Business Wire | Oct 27, 2021 04:23PM EDT

Orion Group Holdings, Inc. Reports Third Quarter 2021 Results; Significant Increase in Backlog

Oct. 27, 2021

HOUSTON--(BUSINESS WIRE)--Oct. 27, 2021--Orion Group Holdings, Inc. (NYSE: ORN) (the "Company"), a leading specialty construction company, today reported a net loss of $10.2 million ($0.33 diluted loss per share) for the third quarter ended September 30, 2021.

Third Quarter 2021 Highlights

* Operating loss was $8.7 million for the third quarter of 2021 compared to operating income of $13.1 million for the third quarter of 2020.

* Net loss was $10.2 million ($0.33 diluted loss per share) for the third quarter of 2021 compared to net income of $11.8 million ($0.39 diluted earnings per share) for the third quarter of 2020.

* The third quarter 2021 net loss included $1.1 million ($0.04 loss per diluted share) of non-recurring items and $0.7 million ($0.02 loss per diluted share) of tax expense associated with the movement of certain valuation allowances. Third quarter 2021 adjusted net loss was $8.4 million ($0.27 diluted loss 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 $(0.5) million in the third quarter of 2021, which compares to adjusted EBITDA of $17.0 million for the third quarter of 2020. (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 third quarter was $572.8 million on a third quarter book-to-bill of 2.28x.

"Our third quarter results were impacted by lower than anticipated revenue due to the phasing of project work, project win rates and timing, tropical weather, and COVID-19 related items," stated Mark Stauffer, Orion's Chief Executive Officer. "This also resulted in an increase in unabsorbed labor and equipment, which further pressured margins."

"When we reported our second quarter results three months ago, we noted our optimism regarding the activity level in our end markets and amount of active project bids. We also noted our intention to remain disciplined in our approach to bidding. That discipline has paid off as we closed the third quarter with several project award announcements, resulting in period-ending backlog of $572.8 million, up 45% from the end of the second quarter. Our bidding activity remains healthy, with approximately $2 billion currently outstanding. We continue to see demand for our services in for both of our segments, and we will remain disciplined in our approach to bidding on these opportunities."

"Despite weather and COVID-19-related impacts, our concrete segment was able to grow revenues 11.3% compared with the prior year period as production volumes increased. Larger, light-commercial jobs were the primary component of our work in the quarter as volumes improved 19% from the prior year period. Conversely, our marine segment experienced a 51.5% revenue decline due primarily to project timing and scheduling as a number of larger projects were underway in the prior-year quarter while the third quarter 2021 reflected a gap in prior projects completing and new projects starting up. Looking ahead for the remainder of the year and heading into 2022, we expect to see improved absorption of labor and equipment as our current scheduling ramps up on new projects."

"We are continuing to track progress on the Federal infrastructure bill. While passage of a large bill would provide a significant catalyst for our end markets and drive absorption of industry capacity, we also believe the clarity resulting from a failed bill would also be a modest positive as many state and local entities are currently in a "wait and see" mode regarding possible funding. As they gain certainty regarding their funding outlook, we expect project award activity to gain momentum."

Consolidated Results for Third Quarter 2021 Compared to Third Quarter 2020

* Contract revenues were $139.9 million, down 26.1% as compared to $189.4 million. The decrease was primarily driven by the timing and mix of several large marine projects that had driven activity in the prior year, which were not replicated or replaced in the current year quarter. This decrease was partially offset by increased production volumes in our concrete segment due to an increase in activity during 2021, including on several larger jobs in the current year period as compared to the prior year period.

* Gross profit was $6.6 million, as compared to $22.5 million. Gross profit margin was 4.7%, as compared to 11.9%. The decrease in gross profit dollars and percentage was primarily driven by the decreased activity and volumes in the marine segment which negatively impacted revenue and contributed to an under recovery of indirect costs primarily related to decreased labor and equipment utilization. Decreased project performance in the concrete segment was driven by inefficiencies in executing work from COVID-19 and weather-related impacts, along with cost overruns in the current period on the completion of one project.

* Selling, General, and Administrative expenses were $15.7 million, as compared to $15.3 million. As a percentage of total contract revenues, SG&A expenses increased from 8.1% to 11.2%, primarily due to lower revenue in the current period. The increase in SG&A dollars was driven primarily by an increase in ERP implementation expense, partially offset by a decrease in bonus expense as compared to the prior year period.

