Orion Group Holdings, Inc. (NYSE:ORN) Q2 2022 Results Conference Call July 28, 2022 10:00 AM ET Company Participants Francis Okoniewski - Vice President, Investor Relations Austin Shanfelter - Interim Chief Executive Officer Craig Owen - Chief Financial Officer Advisor Conference Call Participants Julio Romero - Sidoti& Company Joe Gomes - NOBLE Capital Alex Rygiel - B. Riley Marco Rodriguez - Stonegate Capital Markets Poe Fratt - Alliance Global Partners Operator Good day and welcome to today's Second Quar ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 1-33891 ORION GROUP HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware ...

Orion Group Holdings, Inc. (NYSE:ORN) Q1 2022 Earnings Conference Call April 28, 2022 10:00 AM ET Company Participants Francis Okoniewski - Vice President, Investor Relations Austin Shanfelter - Interim Chief Executive Officer Craig Owen - Chief Financial Officer Advisor Conference Call Participants Joe Gomes - NOBLE Capital Julio Romero - Sidoti Alex Rygiel - B. Riley Marco Rodriguez - Stonegate Capital Markets Poe Fratt - Alliance Global Partners Operator Greetings and welcome to Orion Group Holdings, Inc ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and comprehensive notes for the period ended March 31, 2022 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) **Condensed Consolidated Balance Sheets (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $6,726 | $12,293 | | Total current assets | $186,040 | $197,934 | | Total assets | $340,876 | $351,750 | | Total current liabilities | $153,319 | $161,737 | | Total liabilities | $197,279 | $203,652 | | Total stockholders' equity | $143,597 | $148,098 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) **Condensed Consolidated Statements of Operations (in thousands):** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Contract revenues | $174,931 | $153,309 | | Gross profit | $12,816 | $15,455 | | Operating (loss) income | $(2,855) | $2,055 | | Net (loss) income | $(4,856) | $928 | | Basic (loss) earnings per share | $(0.16) | $0.03 | | Diluted (loss) earnings per share | $(0.16) | $0.03 | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) **Condensed Consolidated Statements of Comprehensive (Loss) Income (in thousands):** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income | $(4,856) | $928 | | Total comprehensive (loss) income | $(4,856) | $1,105 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) **Condensed Consolidated Statements of Stockholders' Equity (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Total stockholders' equity | $143,597 | $148,098 | | Net loss | $(4,856) | N/A | | Stock-based compensation | $370 | N/A | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Condensed Consolidated Statements of Cash Flows (in thousands):** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $10,060 | $9,118 | | Net cash (used in) provided by investing activities | $(2,810) | $772 | | Net cash used in financing activities | $(12,817) | $(6,837) | | Net change in cash, cash equivalents and restricted cash | $(5,567) | $3,053 | | Cash, cash equivalents and restricted cash at end of period | $6,726 | $4,642 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business and Basis of Presentation](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes Orion Group Holdings' specialty construction services across various sectors and its operating segments, affirming adequate liquidity for continued operations - Orion Group Holdings, Inc. provides specialty construction services in infrastructure, industrial, and building sectors across the continental United States, Alaska, Canada, and the Caribbean Basin[17](index=17&type=chunk) - The company operates in two reportable segments: Marine (under the Orion brand) and Concrete (under the TAS Commercial Concrete brand)[18](index=18&type=chunk) - Management believes the company will have adequate liquidity for its operations for at least the next 12 months, concluding that substantial doubt about its ability to continue as a going concern is not raised[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including revenue recognition, credit loss allowances, and insurance claims liabilities - Revenue from construction contracts is generally recognized over time, measured by the percentage of actual contract costs incurred to total estimated costs[30](index=30&type=chunk) - The allowance for credit losses for trade accounts receivable remained at **$0.3 million** for both March 31, 2022, and December 31, 2021[43](index=43&type=chunk) - Total accrual for insurance claims liabilities decreased significantly from **$19.8 million** at December 31, 2021, to **$5.2 million** at March 31, 2022[74](index=74&type=chunk) [3. Revenue](index=28&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%203.%20Revenue) This note details contract revenues by segment, highlighting increases in both Marine and Concrete segments for the period **Contract Revenues by Segment (in thousands):** | Segment | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :---------------- | :-------------------------------- | :-------------------------------- | | Marine Segment | $84,480 | $72,146 | | Concrete Segment | $90,451 | $81,163 | | **Total** | **$174,931** | **$153,309** | - Marine segment construction revenues increased from **$43.94 million** in 2021 to **$59.15 million** in 2022[75](index=75&type=chunk) - Concrete segment light commercial revenues increased from **$64.50 million** in 2021 to **$76.78 million** in 2022[75](index=75&type=chunk) [4. Concentration of Risk and Enterprise-Wide Disclosures](index=30&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%204.%20Concentration%20of%20Risk%20and%20Enterprise-Wide%20Disclosures) This note outlines the company's concentrations of current receivables and contract revenues by customer type, identifying significant private sector and federal government contributions **Concentrations of Current Receivables (Trade and Retainage) at March 31, 2022 (in thousands):** | Customer Type | Amount | Percentage | | :---------------- | :----- | :--------- | | Federal Government | $8,380 | 6 % | | State Governments | $571 | - % | | Local Governments | $19,929 | 14 % | | Private Companies | $114,690 | 80 % | | **Gross receivables** | **$143,570** | **100 %** | **Concentrations of Contract Revenue for Three Months Ended March 31, 2022 (in thousands):** | Customer Type | Amount | Percentage | | :---------------- | :----- | :--------- | | Federal Government | $22,695 | 13 % | | State Governments | $7,704 | 4 % | | Local Governments | $32,402 | 19 % | | Private Companies | $112,130 | 64 % | | **Total contract revenues** | **$174,931** | **100 %** | - One customer in the Federal Government category accounted for **10.4%** of total contract revenues for the three months ended March 31, 2022[80](index=80&type=chunk) [5. Contracts in Progress](index=32&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%205.%20Contracts%20in%20Progress) This note details the company's contract assets and liabilities, including remaining performance obligations and their expected recognition timeline **Contracts in Progress (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Costs incurred on uncompleted contracts | $1,150,314 | $1,138,298 | | Estimated earnings | $164,867 | $168,861 | | Less: Billings to date | $(1,323,300) | $(1,305,628) | | **Net contract position** | **$(8,119)** | **$1,531** | | Contract assets | $24,474 | $28,529 | | Contract liabilities | $(32,593) | $(26,998) | - Remaining performance obligations totaled approximately **$604.1 million** as of March 31, 2022, with **82% ($495.8 million)** expected to be recognized in the next 12 months[84](index=84&type=chunk) [6. Property and Equipment](index=34&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%206.%20Property%20and%20Equipment) This note presents the net book value of property and equipment, including depreciation expense and collateral pledges **Property and Equipment, Net (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Net book value of depreciable assets | $68,256 | $72,262 | | Construction in progress | $8,833 | $6,507 | | Land | $27,885 | $27,885 | | **Total property and equipment, net** | **$104,974** | **$106,654** | - Depreciation expense was **$5.2 million** for the three months ended March 31, 2022, compared to **$5.3 million** in the prior year period[86](index=86&type=chunk) - Substantially all of the company's assets are pledged as collateral under its Credit Agreement[86](index=86&type=chunk) [7. Other Current Accounts Receivable](index=34&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%207.%20Other%20Current%20Accounts%20Receivable) This note details other current accounts receivable, including insurance claims and accident loss receivables **Other Current Accounts Receivable (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Insurance claims receivable | $1,580 | $13,273 | | Accident loss receivables | $1,032 | $3,760 | | Other current receivables | $1,101 | $552 | | **Total other current accounts receivable** | **$3,713** | **$17,585** | [8. Fair Value](index=34&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%208.%20Fair%20Value) This note discusses the fair value measurements of financial assets and liabilities, including life insurance policies and debt **Recurring Financial Assets at Fair Value (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Cash surrender value of life insurance policy | $2,622 | $2,813 | - The cash surrender value of life insurance policies is measured using Level 2 inputs within the fair value hierarchy[91](index=91&type=chunk) - The fair value of the company's debt approximated its carrying value of **$28.6 million** at March 31, 2022, and **$39.4 million** at December 31, 2021, and would be classified as Level 2[93](index=93&type=chunk) [9. Goodwill and Intangible Assets](index=37&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%209.%20Goodwill%20and%20Intangible%20Assets) This note provides details on the company's goodwill and intangible assets, including amortization expense and impairment testing **Goodwill and Intangible Assets (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Net finite-lived intangible assets | $1,354 | $1,664 | | Infinite-lived intangible assets | $6,892 | $6,892 | | **Total net intangible assets** | **$8,246** | **$8,556** | - Amortization expense for finite-lived intangible assets was **$0.3 million** for the three months ended March 31, 2022[95](index=95&type=chunk) - The most recent annual impairment test of the indefinite-lived intangible asset (trade name) concluded no impairment was recorded[96](index=96&type=chunk) [10. Accrued Liabilities](index=38&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2010.