $954 million of work and were successful on approximately $181 million of these bids," stated Robert Tabb, Orion Group Holding's Vice President and Chief Financial Officer. "This resulted in a 1.06 times book-to-bill ratio and a win rate of 19.0%. In the marine segment, we bid on approximately $254 million during the fourth quarter 2020 and were successful on approximately $59 million, representing a win rate of 23.1% and a book-to-bill ratio of 0.60 times. In the concrete segment we bid on approximately $700 million of work and were awarded approximately $122 million, representing a win rate of 17.5% and a book-to-bill ratio of 1.69 times."

Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and 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. Given the typical duration of the Company's projects, which generally range from three to nine months, the Company's backlog at any point in time usually represents only a portion of the revenue it expects to realize during a twelve-month period.

Conference Call Details

Orion Group Holdings will host a conference call to discuss results for the fourth quarter 2020 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, February 25, 2021. To listen to a live webcast of the conference call, or access the replay, visit the Calendar of Events page of the Investor Relations section of the website at www.oriongroupholdingsinc.com. To participate in the call, please dial (201) 493-6739 and ask for the Orion Group Holdings Conference Call.

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, 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 pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas.

Non-GAAP Financial Measures

This press release includes the financial measures "adjusted net income," "adjusted earnings 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 and adjusted earnings per share are not an alternative to net income or earnings per share. Adjusted net income and adjusted earnings per share exclude certain items that management believes impairs a meaningful comparison of operating results. The company believes these adjusted financial measures are a useful adjunct to earnings calculated in accordance with GAAP because management uses adjusted net income available to common stockholders to evaluate 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 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 generally accepted accounting principles in the United States, or as a measure of the Company's profitability or liquidity.

The matters discussed in this press release may constitute or include projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of which 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 estimated project start date, 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, the effects of the ongoing COVID-19 pandemic, 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.

Please refer to the Company's Annual Report on Form 10-K, filed on February 28, 2020, 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.

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,

2020 2019 2020 2019

Contract 170,176 199,793 709,942 708,390 revenues

Costs ofcontract 148,476 180,704 625,239 644,349 revenues

Gross profit 21,700 19,089 84,703 64,041

Selling,general and 17,440 16,335 65,091 61,012 administrativeexpenses

Amortizationof intangible 518 660 2,070 2,640 assets

Gain ondisposal of (1,310 ) (607 ) (9,044 ) (1,804 )assets, net

Operating 5,052 2,701 26,586 2,193 income

Other(expense) income:

Other income 96 197 347 771

Interest 32 36 183 353 income

Interest (1,198 ) (1,827 ) (4,920 ) (6,808 )expense

Other expense, (1,070 ) (1,594 ) (4,390 ) (5,684 )net

Income (loss)before income 3,982 1,107 22,196 (3,491 )taxes

Income tax 316 948 1,976 1,868 expense

Net income $ 3,666 $ 159 $ 20,220 $ (5,359 )(loss)



Basic earnings(loss) per $ 0.12 $ 0.01 $ 0.67 $ (0.18 )share

Dilutedearnings $ 0.12 $ 0.01 $ 0.67 $ (0.18 )(loss) pershare

Shares used tocompute income (loss) pershare:

Basic 30,426,454 29,562,635 30,122,362 29,322,054

Diluted 30,427,940 29,574,145 30,122,362 29,322,054

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

Three months ended December 31,

2020

2019

Amount

Percent

Amount

Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

$

58,669

60.1

%

$

77,349

69.5

%

Private sector

38,955

39.9

%

33,875

30.5

%

Marine segment total

$

97,624

100.0

%

$

111,224

100.0

%

Concrete segment

Public sector

$

4,995

6.9

%

$

8,624

9.7

%

Private sector

67,557

93.1

%

79,945

90.3

%

Concrete segment total

$

72,552

100.0

%

$

88,569

100.0

%

Total

$

170,176

$

199,793

Operating income

Marine segment

$

4,492

4.6

%

$

2,641

2.4

%

Concrete segment

560

0.8

%

60

0.1

%

Total

$

5,052

$

2,701

Twelve months ended December 31,

2020

2019

Amount

Percent

Amount

Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

$

240,353

61.9

%

$

258,039

69.9

%

Private sector

147,820

38.1

%

111,099

30.1

%

Marine segment total

$

388,173

100.0

%

$

369,138

100.0

%

Concrete segment

Public sector

$

41,853

13.0

%

$

49,175

14.5

%

Private sector

279,916

87.0

%

290,077

85.5

%

Concrete segment total

$

321,769

100.0

%

$

339,252

100.0

%

Total

$

709,942

$

708,390

Operating income

Marine segment

$

16,935

4.4

%

$

1,057

0.3

%

Concrete segment

9,651

3.0

%

1,136

0.3

%

Total

$

26,586

$

2,193

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)



Three months ended December 31,

2020 2019

Amount Percent Amount Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector $ 58,669 60.1 % $ 77,349 69.5 %

Private sector 38,955 39.9 % 33,875 30.5 %

Marine segment total $ 97,624 100.0 % $ 111,224 100.0 %

Concrete segment

Public sector $ 4,995 6.9 % $ 8,624 9.7 %

Private sector 67,557 93.1 % 79,945 90.3 %

Concrete segment total $ 72,552 100.0 % $ 88,569 100.0 %

Total $ 170,176 $ 199,793



Operating income

Marine segment $ 4,492 4.6 % $ 2,641 2.4 %

Concrete segment 560 0.8 % 60 0.1 %

Total $ 5,052 $ 2,701



Twelve months ended December 31,

2020 2019

Amount Percent Amount Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector $ 240,353 61.9 % $ 258,039 69.9 %

Private sector 147,820 38.1 % 111,099 30.1 %

Marine segment total $ 388,173 100.0 % $ 369,138 100.0 %

Concrete segment

Public sector $ 41,853 13.0 % $ 49,175 14.5 %

Private sector 279,916 87.0 % 290,077 85.5 %

Concrete segment total $ 321,769 100.0 % $ 339,252 100.0 %

Total $ 709,942 $ 708,390



Operating income

Marine segment $ 16,935 4.4 % $ 1,057 0.3 %

Concrete segment 9,651 3.0 % 1,136 0.3 %

Total $ 26,586 $ 2,193

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,

2020

2019

2020

2019

Net income (loss)

$

3,666

$

159

$

20,220

$

(5,359

)

One-time charges and the tax effects:

ERP implementation

692

-

1,488

-

ISG initiative

-

919

369

4,781

Severance

55

162

175

645

Unamortized debt issuance costs on debt extinguishment

-

-

-

399

Insurance recovery on disposal, net

-

-

(2,859

)

-

Recovery on disputed receivable

-

-

(898

)

-

Tax rate of 23% applied to one-time charges (1)

(172

)

(250

)

397

(1,340

)

Total one-time charges and the tax effects

575

831

(1,328

)

4,485

Federal and state tax valuation allowances

(722

)

465

(4,584

)

916

Adjusted net income

$

3,519

$

1,455

$

14,308

$

42

Adjusted EPS

$

0.12

$

0.05

$

0.47

$

-

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,

2020 2019 2020 2019

Net income (loss) $ 3,666 $ 159 $ 20,220 $ (5,359 )

One-time charges and the tax effects:

ERP implementation 692 - 1,488 -

ISG initiative - 919 369 4,781

Severance 55 162 175 645

Unamortized debt issuance - - - 399 costs on debt extinguishment

Insurance recovery on - - (2,859 ) - disposal, net

Recovery on disputed - - (898 ) - receivable

Tax rate of 23% applied to (172 ) (250 ) 397 (1,340 )one-time charges (1)

Total one-time charges and 575 831 (1,328 ) 4,485 the tax effects

Federal and state tax (722 ) 465 (4,584 ) 916 valuation allowances

Adjusted net income $ 3,519 $ 1,455 $ 14,308 $ 42

Adjusted EPS $ 0.12 $ 0.05 $ 0.47 $ -

_______________(1)

Items are taxed discretely using the Company's blended tax rate.