* Operating loss was $8.7 million as compared to operating income of $13.1 million. Excluding the net gain on insurance recoveries and the recovery of a disputed receivable operating income was $9.3 million in the prior year period.

* EBITDA was $(2.5) million, representing a (1.8)% EBITDA margin, as compared to EBITDA of $20.0 million, or a 10.5% EBITDA margin. When adjusted for non-recurring items, adjusted EBITDA for the third quarter of 2021 was $(0.5) million, representing a (0.3)% 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 September 30, 2021, was $572.8 million, which compares with backlog under contract as of September 30, 2020, of $428.8 million. The third quarter 2021 ending backlog was comprised of $379.9 million for the marine segment, and $192.9 million for the concrete segment. At the end of the third quarter 2021, the Company had approximately $2.0 billion worth of bids outstanding, including approximately $103 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the third quarter of 2021, of which approximately $47 million pertains to the marine segment and approximately $56 million to the concrete segment.

"During the third quarter, we bid on approximately $1.3 billion of work and were successful on approximately $318 million of these bids," continued Mr. Stauffer. "This resulted in a 2.28 times book-to-bill ratio and a win rate of 24.3%. In the marine segment, we bid on approximately $495 million during the third quarter 2021 and were successful on approximately $264 million, representing a win rate of 53.4% and a book-to-bill ratio of 4.83 times. In the concrete segment we bid on approximately $815 million of work and were awarded approximately $54 million, representing a win rate of 6.6% and a book-to-bill ratio of 0.63 times."

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. 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 third quarter 2021 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, October 28, 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 March 2, 2021, 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 Nine months ended

September 30, September 30,

2021 2020 2021 2020

Contract 139,907 189,433 439,091 539,766 revenues

Costs ofcontract 133,329 166,932 404,757 476,763 revenues

Gross profit 6,578 22,501 34,334 63,003

Selling,general and 15,733 15,270 44,078 47,651 administrativeexpenses

Amortizationof intangible 380 519 1,141 1,552 assets

Gain ondisposal of (792 ) (6,373 ) (9,763 ) (7,734 )assets, net

Operating (8,743 ) 13,085 (1,122 ) 21,534 (loss) income

Other(expense) income:

Other income 50 115 159 251

Interest 22 57 73 151 income

Interest (523 ) (1,151 ) (4,506 ) (3,722 )expense

Other expense, (451 ) (979 ) (4,274 ) (3,320 )net

Loss (income)before income (9,194 ) 12,106 (5,396 ) 18,214 taxes

Income tax 1,001 303 341 1,660 expense

Net loss $ (10,195 ) $ 11,803 $ (5,737 ) $ 16,554 (income)



Basic (loss)earnings per $ (0.33 ) $ 0.39 $ (0.19 ) $ 0.55 share

Diluted (loss)earnings per $ (0.33 ) $ 0.39 $ (0.19 ) $ 0.55 share

Shares used tocompute (loss) income pershare:

Basic 30,979,207 30,372,310 30,707,426 30,020,258

Diluted 30,979,207 30,372,310 30,707,426 30,020,258

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

Three months ended September 30,

2021

2020

Amount

Percent

Amount

Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

$

35,580

65.0

%

$

68,353

60.6

%

Private sector

19,159

35.0

%

44,528

39.4

%

Marine segment total

$

54,739

100.0

%

$

112,881

100.0

%

Concrete segment

Public sector

$

2,301

2.7

%

$

8,784

11.5

%

Private sector

82,867

97.3

%

67,768

88.5

%

Concrete segment total

$

85,168

100.0

%

$

76,552

100.0

%

Total

$

139,907

$

189,433

Operating (loss) income

Marine segment

$

(4,965

)

(9.1

)%

$

12,025

10.7

%

Concrete segment

(3,778

)

(4.4

)%

1,060

1.4

%

Total

$

(8,743

)

$

13,085

Nine months ended September 30,

2021

2020

Amount

Percent

Amount

Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

$

121,916

63.9

%

$

181,684

62.5

%

Private sector

68,911

36.1

%

108,865

37.5

%

Marine segment total

$

190,827

100.0

%

$

290,549

100.0

%

Concrete segment

Public sector

$

13,580

5.5

%

$

36,858

14.8

%

Private sector

234,684

94.5

%

212,359

85.2

%

Concrete segment total

$

248,264

100.0

%

$

249,217

100.0

%

Total

$

439,091

$

539,766

Operating income (loss)