%20Accrued%20Liabilities) This note details various accrued liabilities, including salaries, insurance-covered liabilities, and sales taxes **Accrued Liabilities (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Accrued salaries, wages and benefits | $9,240 | $9,879 | | Accrued liabilities expected to be covered by insurance | $5,169 | $19,818 | | Sales taxes | $3,495 | $5,113 | | **Total accrued liabilities** | **$21,141** | **$38,594** | - The company has a remaining **$3.8 million** of CARES Act deferred Social Security taxes due in December 2022[99](index=99&type=chunk) [11. Long-term Debt and Line of Credit](index=38&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2011.%20Long-term%20Debt%20and%20Line%20of%20Credit) This note details the company's total debt, including revolving line of credit and compliance with financial covenants **Total Debt (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Revolving line of credit (principal) | $27,400 | $39,000 | | Other debt (current) | $272 | $141 | | Other debt (long-term) | $929 | $259 | | **Total debt** | **$28,601** | **$39,400** | - Effective March 1, 2022, the Ninth Amendment to the Credit Agreement reduced the commitment on the revolving line of credit to **$42.5 million** and waived certain covenant defaults[102](index=102&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2022[114](index=114&type=chunk) [12. Other Long-Term Liabilities](index=42&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2012.%20Other%20Long-Term%20Liabilities) This note outlines other long-term liabilities, including sale-leaseback arrangements, deferred compensation, and insurance-covered accruals **Other Long-Term Liabilities (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Sale-leaseback arrangement | $15,773 | $15,969 | | Deferred compensation | $2,508 | $2,759 | | Accrued liabilities expected to be covered by insurance | $249 | $214 | | **Total other long-term liabilities** | **$18,530** | **$18,942** | [13. Income Taxes](index=44&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2013.%20Income%20Taxes) This note details income tax expense and the effective tax rate, explaining the impact of valuation allowances and permanent items **Income Tax Expense and Effective Tax Rate (in thousands):** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense | $1,324 | $150 | | Effective tax rate | (37.5)% | 13.9 % | - The effective tax rate for the three months ended March 31, 2022, was **(37.5%)**, primarily due to the movement in the valuation allowance for current year activity, state income taxes, and non-deductibility of other permanent items[120](index=120&type=chunk) - Management believes that a valuation allowance on the net deferred tax assets at March 31, 2022, remains appropriate[121](index=121&type=chunk) [14. Earnings Per Share](index=44&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2014.%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share calculations, noting the impact of net loss on potentially dilutive securities **Shares Used to Compute (Loss) Income Per Share:** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Basic weighted average shares outstanding | 30,971,379 | 30,465,475 | | Diluted weighted average shares outstanding | 30,971,379 | 30,499,978 | - Basic and diluted loss per share for the three months ended March 31, 2022, was **$(0.16)**, compared to earnings per share of **$0.03** in the prior year[11](index=11&type=chunk) - Potentially dilutive securities were antidilutive in the current period due to the net loss[125](index=125&type=chunk) [15. Stock-Based Compensation](index=46&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2015.%20Stock-Based%20Compensation) This note details stock-based compensation expense and the unrecognized compensation related to unvested stock - Stock-based compensation expense was **$0.4 million** for both the three months ended March 31, 2022, and 2021[128](index=128&type=chunk) - Total unrecognized compensation expense related to unvested stock was approximately **$2.7 million** at March 31, 2022, expected to be recognized over approximately **2.0 years**[130](index=130&type=chunk) [16. Commitments and Contingencies](index=46&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2016.%20Commitments%20and%20Contingencies) This note discusses liabilities and reimbursements related to the August 2020 dredge fire incident, confirming settlement within insurance limits - The company recognized **$206.5 million** in total liabilities related to the August 2020 dredge fire incident, including **$206.0 million** paid to date for settlements and wreck removal costs[133](index=133&type=chunk) - Insurance carriers have reimbursed the company **$203.9 million** to date, and all claims arising from the incident have been settled within insurance coverage limits[133](index=133&type=chunk) [17. Segment Information](index=50&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2017.%20Segment%20Information) This note provides segment-level performance data, highlighting revenue growth and operating income changes for Marine and Concrete segments **Segment Performance (in thousands):** | Segment | Contract Revenues (3M 2022) | Operating Income (Loss) (3M 2022) | Contract Revenues (3M 2021) | Operating Income (Loss) (3M 2021) | | :---------------- | :-------------------------- | :-------------------------------- | :-------------------------- | :-------------------------------- | | Marine | $84,480 | $1,840 | $72,146 | $2,848 | | Concrete | $90,451 | $(4,695) | $81,163 | $(793) | - Marine segment contract revenues increased by **17.1%**, but operating income decreased by **$1.0 million**[136](index=136&type=chunk) - Concrete segment contract revenues increased by **11.4%**, but operating loss widened by **$3.9 million** due to project write-downs and unabsorbed indirect expenses[136](index=136&type=chunk) [18. Leases](index=51&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2018.%20Leases) This note details the company's lease assets and liabilities, along with the components of lease expense for operating and financing leases **Lease Assets and Liabilities (in thousands):** | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets, net | $15,006 | $14,686 | | Financing lease right-of-use assets, net | $17,472 | $14,561 | | Total assets | $32,478 | $29,247 | | Total current lease liabilities | $8,675 | $7,263 | | Total noncurrent lease liabilities | $24,314 | $22,545 | | **Total liabilities** | **$32,989** | **$29,808** | **Components of Lease Expense (in thousands):** | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $1,317 | $1,654 | | Short-term lease cost | $316 | $690 | | Interest on lease liabilities (financing) | $167 | $126 | | Amortization of right-of-use assets (financing) | $760 | $781 | | **Total lease cost** | **$2,560** | **$3,251** | [19. Subsequent Events](index=52&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%2019.%20Subsequent%20Events) This note discloses post-period events, including the departure of the CEO and the appointment of an interim successor, along with related separation expenses - Effective April 6, 2022, Mark R. Stauffer, President, CEO, and Interim CFO, separated from the company in all capacities[143](index=143&type=chunk) - Austin J. Shanfelter, Chairman of the Board, was appointed Interim Chief Executive Officer and Interim Chief Financial Officer[144](index=144&type=chunk) - The company expects to incur approximately **$1.1 million** in expenses, primarily in Q2 2022, related to Mr. Stauffer's separation agreement[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operational results for the three months ended March 31, 2022, covering business overview, Q1 performance, segment results, and liquidity [Overview](index=55&type=section&id=MD%26A%20-%20Overview) This overview describes Orion Group Holdings' specialty construction services, revenue recognition methods, and factors influencing contract performance and profitability - Orion Group Holdings provides specialty construction services in infrastructure, industrial, and building sectors, primarily through competitive bidding on fixed-price contracts[152](index=152&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Revenue is generally recorded over time, measured by the percentage of actual contract costs incurred to total estimated costs[156](index=156&type=chunk) - Factors such as completeness of bids, commodity price increases, customer delays, labor availability, and equipment/material proximity can impact contract performance and profitability[156](index=156&type=chunk) [First Quarter 2022 Recap and 2022 Outlook](index=57&type=section&id=MD%26A%20-%20First%20Quarter%202022%20Recap%20and%202022%20Outlook) This section recaps Q1 2022 performance, noting revenue growth despite a net loss, and outlines the company's strategic focus and macroeconomic considerations - In Q1 2022, revenues increased by **14.1%** to **$174.9 million**, but the company recorded a net loss of **$4.9 million**, compared to a net income of **$0.9 million** in the prior year period[157](index=157&type=chunk) - Consolidated backlog reached **$604.1 million** at March 31, 2022, with **$2.1 billion** in quoted bids outstanding and **$112 million** awarded or apparent low bidder post-quarter[157](index=157&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) - The company continues to focus on organic growth, greenfield expansion, and strategic acquisition opportunities, while monitoring macroeconomic impacts like inflation, labor concerns, supply chain delays, and COVID-19[158](index=158&type=chunk)[159](index=159&type=chunk)[166](index=166&type=chunk) [Consolidated Results of Operations](index=63&type=section&id=MD%26A%20-%20Consolidated%20Results%20of%20Operations) This section presents the consolidated financial results, highlighting revenue growth, a decrease in gross profit, and a shift from operating income to loss **Consolidated Results of Operations (in thousands):** | Item | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Contract revenues | $174,931 (100.0%) | $153,309 (100.0%) | | Gross profit | $12,816 (7.3%) | $15,455 (10.1%) | | Selling, general and administrative expenses | $16,170 (9.2%) | $14,630 (9.6%) | | Operating (loss) income | $(2,855) (-1.6%) | $2,055 (1.3%) | | Net (loss) income | $(4,856) (-2.8%) | $928 (0.6%) | - Contract revenues increased by **14.1%** due to large job startups in the marine segment and increased production in the concrete segment[173](index=173&type=chunk) - Gross profit decreased by **17.1%** and gross profit margin declined from **10.1%** to **7.3%**, primarily due to concrete segment write-downs, reduced dredging volume, and a change in work mix[174](index=174&type=chunk) [Segment Results](index=65&type=section&id=MD%26A%20-%20Segment%20Results) This section analyzes the performance of the Marine and Concrete segments, detailing revenue changes and shifts in operating income or loss **Segment Performance (in thousands):** | Segment | Contract Revenues (3M 2022) | Operating Income (Loss) (3M 2022) | Contract Revenues (3M 2021) | Operating Income (Loss) (3M 2021) | | :---------------- | :-------------------------- | :-------------------------------- | :-------------------------- | :-------------------------------- | | Marine | $84,480 | $1,840 | $72,146 | $2,848 | | Concrete | $90,451 | $(4,695) | $81,163 | $(793) | - Marine segment revenues increased by **17.1%** to **$84.5 million**, but operating income decreased by **$1.0 million**[183](index=183&type=chunk)[185](index=185&type=chunk) - Concrete segment revenues increased by **11.4%** to **$90.4 million** due to increased production, but its operating loss widened to **$4.7 million** from **$0.8 million** due to project write-downs and unabsorbed indirect expenses[186](index=186&type=chunk)[187](index=187&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) This section discusses the company's working capital, cash flow from operations, and changes to its revolving line of credit - Working capital decreased to **$32.7 million** at March 31, 2022, from **$36.2 million** at December 31, 2021[189](index=189&type=chunk) - Net cash provided by operating activities increased to **$10.1 million** for the three months ended March 31, 2022, from **$9.1 million** in the prior year[192](index=192&type=chunk) - The Ninth Amendment to the Credit Facility, effective March 1, 2022, reduced the revolving line of credit commitment to **$42.5 million**, with **$13.4 million** of borrowing capacity available at March 31, 2022[190](index=190&type=chunk)[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks primarily from fluctuations in commodity prices (concrete, steel, fuel) and interest rates. While short project durations help mitigate commodity price risk, a 100 basis-point increase in LIBOR would increase annual interest expense by approximately $0.3 million based on current outstanding debt - The company is subject to fluctuations in commodity prices for concrete, steel products, and fuel, but the short-term duration of projects generally allows for inclusion of anticipated price increases in bids[202](index=202&type=chunk) - A **100 basis-point** increase in LIBOR (or an equivalent successor rate) would increase the company's annual interest expense by approximately **$0.3 million**, based on **$27.4 million** in outstanding borrowings at March 31, 2022[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022. No material changes to internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2022[204](index=204&type=chunk) - There were no material changes to internal control over financial reporting during the quarter ended March 31, 2022[205](index=205&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 16 of the condensed consolidated financial statements for detailed information regarding legal proceedings, including the August 2020 dredge fire incident and its resolution - Information about litigation involving the company is incorporated by reference from Note 16 to the condensed consolidated financial statements[206](index=206&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to the risk factors previously disclosed in the 2021 Form 10-K[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period ended March 31, 2022 - No sales of equity securities were made in the period ended March 31, 2022[208](index=208&type=chunk) [Item 3. Defaults upon Senior Securities](index=74&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[209](index=209&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is not applicable[210](index=210&type=chunk) [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) Following the departure of the company's Chief Executive Officer on April 6, 2022, Austin J. Shanfelter, the Chairman of the Board, assumed the duties of Interim Chief Executive Officer and Interim Chief Financial Officer - Austin J. Shanfelter was appointed Interim Chief Executive Officer and Interim Chief Financial Officer effective April 6, 2022, following the departure of the previous CEO[211](index=211&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, amendments to the Credit Agreement, and agreements related to the former CEO's separation - Exhibits include the Ninth Amendment to the Credit Agreement, effective March 1, 2022[212](index=212&type=chunk) - Exhibits also include the Consulting Agreement and Separation and General Release Agreement for former CEO Mark R. Stauffer[212](index=212&type=chunk) SIGNATURES [Signatures](index=77&type=section&id=SIGNATURES%20-%20Signatures) The report is duly signed on behalf of Orion Group Holdings, Inc. by Austin J. Shanfelter, in his capacity as Interim Chief Executive Officer and Interim Chief Financial Officer, dated April 29, 2022 - The report was signed by Austin J. Shanfelter as Interim Chief Executive Officer and Interim Chief Financial Officer on April 29, 2022[218](index=218&type=chunk)

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Orion Group Holdings, Inc. is a specialty construction company operating in infrastructure, industrial, and building sectors through marine and concrete segments [General Background](index=4&type=section&id=General%20background) - Orion Group Holdings, Inc. is a leading specialty construction company serving infrastructure, industrial, and building sectors in the continental United States, Alaska, Canada, and the Caribbean Basin[10](index=10&type=chunk) - The company operates through a marine segment (construction and dredging) and a concrete segment (turnkey concrete construction)[10](index=10&type=chunk) [History and Growth](index=4&type=section&id=History%20and%20growth) - Founded in 1994 as a marine construction project management business, Orion Group Holdings, Inc. expanded through organic growth and acquisitions, including T.A.S. Commercial Concrete Construction, LLC (2015) and Tony Bagliore Concrete, Inc. (2017)[12](index=12&type=chunk) - Strategic acquisitions diversified end markets, customer base, enhanced operational capabilities, expanded geographic reach, and added to the equipment fleet[12](index=12&type=chunk) [Operating Principles and Guiding Beliefs](index=4&type=section&id=Our%20operating%20principles%20and%20guiding%20beliefs) - Core operating principles include **safety, quality, production, integrity, and sustainability**[13](index=13&type=chunk)[15](index=15&type=chunk) [Business Strategy](index=6&type=section&id=Our%20Business%20Strategy) - Key business strategies include adding construction capabilities, expanding into new markets and complementary services, selectively pursuing strategic acquisitions, capitalizing on favorable long-term industry trends, diversification, reinvesting in core operations, attracting and developing employees, and owning equipment[18](index=18&type=chunk) [Services Provided](index=6&type=section&id=Services%20Provided) - The company offers Marine Construction Services (construction, restoration, dredging, maintenance, repair of marine facilities, pipelines, bridges, environmental structures) and Concrete Construction Services (turnkey concrete for commercial, industrial, institutional, and residential projects)[16](index=16&type=chunk)[24](index=24&type=chunk) [Industry and Market Overview](index=10&type=section&id=Industry%20and%20Market%20Overview) - Marine segment markets include port expansion, bridges, marine infrastructure, recreational waterside, Department of Defense, energy, coastal/wetland restoration, hurricane repair, and environmental remediation[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - Concrete segment markets are driven by population growth in Texas metropolitan areas, supporting industrial, institutional, structural, retail, and recreational developments[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) [Customers](index=14&type=section&id=Customers) - Marine segment customers include federal, state, and local governmental agencies, as well as private commercial and industrial enterprises in the United States and the Caribbean Basin[52](index=52&type=chunk) - Concrete segment customers include general contractors, owners/developers of medical facilities, religious developments, sports complexes, school districts, and industrial/commercial/residential buildings in Texas metropolitan areas[52](index=52&type=chunk) Contract Revenue by Customer Type (2019-2021) | | 2021 | % | 2020 | % | 2019 | % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Federal Government | $54,480 | 9 % | $51,793 | 7 % | $46,425 | 6 % | | State Governments | 4,790 | 1 % | 27,574 | 4 % | 47,831 | 7 % | | Local Governments | 120,311 | 20 % | 202,839 | 29 % | 212,958 | 30 % | | Private Companies | 421,779 | 70 % | 427,736 | 60 % | 401,176 | 57 % | | Total contract revenues | $601,360 | 100 % | $709,942 | 100 % | $708,390 | 100 % | [Fluctuations in Quarterly Results](index=14&type=section&id=Fluctuations%20in%20Quarterly%20Results) - Quarterly revenues and results of operations can fluctuate significantly due to project mix, size, scope, schedules, permitting, weather delays, labor productivity, and equipment utilization[55](index=55&type=chunk)[56](index=56&type=chunk) [Competition](index=16&type=section&id=Competition) - Both marine and concrete segments operate in highly fragmented markets, competing with regional and national companies[57](index=57&type=chunk)[58](index=58&type=chunk) - Competitive advantages include turnkey capability, expertise, reputation for safety and quality, versatile equipment fleet, financial strength, surety bonding capacity, local market knowledge, and project management abilities[58](index=58&type=chunk) [Insurance and Bonding](index=16&type=section&id=Insurance%20and%20Bonding) - The company maintains various insurance policies and provides surety bonds for public and private sector contracts[59](index=59&type=chunk)[60](index=60&type=chunk) - As