_______________(1) Items are taxed discretely using the Company's blended tax rate.

Orion Group Holdings, Inc. and SubsidiariesAdjusted EBITDA and Adjusted EBITDA Margin Reconciliations

(In Thousands, Except Margin Data)

(Unaudited)

Three months ended

Year ended

December 31,

December 31,

2020

2019

2020

2019

Net income (loss)

$

3,666

$

159

$

20,220

$

(5,359

)

Income tax expense

316

948

1,976

1,868

Interest expense, net

1,166

1,791

4,737

6,455

Depreciation and amortization

6,555

7,065

27,217

28,407

EBITDA (1)

11,703

9,963

54,150

31,371

Stock-based compensation

111

461

1,998

2,753

ERP implementation

692

-

1,488

-

ISG initiative

-

919

369

4,781

Severance

55

162

175

645

Insurance recovery on disposal, net

-

-

(2,859

)

-

Recovery on disputed receivable

-

-

(898

)

-

Adjusted EBITDA(2)

$

12,561

$

11,505

$

54,423

$

39,550

Operating income margin (3)

3.0

%

1.5

%

3.8

%

0.4

%

Impact of depreciation and amortization

3.9

%

3.5

%

3.8

%

4.0

%

Impact of stock-based compensation

0.1

%

0.2

%

0.3

%

0.4

%

Impact of ERP implementation

0.4

%

-

%

0.2

%

-

%

Impact of ISG initiative

-

%

0.5

%

0.1

%

0.7

%

Impact of severance

-

%

0.1

%

-

%

0.1

%

Impact of insurance recovery on disposal, net

-

%

-

%

(0.4

)%

-

%

Impact of recovery on disputed receivable

-

%

-

%

(0.1

)%

-

%

Adjusted EBITDA margin(2)

7.4

%

5.8

%

7.7

%

5.6

%

Orion Group Holdings, Inc. and SubsidiariesAdjusted EBITDA and Adjusted EBITDA Margin Reconciliations

(In Thousands, Except Margin Data)

(Unaudited)



Three months ended Year ended

December 31, December 31,

2020 2019 2020 2019

Net income (loss) $ 3,666 $ 159 $ 20,220 $ (5,359 )

Income tax expense 316 948 1,976 1,868

Interest expense, net 1,166 1,791 4,737 6,455

Depreciation and 6,555 7,065 27,217 28,407 amortization

EBITDA (1) 11,703 9,963 54,150 31,371

Stock-based compensation 111 461 1,998 2,753

ERP implementation 692 - 1,488 -

ISG initiative - 919 369 4,781

Severance 55 162 175 645

Insurance recovery on - - (2,859 ) - disposal, net

Recovery on disputed - - (898 ) - receivable

Adjusted EBITDA(2) $ 12,561 $ 11,505 $ 54,423 $ 39,550

Operating income margin (3) 3.0 % 1.5 % 3.8 % 0.4 %

Impact of depreciation and 3.9 % 3.5 % 3.8 % 4.0 %amortization

Impact of stock-based 0.1 % 0.2 % 0.3 % 0.4 %compensation

Impact of ERP 0.4 % - % 0.2 % - %implementation

Impact of ISG initiative - % 0.5 % 0.1 % 0.7 %

Impact of severance - % 0.1 % - % 0.1 %

Impact of insurance - % - % (0.4 ) - %recovery on disposal, net %

Impact of recovery on - % - % (0.1 ) - %disputed receivable %

Adjusted EBITDA margin(2) 7.4 % 5.8 % 7.7 % 5.6 %

_______________(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, ERP implementation, the ISG initiative, severance, insurance recovery on disposal, net, and recovery on disputed accounts receivable. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(3)

Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.