Marine segment

$

6,489

3.4

%

$

21,584

7.4

%

Concrete segment

(7,611

)

(3.1

)%

(50

)

(0.0

)%

Total

$

(1,122

)

$

21,534

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)



Three months ended September 30,

2021 2020

Amount Percent Amount Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector $ 35,580 65.0 % $ 68,353 60.6 %

Private sector 19,159 35.0 % 44,528 39.4 %

Marine segment total $ 54,739 100.0 % $ 112,881 100.0 %

Concrete segment

Public sector $ 2,301 2.7 % $ 8,784 11.5 %

Private sector 82,867 97.3 % 67,768 88.5 %

Concrete segment total $ 85,168 100.0 % $ 76,552 100.0 %

Total $ 139,907 $ 189,433



Operating (loss) income

Marine segment $ (4,965 ) (9.1 )% $ 12,025 10.7 %

Concrete segment (3,778 ) (4.4 )% 1,060 1.4 %

Total $ (8,743 ) $ 13,085



Nine months ended September 30,

2021 2020

Amount Percent Amount Percent

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector $ 121,916 63.9 % $ 181,684 62.5 %

Private sector 68,911 36.1 % 108,865 37.5 %

Marine segment total $ 190,827 100.0 % $ 290,549 100.0 %

Concrete segment

Public sector $ 13,580 5.5 % $ 36,858 14.8 %

Private sector 234,684 94.5 % 212,359 85.2 %

Concrete segment total $ 248,264 100.0 % $ 249,217 100.0 %

Total $ 439,091 $ 539,766



Operating income (loss)

Marine segment $ 6,489 3.4 % $ 21,584 7.4 %

Concrete segment (7,611 ) (3.1 )% (50 ) (0.0 )%

Total $ (1,122 ) $ 21,534

Orion Group Holdings, Inc. and Subsidiaries

Reconciliation of Adjusted Net Income (Loss)

(In thousands except per share information)

(Unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2021

2020

2021

2020

Net (loss) income

$

(10,195

)

$

11,803

$

(5,737

)

$

16,554

One-time charges and the tax effects:

ERP implementation

1,383

486

2,822

796

ISG initiative

-

-

-

369

Severance

-

48

-

120

Costs related to debt extinguishment

-

-

2,062

-

Insurance recovery on disposal, net

-

(2,859

)

-

(2,859

)

Recovery on disputed receivable

-

(898

)

-

(898

)

Net loss (gain) on Tampa property sale

98

-

(6,669

)

-

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

(341

)

741

411

569

Total one-time charges and the tax effects

1,140

(2,482

)

(1,374

)

(1,903

)

Federal and state tax valuation allowances

689

(2,231

)

1,659

(3,862

)

Adjusted net (loss) income

$

(8,366

)

$

7,090

$

(5,452

)

$

10,789

Adjusted EPS

$

(0.27

)

$

0.23

$

(0.18

)

$

0.36

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

Orion Group Holdings, Inc. and Subsidiaries

Reconciliation of Adjusted Net Income (Loss)

(In thousands except per share information)

(Unaudited)



Three months ended Nine months ended

September 30, September 30,

2021 2020 2021 2020

Net (loss) income $ (10,195 ) $ 11,803 $ (5,737 ) $ 16,554

One-time charges and the tax effects:

ERP implementation 1,383 486 2,822 796

ISG initiative - - - 369

Severance - 48 - 120

Costs related to debt - - 2,062 - extinguishment

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

Recovery on disputed - (898 ) - (898 )receivable

Net loss (gain) on Tampa 98 - (6,669 ) - property sale

Tax rate of 23% applied to (341 ) 741 411 569 one-time charges (1)

Total one-time charges and 1,140 (2,482 ) (1,374 ) (1,903 )the tax effects

Federal and state tax 689 (2,231 ) 1,659 (3,862 )valuation allowances

Adjusted net (loss) income $ (8,366 ) $ 7,090 $ (5,452 ) $ 10,789

Adjusted EPS $ (0.27 ) $ 0.23 $ (0.18 ) $ 0.36

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

Orion Group Holdings, Inc. and Subsidiaries

Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations

(In Thousands, Except Margin Data)