of December 31, 2021, bonding capacity was at least **$750 million**, with approximately **$110 million** of projects bonded[60](index=60&type=chunk) [Trade Names](index=16&type=section&id=Trade%20Names) - The company operates under various trade names, consolidating under 'Orion Group Holdings, Inc.', and relies on state and common law protections for trademarks[61](index=61&type=chunk) [Equipment](index=16&type=section&id=Equipment) - Orion owns a large, diverse fleet of well-maintained construction equipment for both marine and concrete segments, including barges, dayboats, tugs, dredges, cranes, pump trucks, and laser screeds[62](index=62&type=chunk)[65](index=65&type=chunk)[68](index=68&type=chunk) - Ownership of equipment ensures availability and lower costs, with a strategy to deploy the fleet as needed and extend useful life through capital refurbishment[65](index=65&type=chunk) [Equipment Certification](index=18&type=section&id=Equipment%20Certification) - Marine segment equipment requires certification by the U.S. Coast Guard and, for larger vessels, by the American Bureau of Shipping (ABS) to ensure operational capability and mobility[66](index=66&type=chunk) [Government Regulations](index=18&type=section&id=Government%20Regulations) - The company must comply with federal, state, and local regulations, including workplace safety, labor relations, licensing for shipping/dredging, and permitting for marine construction[67](index=67&type=chunk)[69](index=69&type=chunk) - Marine segment operations are specifically subject to the Dredging Act, Jones Act, Shipping Act, and Vessel Documentation Act, requiring U.S. ownership, control, and crews for certain vessels[67](index=67&type=chunk)[70](index=70&type=chunk) - Both segments are subject to OSHA and EPA requirements[71](index=71&type=chunk) [Environmental Matters](index=20&type=section&id=Environmental%20Matters) - Operations are subject to stringent environmental laws and regulations covering air emissions, water quality, waste management, marine/bird species habitats, and wetlands[73](index=73&type=chunk) - Compliance with environmental laws is not expected to have a material adverse effect, but future laws or regulations could increase costs[75](index=75&type=chunk) - Specific regulations include RCRA (waste management), CERCLA (site remediation), CWA and OPA (water discharges), CAA (air emissions), and ESA (endangered species)[76](index=76&type=chunk)[77](index=77&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[87](index=87&type=chunk) [Human Capital Management](index=24&type=section&id=Human%20Capital%20Management) - As of December 31, 2021, the marine segment had **845 employees** (277 salaried) and the concrete segment had **1,602 employees** (101 salaried)[88](index=88&type=chunk) - Approximately **4.2%** of the total workforce is represented by labor unions, primarily in the marine segment in the Pacific Northwest and Alaska, and certain concrete segment employees[89](index=89&type=chunk) [Financial Information About Geographic Areas](index=24&type=section&id=Financial%20Information%20About%20Geographic%20Areas) - Marine segment operations are primarily along U.S. coastal regions, with minor revenues (**0.5% in 2021**) from the Caribbean Basin and Mexico[90](index=90&type=chunk) - Concrete segment operations are concentrated in Texas metropolitan areas[90](index=90&type=chunk) [Access to the Company's Filings](index=24&type=section&id=Access%20to%20the%20Company's%20Filings) - The company's SEC filings are available free of charge on its website, www.oriongroupholdingsinc.com, and the SEC's website, www.sec.gov[91](index=91&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.Risk%20Factors) The company faces various risks, including intense competition, regulatory challenges, adverse weather, and financial risks from indebtedness and restrictive covenants [Risk Factors Relating to Our Business](index=26&type=section&id=Risk%20Factors%20Relating%20to%20Our%20Business) - Government contracts are highly competitive and regulated, with reduced funding or delays leading to intense competition and pricing pressure[94](index=94&type=chunk) - The COVID-19 pandemic has caused project delays, supply chain disruptions, labor market impacts, and decreased operational efficiency[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company faces risks from inaccurate cost estimates on fixed-price contracts, potential penalties for late completion, and dependence on third-party subcontractors and suppliers[115](index=115&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Risk Factors Relating to Our Employees](index=40&type=section&id=Risk%20Factors%20Relating%20to%20Our%20Employees) - Potential risks include unionization, work stoppages, slowdowns, or increased labor costs, as only a small percentage of the workforce is currently unionized[138](index=138&type=chunk) - Marine segment employees are covered by federal maritime laws (Jones Act, USL&H, Seaman's Wage Act), which can lead to greater exposure for job-related injury claims compared to state workers' compensation limits[139](index=139&type=chunk) [General Risk Factors](index=40&type=section&id=General%20Risk%20Factors) - Growth through strategic acquisitions carries risks such as integration difficulties, termination of key personnel/customer relationships, financial challenges, and potential environmental liabilities[141](index=141&type=chunk)[144](index=144&type=chunk) - Systems and information technology interruptions, failures, or data security breaches could adversely impact operations, intellectual property, and expose the company to financial losses and reputational harm[145](index=145&type=chunk)[146](index=146&type=chunk) [Risk Factors Relating to Our Indebtedness and Financing Plans](index=42&type=section&id=Risk%20Factors%20Relating%20to%20Our%20Indebtedness%20and%20Financing%20Plans) - Bonding requirements may limit the ability to incur additional indebtedness, impacting potential acquisitions and operations[147](index=147&type=chunk) - Indebtedness requires significant debt service payments and includes restrictive covenants that can limit the company's flexibility in business operations and future investments[148](index=148&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Variable rate indebtedness exposes the company to interest rate risk, potentially increasing debt service obligations[153](index=153&type=chunk) [Item 1B. Unresolved Staff Comments](index=44&type=section&id=Item%201B.Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments were reported[154](index=154&type=chunk) [Item 2. Properties](index=44&type=section&id=Item%202.%20Properties) Orion Group Holdings, Inc. maintains its corporate headquarters and other facilities, with some real estate assets pledged as collateral - Corporate headquarters are leased in Houston, Texas (**24,746 sq ft**), with other leased offices in Alaska, Louisiana, Florida, Texas, and Washington[154](index=154&type=chunk) - The company owns **35.3 acres** for waterfront maintenance and dock facilities, including an equipment yard in Texas, and **340 acres** in the Houston Ship Channel for dredge material placement[157](index=157&type=chunk) - Existing facilities are considered adequate, and no single facility is material to operations; some real estate assets are pledged as collateral[158](index=158&type=chunk) [Item 3. Legal Proceedings](index=46&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 17 of the Financial Statements - Legal proceedings information is detailed in Note 17 of the Financial Statements[159](index=159&type=chunk) [Item 4. Mine Safety Disclosure](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosure%20(not%20applicable)) Mine safety disclosure is not applicable to the company's operations - Mine Safety Disclosure is not applicable[160](index=160&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=46&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Orion Group Holdings, Inc.'s common stock is listed on the NYSE, with no equity repurchases during the period - Common stock is listed on the NYSE under the symbol '**ORN**'[161](index=161&type=chunk) - As of February 18, 2022, there were approximately **5,894 stockholders of record**[162](index=162&type=chunk) - No issuer repurchases of equity securities occurred[163](index=163&type=chunk) Performance Graph (2016-2021) - Value of $100 Investment | | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Orion Group Holdings, Inc. | 100.00 | 78.69 | 43.12 | 52.16 | 49.85 | 37.89 | | S&P 500 | 100.00 | 119.42 | 111.97 | 144.31 | 167.77 | 212.89 | | Dow Jones US Heavy Civil Construction | 100.00 | 104.51 | 76.67 | 102.11 | 123.25 | 184.05 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, revenues decreased by 15.3% to $601.4 million, resulting in a net loss of $14.6 million, while backlog increased to $590.0 million [Overview](index=48&type=section&id=Overview) - Orion Group Holdings, Inc. provides specialty construction services in infrastructure, industrial, and building sectors across the continental U.S., Alaska, and the Caribbean Basin, through marine and concrete segments[169](index=169&type=chunk) - Contracts are primarily obtained through competitive bidding and negotiation, with most revenue derived from fixed-price contracts recognized over time based on costs incurred[170](index=170&type=chunk)[171](index=171&type=chunk) [2021 Recap and 2022 Outlook](index=48&type=section&id=2021%20Recap%20and%202022%20Outlook) 2021 Financial Performance | Metric | Value (in millions) | | :--- | :--- | | Revenues | $601.4 | | Net Loss | $(14.6) | | Consolidated Backlog | $590.0 | - The company aims for organic growth, greenfield expansion, and strategic acquisitions in 2022, while monitoring COVID-19 impacts on project timing and supply chains[173](index=173&type=chunk)[176](index=176&type=chunk) - Long-term demand for marine services is driven by degrading U.S. marine infrastructure, port expansion, and government-funded projects (WRRDA Act, RESTORE Act, federal infrastructure bill)[178](index=178&type=chunk)[179](index=179&type=chunk) - Long-term demand for concrete services is supported by population growth in Texas, corporate relocations, and investments in warehouse/distribution, education, office, retail, multi-family housing, and federal infrastructure projects[180](index=180&type=chunk)[181](index=181&type=chunk)[184](index=184&type=chunk) [Consolidated Results of Operations](index=52&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated Backlog (in millions) | Segment | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Marine segment | $376.9 | $379.9 | $170.2 | $154.8 | $202.6 | | Concrete segment | $213.1 | $192.9 | $224.2 | $210.0 | $236.9 | | Consolidated | $590.0 | $572.8 | $394.4 | $364.8 | $439.5 | - Backlog increased during Q4 2021 due to new job wins, reversing a declining trend earlier in the year caused by COVID-19 impacts[183](index=183&type=chunk) Consolidated Income Statement Summary (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Contract revenues | $601,360 | $709,942 | $708,390 | | Cost of contract revenues | $560,393 | $625,239 | $644,349 | | Gross profit | $40,967 | $84,703 | $64,041 | | SG&A expenses | $60,181 | $65,091 | $61,012 | | Operating (loss) income | $(9,317) | $26,586 | $2,193 | | Net (loss) income | $(14,560) | $20,220 | $(5,359) | | Basic (loss) earnings per share | $(0.47) | $0.67 | $(0.18) | - Contract revenues decreased by **15.3%** in 2021 compared to 2020, primarily due to reduced project activity in the marine segment from COVID-19 impacts[185](index=185&type=chunk) - Gross profit decreased by **51.6%** in 2021, driven by lower activity, under-recovery of indirect costs, and decreased project performance in the concrete segment[186](index=186&type=chunk) - SG&A expenses decreased by **7.5%** in 2021, but increased as a percentage of revenue due to lower revenue[187](index=187&type=chunk) [Segment Results](index=56&type=section&id=Segment%20Results) Segment Contract Revenues and Operating Income (2019-2021, in thousands) | Segment | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | | **Marine** | Contract revenues | $263,915 | $388,173 | $369,138 | | | Operating income | $5,760 | $29,815 | $12,841 | | **Concrete** | Contract revenues | $337,445 | $321,769 | $339,252 | | | Operating income (loss) | $(15,077) | $(3,229) | $(10,648) | | **Total** | Contract revenues | $601,360 | $709,942 | $708,390 | | | Operating (loss) income | $(9,317) | $26,586 | $2,193 | - Marine segment revenues decreased by **32.0%** in 2021 due to reduced project activity, leading to a **$24.0 million** decrease in operating income[200](index=200&type=chunk)[201](index=201&type=chunk) - Concrete segment revenues increased by **4.9%** in 2021, but operating loss increased by **$11.9 million** due to decreased project performance and lower margins[203](index=203&type=chunk)[204](index=204&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates include revenue recognition from construction contracts, long-lived assets, income taxes, and insurance coverage, litigation, claims, and contingencies[209](index=209&type=chunk)[212](index=212&type=chunk) - Revenue is recognized over time for construction contracts, measured by the percentage of actual costs incurred to total estimated costs, with revisions recognized in the period determined[210](index=210&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Long-lived assets are depreciated over estimated useful lives and reviewed for impairment based on future cash flows[216](index=216&type=chunk) - Income tax provision uses the asset and liability method, requiring significant assumptions for deferred tax assets/liabilities and valuation allowances[217](index=217&type=chunk)[218](index=218&type=chunk) - Insurance coverage for liabilities is maintained, with self-insured portions accrued based on known claims and estimates for incurred but not reported claims[222](index=222&type=chunk)[224](index=224&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity needs are for working capital, capital expenditures, and strategic acquisitions, historically funded by operating activities and credit facilities[225](index=225&type=chunk) Cash Flow Summary (2019-2021, in thousands) | Cash Flow Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Operating activities | $69 | $46,032 | $(716) | | Investing activities | $10,629 | $(3,129) | $(13,331) | | Financing activities | $6 | $(42,400) | $6,449 | | Capital expenditures | $(16,975) | $(14,694) | $(17,199) | - As of December 31, 2021, working capital was **$36.2 million**, unrestricted cash was **$12.3 million**, and borrowing capacity on the revolving line of credit was **$9.3 million**[226](index=226&type=chunk) - The company executed a Ninth Amendment in March 2022 to waive covenant defaults, reset the revolver limit to **$42.5 million**, and institute temporary covenant requirements[228](index=228&type=chunk)[243](index=243&type=chunk)[483](index=483&type=chunk)[484](index=484&type=chunk) - Bonding capacity was at least **$750 million** as of December 31, 2021, with **$110 million** of projects bonded[244](index=244&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=68&type=section&id=Item%207A.Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from commodity price fluctuations and variable interest rates, impacting costs and debt service - Operations are subject to commodity price risk for materials like concrete, steel, and fuel, which can impact fixed-price contracts[249](index=249&type=chunk) - Variable rate indebtedness exposes the company to interest rate risk; a **100 basis-point increase** in LIBOR would increase annual interest expense by approximately **$0.4 million** based on **$39.0 million** outstanding at December 31, 2021[250](index=250&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements and supplementary data are provided in a separate section starting on page F-1 - Financial statements and supplementary data are incorporated by reference, starting on page F-1[251](index=251&type=chunk) [Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure during the reported period - No changes in or disagreements with accountants on accounting and financial disclosure were reported[252](index=252&type=chunk) [Item 9A. Controls and Procedures](index=70&type=section&id=Item%209A.Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Disclosure controls and procedures were effective as of December 31, 2021[253](index=253&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2021, based on the COSO 2013 Framework[257](index=257&type=chunk) - No material changes to internal control over financial reporting occurred during the year ended December 31, 2021[255](index=255&type=chunk) - Control systems have inherent limitations, providing only reasonable assurance against errors and fraud[260](index=260&type=chunk) [Item 9B. Other Information](index=72&type=section&id=Item%209B.Other%20Information) Mark R. Stauffer, CEO, assumed Interim CFO duties following the previous CFO's departure - Mark R. Stauffer, CEO, assumed Interim CFO duties after the previous CFO's departure on October 29, 2021[261](index=261&type=chunk) [Item 9C. Covered Issuer](index=72&type=section&id=Item%209C.Covered%20Issuer) This item is not applicable to the company - Item 9C is not applicable[262](index=262&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=72&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement[264](index=264&type=chunk)[269](index=269&type=chunk) Key Directors and Executive Officers | Name | Age | Position with the Company | | :--- | :--- | :--- | | Austin J. Shanfelter | 64 | Chairman of the Board | | Mark R. Stauffer | 59 | President, Chief Executive Officer, Interim Chief Financial Officer and Director | | Peter R. Buchler | 75 | Executive Vice President, Chief Administrative Officer, Chief Compliance Officer, General Counsel and Secretary | - The company has adopted a code of ethics for its chief executive, chief financial, and principal accounting officers, and corporate governance guidelines, available on its website[267](index=267&type=chunk) [Item 11. Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the definitive proxy statement - Executive compensation details are incorporated by reference from the definitive proxy statement[270](index=270&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the definitive proxy statement - Security ownership information is incorporated by reference from the definitive proxy statement[271](index=271&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the definitive proxy statement - Information on related transactions and director independence is incorporated by reference from the definitive proxy statement[272](index=272&type=chunk) [Item 14. Principal Accounting Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the definitive proxy statement - Principal accounting fees and services information is incorporated by reference from the definitive proxy statement[273](index=273&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=74&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K - The report includes Consolidated Financial Statements for the three years ended December 31, 2021, and Schedule II – Schedule of Valuation and Qualifying Accounts[275](index=275&type=chunk)[276](index=276&type=chunk) - A comprehensive list of exhibits is provided, covering corporate governance documents, equity incentive plans, employment agreements, and various amendments to the Credit Agreement[276](index=276&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[282](index=282&type=chunk) SIGNATURES [SIGNATURES](index=83&type=section&id=SIGNATURES) The Annual Report on Form 10-K was signed on March 7, 2022, by Mark R. Stauffer and other directors - The report was signed on **March 7, 2022**, by Mark R. Stauffer (President, CEO, Interim CFO, Director) and other directors[285](index=285&type=chunk)[287](index=287&type=chunk) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS [Reports of Independent Registered Public Accounting Firm](index=85&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%20185)) KPMG LLP issued unqualified opinions on the financial statements and internal control over financial reporting, noting estimated costs at completion as a critical audit matter - KPMG LLP issued an **unqualified opinion** on the consolidated financial statements for the three-year period ended December 31, 2021, in conformity with U.S. GAAP[291](index=291&type=chunk) - An **unqualified opinion** was also issued on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[291](index=291&type=chunk)[300](index=300&type=chunk) - A critical audit matter was the evaluation of estimated costs at completion for certain long-term, fixed-priced construction contracts in the Marine segment, due to variability and estimation uncertainty[294](index=294&type=chunk)[297](index=297&type=chunk) [Consolidated Balance Sheets](index=90&type=section&id=Consolidated%20Balance%20Sheets%20at%20December%2031,%202021%20and%202020) Total