_______________(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, ERP implementation, the ISG initiative,(2) severance, insurance recovery on disposal, net, and recovery on disputed accounts receivable. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(3) Operating income margin is calculated by dividing operating income plus other income (expense), net 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,

2020

2019

2020

2019

Operating income

4,492

2,641

560

60

Other income (expense), net (1)

3,836

3,214

(3,739

)

(3,018

)

Depreciation and amortization

4,306

4,914

2,248

2,152

EBITDA (2)

12,634

10,769

(931

)

(806

)

Stock-based compensation

74

406

37

55

ERP implementation

378

-

314

-

ISG initiative

-

781

-

138

Severance

55

126

-

36

Adjusted EBITDA(3)

$

13,141

$

12,082

$

(580

)

$

(577

)

Operating income margin (4)

8.5

%

5.3

%

(4.3

)%

(3.3

)%

Impact of depreciation and amortization

4.4

%

4.4

%

3.1

%

2.4

%

Impact of stock-based compensation

0.1

%

0.4

%

-

%

-

%

Impact of ERP implementation

0.4

%

-

%

0.4

%

-

%

Impact of ISG initiative

-

%

0.7

%

-

%

0.2

%

Impact of severance

0.1

%

0.1

%

-

%

-

%

Adjusted EBITDA margin (3)

13.5

%

10.9

%

(0.8

)%

(0.7

)%

Marine

Concrete

Year ended

Year ended

December 31,

December 31,

2020

2019

2020

2019

Operating income

16,935

1,057

9,651

1,136

Other income (expense), net (1)

13,225

11,976

(12,877

)

(11,206

)

Depreciation and amortization

18,369

19,889

8,847

8,519

EBITDA (2)

48,529

32,922

5,621

(1,551

)

Stock-based compensation

1,841

2,470

157

283

ERP implementation

795

-

693

-

ISG initiative

190

2,491

179

2,290

Severance

81

609

94

36

Insurance recovery on disposal, net

(2,859

)

-

-

-

Recovery on disputed receivable

(898

)

-

-

-

Adjusted EBITDA(3)

$

47,679

$

38,492

$

6,744

$

1,058

Operating income margin (4)

7.8

%

3.5

%

(0.9

)%

(3.0

)%

Impact of depreciation and amortization

4.7

%

5.4

%

2.7

%

2.5

%

Impact of stock-based compensation

0.5

%

0.6

%

-

%

0.1

%

Impact of ERP implementation

0.2

%

-

%

0.2

%

-

%

Impact of ISG initiative

-

%

0.7

%

0.1

%

0.7

%

Impact of severance

-

%

0.2

%

-

%

-

%

Impact of insurance recovery on disposal, net

(0.7

)%

-

%

-

%

-

%

Impact of recovery on disputed receivable

(0.2

)%

-

%

-

%

-

%

Adjusted EBITDA margin (3)

12.3

%

10.4

%

2.1

%

0.3

%

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,

2020 2019 2020 2019

Operating income 4,492 2,641 560 60

Other income (expense), 3,836 3,214 (3,739 ) (3,018 )net (1)

Depreciation and 4,306 4,914 2,248 2,152 amortization

EBITDA (2) 12,634 10,769 (931 ) (806 )

Stock-based compensation 74 406 37 55

ERP implementation 378 - 314 -

ISG initiative - 781 - 138

Severance 55 126 - 36

Adjusted EBITDA(3) $ 13,141 $ 12,082 $ (580 ) $ (577 )

Operating income margin 8.5 % 5.3 % (4.3 ) (3.3 )(4) % %

Impact of depreciation 4.4 % 4.4 % 3.1 % 2.4 %and amortization

Impact of stock-based 0.1 % 0.4 % - % - %compensation

Impact of ERP 0.4 % - % 0.4 % - %implementation

Impact of ISG initiative - % 0.7 % - % 0.2 %

Impact of severance 0.1 % 0.1 % - % - %

Adjusted EBITDA margin 13.5 % 10.9 % (0.8 ) (0.7 )(3) % %



Marine Concrete

Year ended Year ended

December 31, December 31,

2020 2019 2020 2019

Operating income 16,935 1,057 9,651 1,136

Other income (expense), 13,225 11,976 (12,877 ) (11,206 )net (1)