(Unaudited)



Three months ended Nine months ended

September 30, September 30,

2021 2020 2021 2020

Net (loss) income $ (10,195 ) $ 11,803 $ (5,737 ) $ 16,554

Income tax (benefit) expense 1,001 303 341 1,660

Interest expense, net 501 1,094 4,433 3,571

Depreciation and amortization 6,225 6,766 19,140 20,662

EBITDA (1) (2,468 ) 19,966 18,177 42,447

Stock-based compensation 526 258 2,154 1,887

ERP implementation 1,383 486 2,822 796

ISG initiative - - - 369

Severance - 48 - 120

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

Recovery on disputed - (898 ) - (898 )receivable

Net loss (gain) on Tampa 98 - (6,669 ) - property sale

Adjusted EBITDA(2) $ (461 ) $ 17,001 $ 16,484 $ 41,862

Operating income margin (6.2 ) 7.0 % (0.4 ) 4.2 % % %

Impact of other income - % - % - % - %(expense), net

Impact of depreciation and 4.4 % 3.6 % 4.6 % 3.8 %amortization

Impact of stock-based 0.4 % 0.1 % 0.5 % 0.3 %compensation

Impact of ERP implementation 1.0 % 0.3 % 0.6 % 0.1 %

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

Impact of severance - % - % - % - %

Impact of insurance recovery - % (1.5 ) - % (0.5 )on disposal, net % %

Impact of recovery on - % (0.5 ) - % (0.2 )disputed receivable % %

Impact of net loss (gain) on 0.1 % - % (1.5 ) - %Tampa property sale %

Adjusted EBITDA margin(2) (0.3 ) 9.0 % 3.8 % 7.8 % %

(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, recovery on a disputed receivable and the net loss (gain) on the Tampa property sale. 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

September 30, September 30,

2021 2020 2021 2020

Operating (loss) income (1) (4,965 ) 12,025 (3,778 ) 1,060

Other income (expense), net 50 114 - 1

Depreciation and 4,232 4,543 1,993 2,223 amortization

EBITDA (2) (683 ) 16,682 (1,785 ) 3,284

Stock-based compensation 509 227 17 31

ERP implementation 571 262 812 224

Severance - - - 48

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

Recovery on disputed - (898 ) - - receivable

Net loss on Tampa property 98 - - - sale

Adjusted EBITDA(3) $ 495 $ 13,414 $ (956 ) $ 3,587

Operating income margin (9.1 ) 10.7 % (4.3 ) 1.4 % % %

Impact of other income 0.2 % 0.1 % - % - %(expense), net

Impact of depreciation and 7.7 % 4.0 % 2.2 % 2.9 %amortization

Impact of stock-based 0.9 % 0.2 % - % - %compensation

Impact of ERP implementation 1.0 % 0.2 % 1.0 % 0.3 %

Impact of severance - % - % - % 0.1 %

Impact of insurance recovery - % (2.5 ) - % - %on disposal, net %

Impact of recovery on - % (0.8 ) - % - %disputed receivable %

Impact of net loss on Tampa 0.2 % - % - % - %property sale

Adjusted EBITDA margin (3) 0.9 % 11.9 % (1.1 ) 4.7 % %



Marine Concrete

Nine months ended Nine months ended

September 30, September 30,

2021 2020 2021 2020

Operating income (loss) (1) 6,489 21,584 (7,611 ) (50 )