assets decreased from $414.2 million in 2020 to $351.8 million in 2021, driven by reductions in current assets and property and equipment Consolidated Balance Sheet Summary (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total current assets | $197,934 | $235,402 | | Property and equipment, net | $106,654 | $125,497 | | Total assets | $351,750 | $414,189 | | Total current liabilities | $161,737 | $180,613 | | Long-term debt, net | $259 | $29,523 | | Total liabilities | $203,652 | $254,695 | | Total stockholders' equity | $148,098 | $159,494 | - Cash and cash equivalents increased significantly from **$1.6 million** in 2020 to **$12.3 million** in 2021[307](index=307&type=chunk) - Current debt increased from **$4.3 million** in 2020 to **$39.1 million** in 2021, while long-term debt decreased substantially from **$29.5 million** to **$0.3 million**[307](index=307&type=chunk) [Consolidated Statements of Operations](index=91&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Years%20Ended%20December%2031,%202021,%202020%20and%202019) The company reported a net loss of $14.6 million in 2021, a significant decline from $20.2 million net income in 2020, with revenues decreasing by 15.3% Consolidated Statements of Operations (in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Contract revenues | $601,360 | $709,942 | $708,390 | | Gross profit | $40,967 | $84,703 | $64,041 | | Operating (loss) income | $(9,317) | $26,586 | $2,193 | | Net (loss) income | $(14,560) | $20,220 | $(5,359) | | Basic (loss) earnings per share | $(0.47) | $0.67 | $(0.18) | - Contract revenues decreased by **$108.5 million (15.3%)** in 2021 compared to 2020[185](index=185&type=chunk) - Gross profit decreased by **$43.7 million (51.6%)** in 2021, with the gross profit margin falling from **11.9% to 6.8%**[186](index=186&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=92&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20Years%20Ended%20December%2031,%202021,%202020%20and%202019) Total comprehensive loss was $13.3 million in 2021, a shift from $19.8 million income in 2020, primarily due to the net loss Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net (loss) income | $(14,560) | $20,220 | $(5,359) | | Change in fair value of cash flow hedge, net of tax | $1,234 | $(429) | $(765) | | Total comprehensive (loss) income | $(13,326) | $19,791 | $(6,124) | - The company reported a total comprehensive loss of **$13.3 million** in 2021, a significant shift from the **$19.8 million** income in 2020[310](index=310&type=chunk) [Consolidated Statement of Stockholders' Equity](index=93&type=section&id=Consolidated%20Statement%20of%20Stockholders'%20Equity%20for%20the%20Years%20Ended%20December%2031,%202021,%202020%20and%202019) Total stockholders' equity decreased by $11.4 million from 2020 to 2021, mainly due to the net loss incurred in 2021 Consolidated Stockholders' Equity Summary (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | :--- | | Common Stock (Amount) | $317 | $312 | $303 | | Treasury Stock (Amount) | $(6,540) | $(6,540) | $(6,540) | | Accumulated Other Comprehensive Loss | $0 | $(1,602) | $(1,045) | | Additional Paid-In Capital | $185,881 | $184,324 | $182,523 | | Retained (Loss) Earnings | $(31,560) | $(17,000) | $(37,220) | | Total Stockholders' Equity | $148,098 | $159,494 | $138,021 | - Total stockholders' equity decreased by **$11.4 million** from 2020 to 2021, mainly due to the net loss of **$14.6 million** in 2021[313](index=313&type=chunk) - Stock-based compensation added **$2.4 million** to additional paid-in capital in 2021[313](index=313&type=chunk) [Consolidated Statements of Cash Flows](index=94&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Years%20Ended%20December%2031,%202021,%202020%20and%202019) Operating cash flow significantly decreased to $0.1 million in 2021, while investing activities provided $10.6 million, primarily from asset sales Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $69 | $46,032 | $(716) | | Net cash provided by (used in) investing activities | $10,629 | $(3,129) | $(13,331) | | Net cash provided by (used in) financing activities | $6 | $(42,400) | $6,449 | | Net change in cash, cash equivalents and restricted cash | $10,704 | $503 | $(7,598) | | Cash, cash equivalents and restricted cash at end of period | $12,293 | $1,589 | $1,086 | - Operating activities generated **$0.1 million** in cash in 2021, a sharp decrease from **$46.0 million** in 2020, driven by changes in net working capital[230](index=230&type=chunk)[231](index=231&type=chunk) - Investing activities provided **$10.6 million** in cash in 2021, primarily from **$27.2 million** in proceeds from asset sales, including property in Tampa, Florida[235](index=235&type=chunk) - Financing activities resulted in a net cash inflow of **$6 thousand** in 2021, including **$53.0 million** in borrowings and **$49.1 million** in repayments on the revolving line of credit, and the full extinguishment of the term loan[236](index=236&type=chunk)[237](index=237&type=chunk) [Notes to Consolidated Financial Statements](index=95&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on business, accounting policies, revenue, risk, contracts, assets, liabilities, debt, taxes, EPS, compensation, benefits, commitments, segments, leases, and subsequent events [1. Description of Business and Basis of Presentation](index=95&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Orion Group Holdings, Inc. provides specialty construction services in infrastructure, industrial, and building sectors through marine and concrete segments[318](index=318&type=chunk) - The company's operations comprise two reportable segments: marine (Orion brand) and concrete (TAS Commercial Concrete brand), based on similar economic characteristics and operational processes[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) - Management believes the company has adequate liquidity for operations for at least the next 12 months, based on forecasted sales, costs, capital expenditures, and working capital management[327](index=327&type=chunk) [2. Summary of Significant Accounting Policies](index=97&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - Revenue from construction contracts is recognized over time, measured by the percentage of actual costs incurred to total estimated costs, with changes in estimates recognized on a cumulative catch-up basis[329](index=329&type=chunk)[330](index=330&type=chunk)[332](index=332&type=chunk)[334](index=334&type=chunk) - Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives (**3-40 years**), with impairment reviews conducted when circumstances indicate[352](index=352&type=chunk)[353](index=353&type=chunk)[355](index=355&type=chunk) - The company determines its income tax provision using the asset and liability method, making significant assumptions for deferred tax assets/liabilities and valuation allowances[366](index=366&type=chunk) - Insurance coverage includes traditional policies with deductibles and self-insurance for workers' compensation and employee health care, with accruals based on known and estimated claims[370](index=370&type=chunk)[371](index=371&type=chunk)[373](index=373&type=chunk) [3. Revenue](index=109&type=section&id=3.%20Revenue) Contract Revenues by Service Line (in thousands) | Segment | Service Line | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | | **Marine** | Construction | $169,554 | $272,870 | $242,527 | | | Dredging | $80,831 | $106,647 | $112,303 | | | Specialty Services | $13,530 | $8,656 | $14,308 | | | *Marine segment total* | *$263,915* | *$388,173* | *$369,138* | | **Concrete** | Structural | $58,420 | $85,904 | $54,497 | | | Light Commercial | $279,018 | $235,835 | $284,624 | | | Other | $7 | $30 | $131 | | | *Concrete segment total* | *$337,445* | *$321,769* | *$339,252* | | **Total contract revenues** | | **$601,360** | **$709,942** | **$708,390** | - Marine segment construction revenues decreased significantly from **$272.9 million** in 2020 to **$169.6 million** in 2021[378](index=378&type=chunk) - Concrete segment light commercial revenues increased from **$235.8 million** in 2020 to **$279.0 million** in 2021[378](index=378&type=chunk) [4. Concentration of Risk and Enterprise Wide Disclosures](index=110&type=section&id=4.%20Concentration%20of%20Risk%20and%20Enterprise%20Wide%20Disclosures) Concentrations of Current Receivables (in thousands) | Customer Type | Dec 31, 2021 | % | Dec 31, 2020 | % | | :--- | :--- | :--- | :--- | :--- | | Federal Government | $6,563 | 5 % | $4,826 | 4 % | | State Governments | $61 | - % | $0 | - % | | Local Governments | $11,923 | 9 % | $17,823 | 13 % | | Private Companies | $111,328 | 86 % | $110,616 | 83 % | | Gross receivables | $129,875 | 100 % | $133,265 | 100 % | | Allowance for credit losses | $(323) | | $(411) | | | Net receivables | $129,552 | | $132,854 | | Concentrations of Contract Revenue by Customer Type (in thousands) | Customer Type | 2021 | % | 2020 | % | 2019 | % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Federal Government | $54,480 | 9 % | $51,793 | 7 % | $46,425 | 6 % | | State Governments | $4,790 | 1 % | $27,574 | 4 % | $47,831 | 7 % | | Local Government | $120,311 | 20 % | $202,839 | 29 % | $212,958 | 30 % | | Private Companies | $421,779 | 70 % | $427,736 | 60 % | $401,176 | 57 % | | Total contract revenues | $601,360 | 100 % | $709,942 | 100 % | $708,390 | 100 % | - No single customer accounted for more than **10.0%** of total current receivables at December 31, 2021 and 2020, or total contract revenues in 2021 and 2019[382](index=382&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) [5. Contracts in Progress](index=111&type=section&id=5.%20Contracts%20in%20Progress) Contracts in Progress (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Costs incurred on uncompleted contracts | $1,138,298 | $1,151,987 | | Estimated earnings | $168,861 | $202,369 | | Less: Billings to date | $(1,305,628) | $(1,355,220) | | Net | $1,531 | $(864) | | Contract assets | $28,529 | $32,271 | | Contract liabilities | $(26,998) | $(33,135) | - Remaining performance obligations totaled approximately **$590.0 million** as of December 31, 2021, with **77%** expected to be recognized in the next 12 months[388](index=388&type=chunk) - Contract assets include **$3.8 million** (2021) and **$3.1 million** (2020) related to claims and unapproved change orders[387](index=387&type=chunk) [6. Property and Equipment](index=111&type=section&id=6.