Depreciation and 18,369 19,889 8,847 8,519 amortization

EBITDA (2) 48,529 32,922 5,621 (1,551 )

Stock-based compensation 1,841 2,470 157 283

ERP implementation 795 - 693 -

ISG initiative 190 2,491 179 2,290

Severance 81 609 94 36

Insurance recovery on (2,859 ) - - - disposal, net

Recovery on disputed (898 ) - - - receivable

Adjusted EBITDA(3) $ 47,679 $ 38,492 $ 6,744 $ 1,058

Operating income margin 7.8 % 3.5 % (0.9 ) (3.0 )(4) % %

Impact of depreciation 4.7 % 5.4 % 2.7 % 2.5 %and amortization

Impact of stock-based 0.5 % 0.6 % - % 0.1 %compensation

Impact of ERP 0.2 % - % 0.2 % - %implementation

Impact of ISG initiative - % 0.7 % 0.1 % 0.7 %

Impact of severance - % 0.2 % - % - %

Impact of insurance (0.7 ) - % - % - %recovery on disposal, net %

Impact of recovery on (0.2 ) - % - % - %disputed receivable %

Adjusted EBITDA margin 12.3 % 10.4 % 2.1 % 0.3 %(3)

_______________(1)

Primarily consists of corporate overhead costs recorded to the marine segment as part of operating income(loss) and allocated from the marine segment to the concrete segment in other income (expense) line. Allocated amounts net to zero on a consolidated basis.

(2)

EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.

(3)

Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, ERP implementation, the ISG initiative, severance, insurance recovery on disposal, net, and recovery on disputed accounts receivable. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(4)

Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.

_______________ Primarily consists of corporate overhead costs recorded to the marine(1) segment as part of operating income(loss) and allocated from the marine segment to the concrete segment in other income (expense) line. Allocated amounts net to zero on a consolidated basis.

(2) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, ERP implementation, the ISG initiative,(3) severance, insurance recovery on disposal, net, and recovery on disputed accounts receivable. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(4) Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows Summary

(In Thousands)

(Unaudited)

Three months ended

Year ended

December 31,

December 31,

2020

2019

2020

2019

Net income (loss)

$

3,666

$

159

$

20,220

$

(5,359

)

Adjustments to remove non-cash and non-operating items

7,005

8,120

26,338

35,457

Cash flow from net income after adjusting for non-cash and non-operating items

10,671

8,279

46,558

30,098

Change in operating assets and liabilities (working capital)

(3,015

)

(7,098

)

(526

)

(30,814

)

Cash flows provided by (used in) operating activities

$

7,656

$

1,181

$

46,032

$

(716

)

Cash flows used in investing activities

$

(932

)

$

(3,683

)

$

(3,129

)

$

(13,331

)

Cash flows (used in) provided by financing activities

$

(7,867

)

$

2,238

$

(42,400

)

$

6,449

Capital expenditures (included in investing activities above)

$

(5,250

)

$

(4,164

)

$

(14,694

)

$

(17,199

)

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows Summary

(In Thousands)

(Unaudited)



Three months ended Year ended

December 31, December 31,

2020 2019 2020 2019

Net income (loss) $ 3,666 $ 159 $ 20,220 $ (5,359 )

Adjustments to removenon-cash and 7,005 8,120 26,338 35,457 non-operating items

Cash flow from net incomeafter adjusting for 10,671 8,279 46,558 30,098 non-cash andnon-operating items

Change in operatingassets and liabilities (3,015 ) (7,098 ) (526 ) (30,814 )(working capital)