Other income (expense), net 159 248 - 3

Depreciation and 12,912 14,063 6,228 6,599 amortization

EBITDA (2) 19,560 35,895 (1,383 ) 6,552

Stock-based compensation 2,079 1,767 75 120

ERP implementation 1,226 417 1,596 379

ISG initiative - 190 - 179

Severance - 26 - 94

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

Recovery on disputed - (898 ) - - receivable

Net gain on Tampa property (6,669 ) - - - sale

Adjusted EBITDA(3) $ 16,196 $ 34,538 $ 288 $ 7,324

Operating income margin 3.4 % 7.4 % (3.1 ) (0.0 ) % %

Impact of other income 0.1 % 0.2 % - % - %(expense), net

Impact of depreciation and 6.8 % 4.8 % 2.5 % 2.6 %amortization

Impact of stock-based 1.1 % 0.6 % 0.1 % - %compensation

Impact of ERP implementation 0.6 % 0.1 % 0.6 % 0.2 %

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

Impact of severance - % - % - % - %

Impact of insurance recovery - % (1.0 ) - % - %on disposal, net %

Impact of recovery on - % (0.3 ) - % - %disputed receivable %

Impact of net gain on Tampa (3.5 ) - % - % - %property sale %

Adjusted EBITDA margin (3) 8.5 % 11.9 % 0.1 % 2.9 %

(1) In connection with the preparation of the financial statements for the quarter ended September 30, 2021, the Company has identified and corrected certain immaterial errors in segment reporting for all periods presented. Specifically, certain corporate overhead costs previously recorded to the marine segment as part of operating income (loss) and allocated from the marine segment to the concrete segment below operating income in the other income (expense) line have been allocated from the marine segment to the concrete segment as part of the determination of operating income for each segment.

(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, recovery on a disputed receivable and the net loss (gain) on the Tampa property sale. 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 Nine months ended

September 30, September 30,

2021 2020 2021 2020

Net (loss) income $ (10,195 ) $ 11,803 $ (5,737 ) $ 16,554

Adjustments to removenon-cash and 7,234 1,505 16,738 19,333 non-operating items

Cash flow from netincome after adjusting (2,961 ) 13,308 11,001 35,887 for non-cash andnon-operating items

Change in operatingassets and liabilities (4,074 ) (8,006 ) (6,761 ) 2,489 (working capital)

Cash flows (used in)provided by operating $ (7,035 ) $ 5,302 $ 4,240 $ 38,376 activities

Cash flows (used in)provided by investing $ (5,973 ) $ (153 ) $ 14,489 $ (2,197 )activities

Cash flows provided by(used) in financing $ 11,491 $ (12,760 ) $ (19,425 ) $ (34,533 )activities



Capital expenditures(included in investing $ (6,879 ) $ (4,408 ) $ (11,594 ) $ (9,444 )activities above)

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)

Nine months ended September 30,

2021

2020

Cash flows from operating activities

Net (loss) income

$

(5,737

)

$

16,554

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

16,881

18,175

Amortization of ROU operating leases

3,967

4,449

Amortization of ROU finance leases

2,259

2,487

Write-off of debt issuance costs upon debt extinguishment

790

-

Amortization of deferred debt issuance costs

430

529

Deferred income taxes

20

27

Stock-based compensation

2,154

1,887

Gain on disposal of assets, net

(9,763

)

(7,734

)

Allowance for credit losses

-

(487

)

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

Accounts receivable

10,402

12,151

Income tax receivable

(64

)

-

Inventory

279

(291

)

Prepaid expenses and other

2,006

1,667

Contract assets

14,601

(1,807

)

Accounts payable

(16,841

)

(22,583

)

Accrued liabilities

(5,530

)

26,282

Operating lease liabilities

(3,803

)

(4,079

)

Income tax payable

(307

)

(1,037

)

Contract liabilities

(7,504

)

(7,814

)

Net cash provided by operating activities

4,240

38,376

Cash flows from investing activities:

Proceeds from sale of property and equipment

25,643

5,821

Purchase of property and equipment

(11,594

)

(9,444

)

Contributions to CSV life insurance

-

(99

)

Insurance claim proceeds related to property and equipment

440

1,525

Net cash provided by (used in) investing activities

14,489

(2,197

)

Cash flows from financing activities:

Borrowings from Credit Facility

33,000

10,000

Payments made on borrowings from Credit Facility

(49,086

)

(41,225

)

Payments of finance lease liabilities

(2,500

)

(2,751

)

Payments related to tax withholding for stock-based compensation

(949

)

(188

)

Exercise of stock options

110

-

Net cash used in financing activities

(19,425

)

(34,533

)

Net change in cash, cash equivalents and restricted cash

(696

)

1,646

Cash, cash equivalents and restricted cash at beginning of period

1,589

1,086

Cash, cash equivalents and restricted cash at end of period

$

893

$

2,732

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)