%20Property%20and%20Equipment) Property and Equipment, Net (in thousands) | Asset Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Automobiles and trucks | $2,337 | $2,379 | | Building and improvements | $34,796 | $44,324 | | Construction equipment | $137,786 | $142,661 | | Vessels and other equipment | $82,455 | $79,499 | | Office equipment | $6,430 | $5,577 | | Less: Accumulated depreciation | $(191,542) | $(186,615) | | Net book value of depreciable assets | $72,262 | $87,825 | | Construction in progress | $6,507 | $1,809 | | Land | $27,885 | $35,863 | | Total | $106,654 | $125,497 | - The company sold land, building, and improvements in Tampa, Florida, in 2021, recognizing a net gain of **$6.7 million**[389](index=389&type=chunk) - Depreciation expense was **$21.1 million** in 2021, **$21.8 million** in 2020, and **$23.5 million** in 2019, primarily included in the cost of contract revenue[390](index=390&type=chunk) [7. Other Current Accounts Receivable](index=113&type=section&id=7.%20Other%20Current%20Accounts%20Receivable) Other Current Accounts Receivable (in thousands) | Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Insurance claims receivable | $13,273 | $57,021 | | Accident loss receivables | $3,760 | $1,448 | | Other current receivables | $552 | $1,023 | | Total | $17,585 | $59,492 | - Insurance claims receivable decreased significantly from **$57.0 million** in 2020 to **$13.3 million** in 2021[393](index=393&type=chunk) [8. Fair Value](index=113&type=section&id=8.%20Fair%20Value) Recurring Fair Value Measurements (in thousands) | Category | Dec 31, 2021 (Carrying Value) | Dec 31, 2020 (Carrying Value) | | :--- | :--- | :--- | | Cash surrender value of life insurance policy | $2,813 | $3,169 | | Derivatives | $0 | $1,602 | - Derivatives (interest rate swaps) were valued using Level 2 inputs and were eliminated in 2021 upon extinguishment of the term loan[396](index=396&type=chunk)[429](index=429&type=chunk) - The fair value of the company's debt approximated its carrying value (**$39.4 million** in 2021, **$35.1 million** in 2020) and would be classified as Level 2 in the fair value hierarchy[401](index=401&type=chunk) [9. Intangible Assets](index=115&type=section&id=9.%20Intangible%20Assets) Intangible Assets, Net (in thousands) | Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Net finite-lived intangible assets | $1,664 | $3,185 | | Infinite-lived intangible assets | $6,892 | $6,892 | | Total net intangible assets | $8,556 | $10,077 | - Finite-lived intangible assets, primarily customer relationships from TAS and TBC acquisitions, are amortized over **eight years** using an accelerated method[402](index=402&type=chunk) - Amortization expense for finite-lived intangible assets was **$1.5 million** in 2021, **$2.1 million** in 2020, and **$2.6 million** in 2019[402](index=402&type=chunk) - The infinite-lived trade name was tested for impairment annually, with no impairment recorded in 2021 or 2020[403](index=403&type=chunk) [10. Accrued Liabilities](index=117&type=section&id=10.%20Accrued%20Liabilities) Accrued Liabilities (in thousands) | Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Accrued salaries, wages and benefits | $9,879 | $15,071 | | Accrued liabilities expected to be covered by insurance | $19,818 | $60,365 | | Sales taxes | $5,113 | $5,909 | | Property taxes | $1,047 | $908 | | Sale-leaseback arrangement | $743 | $676 | | Accounting and audit fees | $413 | $344 | | Interest | $23 | $22 | | Equipment purchase | $0 | $461 | | Other accrued expenses | $1,558 | $881 | | Total | $38,594 | $84,637 | - Accrued liabilities decreased significantly from **$84.6 million** in 2020 to **$38.6 million** in 2021, primarily due to a reduction in accrued liabilities expected to be covered by insurance[405](index=405&type=chunk) - The company deferred **$7.6 million** in employer Social Security taxes under the CARES Act, with **$3.8 million** paid in December 2021 and the remaining **$3.8 million** due in December 2022[406](index=406&type=chunk) [11. Long-term Debt and Line of Credit](index=117&type=section&id=11.%20Long-term%20Debt%20and%20Line%20of%20Credit) - The Credit Facility, guaranteed by subsidiaries and secured by assets, matures on **July 31, 2023**, and provides for a revolving line of credit and a term loan[407](index=407&type=chunk)[408](index=408&type=chunk) Debt Obligations (in thousands) | Category | Dec 31, 2021 (Principal) | Dec 31, 2020 (Principal) | | :--- | :--- | :--- | | Revolving line of credit | $39,000 | $0 | | Term loan - current | $0 | $4,500 | | Other debt | $141 | $0 | | Total current debt | $39,141 | $4,500 | | Revolving line of credit (long-term) | $0 | $5,000 | | Term loan - long-term | $0 | $25,586 | | Other debt (long-term) | $259 | $0 | | Total long-term debt | $259 | $30,586 | | Total debt | $39,400 | $35,086 | - The term loan component of the Credit Facility was fully extinguished in Q2 2021, using proceeds from asset sales, eliminating future amortization payments and resulting in a **$1.3 million** loss on the interest rate swap termination[237](index=237&type=chunk)[421](index=421&type=chunk) - As of December 31, 2021, **$39.0 million** was outstanding under the revolving line of credit, with **$9.3 million** available borrowing capacity[419](index=419&type=chunk) - The company executed the Ninth Amendment in March 2022 to waive financial covenant defaults as of December 31, 2021, and reset the revolving line of credit commitment to **$42.5 million**[424](index=424&type=chunk)[484](index=484&type=chunk) [12. Other Long-Term Liabilities](index=123&type=section&id=12.%20Other%20Long-Term%20Liabilities) Other Long-Term Liabilities (in thousands) | Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Sale-leaseback arrangement | $15,969 | $16,712 | | Deferred compensation | $2,759 | $2,818 | | Accrued liabilities expected to be covered by insurance | $214 | $307 | | Total | $18,942 | $19,837 | - The sale-leaseback arrangement for the Channelview, Texas property, recorded as a failed sale-leaseback, resulted in a liability of **$16.0 million** at December 31, 2021[431](index=431&type=chunk) [13. Income Taxes](index=124&type=section&id=13.%20Income%20Taxes) Consolidated Income Tax Expense (in thousands) | Component | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | U.S. Federal | $0 | $0 | $0 | | State and local | $223 | $602 | $820 | | Foreign | $279 | $1,374 | $1,048 | | Total | $502 | $1,976 | $1,868 | - The effective tax rate for 2021 was **(3.6%)**, differing from the federal statutory rate of **21%** primarily due to a valuation allowance related to the current year net loss[190](index=190&type=chunk)[191](index=191&type=chunk)[434](index=434&type=chunk) - The company has federal net operating loss carryforwards of **$30.2 million** (indefinite carryforward, **80%** taxable income limit) and state net operating losses of **$124.3 million**[436](index=436&type=chunk) - A valuation allowance of **$15.4 million** was maintained at December 31, 2021, due to a history of losses, increasing by **$3.0 million** during the year[437](index=437&type=chunk) [14. Earnings Per Share](index=127&type=section&id=14.%20Earnings%20Per%20Share) Basic and Diluted Earnings Per Share (EPS) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Basic (loss) earnings per share | $(0.47) | $0.67 | $(0.18) | | Diluted (loss) earnings per share | $(0.47) | $0.67 | $(0.18) | | Weighted average shares outstanding (Basic) | 30,763,527 | 30,122,362 | 29,322,054 | | Total weighted average shares outstanding assuming dilution | 30,763,527 | 30,122,362 | 29,322,054 | - Basic and diluted EPS were **$(0.47)** in 2021, reflecting the net loss for the year[308](index=308&type=chunk) - Potentially dilutive securities (stock options) were antidilutive and not included in EPS calculations for periods with a net loss or when the exercise price exceeded the market price[441](index=441&type=chunk) [15. Stock-Based Compensation](index=129&type=section&id=15.%20Stock-Based%20Compensation) Restricted Stock Activity | Metric | Number of Shares (2021) | Weighted Average Fair Value Per Share (2021) | | :--- | :--- | :--- | | Nonvested at January 1 | 950,436 | $3.04 | | Granted | 916,531 | $4.58 | | Vested | (690,676) | $3.43 | | Forfeited shares | (234,232) | $4.22 | | Nonvested at December 31 | 942,059 | $3.97 | - In 2021, the company awarded **916,531 restricted stock shares** and **240,000 performance-based units** to directors, officers, and executives[445](index=445&type=chunk)[448](index=448&type=chunk)[453](index=453&type=chunk) - Total unrecognized compensation expense related to unvested stock was approximately **$3.2 million** as of December 31, 2021, expected to be recognized over **2.2 years**[460](index=460&type=chunk) - Compensation expense for stock-based awards was **$2.4 million** in 2021, **$2.0 million** in 2020, and **$2.8 million** in 2019[458](index=458&type=chunk) [16. Employee Benefits](index=132&type=section&id=16.%20Employee%20Benefits) - The marine segment's 401(k) Retirement Plan includes a **100% match on the first 2%** and **50% on the next 2%** of eligible compensation, with employer contributions vesting over **four years**[462](index=462&type=chunk) - The concrete segment's 401(k) Retirement Plan matches **50% on the first 6%** of eligible compensation, with employer contributions vesting over **five years**[463](index=463&type=chunk)[464](index=464&type=chunk) Multi-Employer Defined Pension Plan Contributions (in thousands) | Pension Trust Fund | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | International Union of Operating Engineers | $1,297 | $2,480 | $3,021 | | Washington Laborers | $244 | $236 | $30 | | Carpenters Retirement Plan of Western Washington | $1,700 | $1,898 | $695 | | Cement Masons & Plasterers Trust Funds | $32 | $39 | $2 | | Western Conference of Teamsters Pension Trust Fund | $44 | $15 | $0 | | Total (selected plans) | $3,317 | $4,668 | $3,748 | [17. Commitments and Contingencies](index=134&type=section&id=17.%20Commitments%20and%20Contingencies) - A dredge fire incident in August 2020 resulted in five fatalities, injuries, and an oil discharge, leading to multiple lawsuits and a limitation of liability action[468](index=468&type=chunk) - As of December 31, 2021, **$206.7 million** in total liabilities were recognized for the incident, including **$192.0 million** paid (settlements, wreck removal) and **$14.6 million** in accruals for outstanding claims[472](index=472&type=chunk) - All claims from the August 2020 incident have been settled within insurance coverage limits, with **$189.6 million** reimbursed by carriers to date[472](index=472&type=chunk) - The company is involved in other legal proceedings, but management believes these will not materially affect financial condition, results of operations, or cash flows[473](index=473&type=chunk) [18. Segment Information](index=136&type=section&id=18.