Cash flows provided by(used in) operating $ 7,656 $ 1,181 $ 46,032 $ (716 )activities

Cash flows used in $ (932 ) $ (3,683 ) $ (3,129 ) $ (13,331 )investing activities

Cash flows (used in)provided by financing $ (7,867 ) $ 2,238 $ (42,400 ) $ 6,449 activities



Capital expenditures(included in investing $ (5,250 ) $ (4,164 ) $ (14,694 ) $ (17,199 )activities above)

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)

Year ended December 31,

2020

2019

Cash flows from operating activities

Net income (loss)

$

20,220

$

(5,359

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

23,893

26,096

Amortization of ROU operating leases

5,874

5,177

Amortization of ROU finance leases

3,324

2,312

Write-off of debt issuance costs upon debt modification

-

399

Amortization of deferred debt issuance costs

763

453

Deferred income taxes

17

71

Stock-based compensation

1,998

2,753

Gain on disposal of assets, net

(6,185

)

(1,804

)

Gain on involuntary disposition of assets, net

(2,859

)

-

Allowance for credit losses

(487

)

-

Change in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable

23,587

(51,709

)

Income tax receivable

543

(495

)

Inventory

148

503

Prepaid expenses and other

(1,070

)

131

Costs and estimated earnings in excess of billings on uncompleted contracts

9,118

(32,172

)

Accounts payable

(22,015

)

28,894

Accrued liabilities

11,092

1,334

Operating lease liabilities

(5,399

)

(5,843

)

Income tax payable

(884

)

1,523

Billings in excess of costs and estimated earnings on uncompleted contracts

(15,646

)

27,020

Net cash provided by (used in) operating activities

46,032

(716

)

Cash flows from investing activities:

Proceeds from sale of property and equipment

5,944

2,015

Purchase of property and equipment

(14,694

)

(17,199

)

Contributions to CSV life insurance

(99

)

(721

)

Insurance claim proceeds related to property and equipment

5,720

2,574

Net cash used in investing activities

(3,129

)

(13,331

)

Cash flows from financing activities:

Borrowings from Credit Facility

10,000

63,000

Payments made on borrowings from Credit Facility

(48,204

)

(70,210

)

Loan costs from Credit Facility

(389

)

(1,680

)

Payments of finance lease liabilities

(3,619

)

(2,906

)

Purchase of vested stock-based awards

(188

)

-

Exercise of stock options

-

35

Net cash (used in) provided by financing activities

(42,400

)

6,449

Net change in cash, cash equivalents and restricted cash

503

(7,598

)

Cash, cash equivalents and restricted cash at beginning of period

1,086

8,684

Cash, cash equivalents and restricted cash at end of period

$

1,589

$

1,086

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)



Year ended December 31,

2020 2019

Cash flows from operating activities

Net income (loss) $ 20,220 $ (5,359 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 23,893 26,096

Amortization of ROU operating leases 5,874 5,177

Amortization of ROU finance leases 3,324 2,312

Write-off of debt issuance costs upon debt - 399 modification

Amortization of deferred debt issuance costs 763 453

Deferred income taxes 17 71

Stock-based compensation 1,998 2,753

Gain on disposal of assets, net (6,185 ) (1,804 )

Gain on involuntary disposition of assets, net (2,859 ) -

Allowance for credit losses (487 ) -

Change in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable 23,587 (51,709 )

Income tax receivable 543 (495 )

Inventory 148 503

Prepaid expenses and other (1,070 ) 131

Costs and estimated earnings in excess of billings 9,118 (32,172 )on uncompleted contracts

Accounts payable (22,015 ) 28,894

Accrued liabilities 11,092 1,334

Operating lease liabilities (5,399 ) (5,843 )

Income tax payable (884 ) 1,523

Billings in excess of costs and estimated earnings (15,646 ) 27,020 on uncompleted contracts

Net cash provided by (used in) operating activities 46,032 (716 )

Cash flows from investing activities:

Proceeds from sale of property and equipment 5,944 2,015

Purchase of property and equipment (14,694 ) (17,199 )

Contributions to CSV life insurance (99 ) (721 )

Insurance claim proceeds related to property and 5,720 2,574 equipment

Net cash used in investing activities (3,129 ) (13,331 )

Cash flows from financing activities:

Borrowings from Credit Facility 10,000 63,000

Payments made on borrowings from Credit Facility (48,204 ) (70,210 )

Loan costs from Credit Facility (389 ) (1,680 )

Payments of finance lease liabilities (3,619 ) (2,906 )

Purchase of vested stock-based awards (188 ) -

Exercise of stock options - 35

Net cash (used in) provided by financing activities (42,400 ) 6,449

Net change in cash, cash equivalents and restricted 503 (7,598 )cash

Cash, cash equivalents and restricted cash at 1,086 8,684 beginning of period

Cash, cash equivalents and restricted cash at end $ 1,589 $ 1,086 of period

Orion Group Holdings, Inc. and Subsidiaries

Condensed Balance Sheets

(In Thousands, Except Share and Per Share Information)

December 31,

December 31,

2020

2019

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

1,589

128

Restricted cash

-

958

Accounts receivable:

Trade, net of allowance for credit losses of $411 and $2,600, respectively

96,369

116,540

Retainage

36,485

42,547

Income taxes receivable

419

962

Other current

59,492

2,680

Inventory

1,548

1,114

Costs and estimated earnings in excess of billings on uncompleted contracts

32,271

41,389

Prepaid expenses and other

7,229

5,647

Total current assets

235,402

211,965

Property and equipment, net of depreciation

125,497

132,348

Operating lease right-of-use assets, net of amortization

18,874

17,997

Financing lease right-of-use assets, net of amortization

12,858

7,896

Inventory, non-current

6,455

7,037

Intangible assets, net of amortization

10,077

12,147

Deferred income tax asset

70

85

Other non-current

4,956

5,369

Total assets

$

414,189

$

394,844

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current debt, net of issuance costs

$

4,344

$

3,668

Accounts payable:

Trade

48,252

70,421

Retainage

716

562

Accrued liabilities

84,637

16,966

Income taxes payable

639

1,523

Billings in excess of costs and estimated earnings on uncompleted contracts

33,135

48,781

Current portion of operating lease liabilities

4,989

5,043

Current portion of financing lease liabilities

3,901

2,788

Total current liabilities

180,613

149,752

Long-term debt, net of debt issuance costs

29,523

68,029

Operating lease liabilities

14,537

13,596

Financing lease liabilities

8,376

3,760

Other long-term liabilities

19,837

20,436

Deferred income tax liability

207

205

Interest rate swap liability

1,602

1,045

Total liabilities

254,695

256,823

Stockholders' equity:

Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued

-

-

Common stock -- $0.01 par value, 50,000,000 authorized, 31,171,804 and 30,303,395 issued; 30,460,573 and 29,592,164 outstanding at December 31, 2020 and December 31, 2019, respectively

312

303

Treasury stock, 711,231 shares, at cost, as of December 31, 2020 and December 31, 2019, respectively

(6,540

)

(6,540

)

Accumulated other comprehensive loss

(1,602

)

(1,045

)

Additional paid-in capital

184,324

182,523

Retained loss

(17,000

)

(37,220

)

Total stockholders' equity

159,494

138,021

Total liabilities and stockholders' equity

$

414,189

$

394,844

View source version on businesswire.com: https://www.businesswire.com/news/home/20210224006110/en/

CONTACT: Orion Group Holdings Inc. Francis Okoniewski, VP Investor Relations (346) 616-4138 www.oriongroupholdingsinc.com

CONTACT: -OR-

CONTACT: INVESTOR RELATIONS COUNSEL: The Equity Group Inc. Fred Buonocore, CFA (212) 836-9607 Mike Gaudreau (212) 836-9620