Nine months ended September 30,

2021 2020

Cash flows from operating activities

Net (loss) income $ (5,737 ) $ 16,554

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 16,881 18,175

Amortization of ROU operating leases 3,967 4,449

Amortization of ROU finance leases 2,259 2,487

Write-off of debt issuance costs upon debt 790 - extinguishment

Amortization of deferred debt issuance costs 430 529

Deferred income taxes 20 27

Stock-based compensation 2,154 1,887

Gain on disposal of assets, net (9,763 ) (7,734 )

Allowance for credit losses - (487 )

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

Accounts receivable 10,402 12,151

Income tax receivable (64 ) -

Inventory 279 (291 )

Prepaid expenses and other 2,006 1,667

Contract assets 14,601 (1,807 )

Accounts payable (16,841 ) (22,583 )

Accrued liabilities (5,530 ) 26,282

Operating lease liabilities (3,803 ) (4,079 )

Income tax payable (307 ) (1,037 )

Contract liabilities (7,504 ) (7,814 )

Net cash provided by operating activities 4,240 38,376

Cash flows from investing activities:

Proceeds from sale of property and equipment 25,643 5,821

Purchase of property and equipment (11,594 ) (9,444 )

Contributions to CSV life insurance - (99 )

Insurance claim proceeds related to property and 440 1,525 equipment

Net cash provided by (used in) investing activities 14,489 (2,197 )

Cash flows from financing activities:

Borrowings from Credit Facility 33,000 10,000

Payments made on borrowings from Credit Facility (49,086 ) (41,225 )

Payments of finance lease liabilities (2,500 ) (2,751 )

Payments related to tax withholding for stock-based (949 ) (188 )compensation

Exercise of stock options 110 -

Net cash used in financing activities (19,425 ) (34,533 )

Net change in cash, cash equivalents and restricted (696 ) 1,646 cash

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

Cash, cash equivalents and restricted cash at end of $ 893 $ 2,732 period

Orion Group Holdings, Inc. and Subsidiaries

Condensed Balance Sheets

(In Thousands, Except Share and Per Share Information)

September 30,

December 31,

2021

2020

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

893

1,589

Accounts receivable:

Trade, net of allowance for credit losses of $323 and $411, at September 30, 2021 and December 31, 2020, respectively

83,984

96,369

Retainage

39,176

36,485

Income taxes receivable

483

419

Other current

66,041

59,492

Inventory

1,311

1,548

Contract assets

17,670

32,271

Prepaid expenses and other

5,498

7,229

Total current assets

215,056

235,402

Property and equipment, net of depreciation

106,685

125,497

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

15,193

18,874

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

12,135

12,858

Inventory, non-current

5,628

6,455

Intangible assets, net of amortization

8,936

10,077

Deferred income tax asset

41

70

Other non-current

4,681

4,956

Total assets

$

368,355

$

414,189

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current debt, net of issuance costs

$

19,139

$

4,344

Accounts payable:

Trade

31,163

48,252

Retainage

762

716

Accrued liabilities

83,419

84,637

Income taxes payable

332

639

Contract liabilities

25,631

33,135

Current portion of operating lease liabilities

3,970

4,989

Current portion of financing lease liabilities

1,408

3,901

Total current liabilities

165,824

180,613

Long-term debt, net of debt issuance costs

295

29,523

Operating lease liabilities

12,033

14,537

Financing lease liabilities

10,324

8,376

Other long-term liabilities

23,007

19,837

Deferred income tax liability

198

207

Interest rate swap liability

-

1,602

Total liabilities

211,681

254,695

Stockholders' equity:

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

-

-

Common stock -- $0.01 par value, 50,000,000 authorized, 31,779,706 and 31,171,804 issued; 31,068,475 and 30,460,573 outstanding at September 30, 2021 and December 31, 2020, respectively

318

312

Treasury stock, 711,231 shares, at cost, as of September 30, 2021 and December 31, 2020, respectively

(6,540

)

(6,540

)

Accumulated other comprehensive loss

-

(1,602

)

Additional paid-in capital

185,633

184,324

Retained loss

(22,737

)

(17,000

)

Total stockholders' equity

156,674

159,494

Total liabilities and stockholders' equity

$

368,355

$

414,189

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027006121/en/

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

CONTACT: INVESTOR RELATIONS COUNSEL: The Equity Group Inc. Jeremy Hellman, CFA (804) 595-2083