%20Segment%20Information) Segment Financial Performance (in thousands) | Segment | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | | **Marine** | Contract revenues | $263,915 | $388,173 | $369,138 | | | Operating income | $5,760 | $29,815 | $12,841 | | | Depreciation and amortization expense | $(17,287) | $(18,369) | $(19,889) | | | Total assets | $236,773 | $290,372 | | | | Property and equipment, net | $93,383 | $109,298 | | | **Concrete** | Contract revenues | $337,445 | $321,769 | $339,252 | | | Operating income (loss) | $(15,077) | $(3,229) | $(10,648) | | | Depreciation and amortization expense | $(8,143) | $(8,848) | $(8,519) | | | Total assets | $114,977 | $123,817 | | | | Property and equipment, net | $13,271 | $16,199 | | - Marine segment revenues decreased by **32.0%** in 2021, while concrete segment revenues increased by **4.9%**[200](index=200&type=chunk)[203](index=203&type=chunk) - Corporate overhead costs were reallocated between segments for all periods presented, resulting in offsetting changes in operating income for each segment[198](index=198&type=chunk)[475](index=475&type=chunk) [19. Leases](index=138&type=section&id=19.%20Leases) Leases Recorded on Balance Sheet (in thousands) | Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Operating lease right-of-use assets, net | $14,686 | $18,874 | | Financing lease right-of-use assets, net | $14,561 | $12,858 | | Total assets | $29,247 | $31,732 | | Current operating lease liabilities | $3,857 | $4,989 | | Current financing lease liabilities | $3,406 | $3,901 | | Noncurrent operating lease liabilities | $11,637 | $14,537 | | Noncurrent financing lease liabilities | $10,908 | $8,376 | | Total liabilities | $29,808 | $31,803 | Total Lease Cost (in thousands) | Lease Cost Component | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Operating lease cost | $5,814 | $6,430 | $6,930 | | Short-term lease cost | $1,607 | $3,871 | $2,001 | | Interest on finance lease liabilities | $491 | $548 | $362 | | Amortization of ROU assets (finance) | $2,822 | $3,324 | $2,312 | | Total lease cost | $10,734 | $14,173 | $11,605 | - The weighted average remaining lease term for operating leases was **4.90 years** (2021) and for financing leases was **4.70 years** (2021)[480](index=480&type=chunk) [20. Subsequent Event](index=140&type=section&id=20.%20Subsequent%20Event) - In March 2022, the company executed the Ninth Amendment to its Credit Agreement, waiving financial covenant defaults as of December 31, 2021[483](index=483&type=chunk) - The amendment reset the revolving line of credit commitment to **$42.5 million** and instituted temporary covenant requirements for minimum consolidated EBITDA and consolidated leverage/fixed charge coverage ratios[484](index=484&type=chunk) - New debt issuance costs of approximately **$1.0 million** related to the Ninth Amendment will be amortized through the maturity date[484](index=484&type=chunk) SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS](index=142&type=section&id=SCHEDULE%20II%20-%20VALUATION%20AND%20QUALIFYING%20ACCOUNTS) Schedule II details changes in allowance for credit losses and reserve for losses on uncompleted contracts from 2019 to 2021 Schedule II - Valuation and Qualifying Accounts (in thousands) | Description | Balance at Beginning of Period (2019) | Charged to Revenue, Cost or Expense (2019) | Deduction (2019) | Balance at End of Period (2019) | | :--- | :--- | :--- | :--- | :--- | | Allowance for credit losses | $4,280 | $0 | $1,680 | $2,600 | | Reserve for losses on uncompleted contracts | $22,770 | $2,455 | $14,300 | $10,925 | | | | | | | | Description | Balance at Beginning of Period (2020) | Charged to Revenue, Cost or Expense (2020) | Deduction (2020) | Balance at End of Period (2020) | | :--- | :--- | :--- | :--- | :--- | | Allowance for credit losses | $2,600 | $(487) | $1,702 | $411 | | Reserve for losses on uncompleted contracts | $10,925 | $543 | $9,995 | $1,473 | | | | | | | | Description | Balance at Beginning of Period (2021) | Charged to Revenue, Cost or Expense (2021) | Deduction (2021) | Balance at End of Period (2021) | | :--- | :--- | :--- | :--- | :--- | | Allowance for credit losses | $411 | $0 | $88 | $323 | | Reserve for losses on uncompleted contracts | $1,473 | $33 | $1,472 | $34 | - The allowance for credit losses decreased from **$411 thousand** at the beginning of 2021 to **$323 thousand** at year-end[486](index=486&type=chunk) - The reserve for losses on uncompleted contracts significantly decreased from **$1,473 thousand** at the beginning of 2021 to **$34 thousand** at year-end[486](index=486&type=chunk)

Financial Data and Key Metrics Changes - Revenues for Q4 2021 were $162 million, down from $170 million in Q4 2020, primarily due to decreased volume in the Marine business [10] - Gross profit for Q4 2021 was $6.6 million compared to $21.7 million in the prior year, with a gross profit margin of 4.1% versus 12.8% in the prior year [10] - Net loss for Q4 2021 was $8.8 million or $0.29 loss per share, including a nonrecurring expense of $2.1 million related to ERP development [13] Business Line Data and Key Metrics Changes - Marine segment revenues for Q4 2021 were $73.1 million with an adjusted EBITDA of $5.2 million and an adjusted EBITDA margin of 7.1%, down from $97.6 million and 13.5% in the prior year [11] - Concrete segment revenues increased to $89.2 million from $72.6 million in Q4 2020, but adjusted EBITDA was negative $4.3 million compared to negative $0.6 million in the prior year [12] Market Data and Key Metrics Changes - The current level of quoted work outstanding is approximately $2.6 billion, up 63% year-over-year, indicating a robust project pipeline [9] - Backlog at the end of Q4 2021 was $590 million, up from $440 million at the end of the previous year [15] Company Strategy and Development Direction - The company aims to focus on winning new awards and replenishing backlog while maintaining a disciplined bidding approach [21] - The Infrastructure Investment and Jobs Act is expected to provide a significant tailwind for public sector projects, particularly in the Marine segment [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the second half of 2021 was impacted by COVID-19 lag effects but expects a reacceleration in 2022 with improving markets and increased backlog [8] - For 2022, the company expects adjusted EBITDA to be in the mid $30 million range, with a strong pipeline of projects and improving bid margins [20] Other Important Information - The company ended the year with $39.4 million of outstanding debt and approximately $12.3 million in cash [16][17] - An amendment to the credit agreement provides for a waiver and greater flexibility regarding leverage and fixed charge coverage ratios [18] Q&A Session Summary Question: Can you provide an update on the Concrete segment and bid margins? - Management indicated that the concrete business has seen pressure on bid margins but expects to burn through lower margin backlog quickly as market conditions improve [27][28] Question: What is the guidance for adjusted EBITDA in 2022? - Management provided guidance of mid $30 million for adjusted EBITDA in 2022, with expectations of improvement as the year progresses [30] Question: Can you update on asset sales and the ERP system implementation? - Both properties remain under contract, with expected closing dates in the second quarter. The ERP system implementation has been pushed out but remains a priority [32][35] Question: What is the CapEx number for 2022? - CapEx is expected to be in the $15 million to $18 million range for the year [54]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Orion Group Holdings' unaudited condensed consolidated financial statements and notes for Q3 2021 and prior periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Metric (in thousands) | September 30, 2021 | December 31, 2020 | | :-------------------- | :------------------ | :------------------ | | Total current assets | $215,056 | $235,402 | | Total assets | $368,355 | $414,189 | | Total current liabilities | $165,824 | $180,613 | | Total liabilities | $211,681 | $254,695 | | Total stockholders' equity | $156,674 | $159,494 | - Total assets decreased by approximately **$45.8 million** from December 31, 2020, to September 30, 2021, primarily due to a reduction in current assets and property and equipment[11](index=11&type=chunk) - Total liabilities decreased by approximately **$43 million**, driven by a reduction in long-term debt and current liabilities[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations Summary (in thousands, except per share) | Metric (in thousands, except per share) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Contract revenues | $139,907 | $189,433 | $439,091 | $539,766 | | Gross profit | $6,578 | $22,501 | $34,334 | $63,003 | | Operating (loss) income | $(8,743) | $13,085 | $(1,122) | $21,534 | | Net (loss) income | $(10,195) | $11,803 | $(5,737) | $16,554 | | Basic (loss) earnings per share | $(0.33) | $0.39 | $(0.19) | $0.55 | - For the three months ended September 30, 2021, contract revenues decreased by **26.1%** year-over-year, leading to a net loss of **$10.2 million** compared to a net income of **$11.8 million** in the prior year[14](index=14&type=chunk) - For the nine months ended September 30, 2021, contract revenues decreased by **18.7%** year-over-year, resulting in a net loss of **$5.7 million** compared to a net income of **$16.6 million** in the prior year[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) Comprehensive Income Summary (in thousands) | Metric (in thousands) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net (loss) income | $(10,195) | $11,803 | $(5,737) | $16,554 | | Change in fair value of cash flow hedge, net of tax | $0 | $150 | $1,234 | $(577) | | Total comprehensive (loss) income | $(10,195) | $11,953 | $(4,503) | $15,977 | - Total comprehensive loss for the three months ended September 30, 2021, was **$(10,195) thousand**, a significant decrease from **$11,953 thousand** in the prior year, primarily due to the net loss[15](index=15&type=chunk) - For the nine months ended September 30, 2021, total comprehensive loss was **$(4,503) thousand**, compared to a comprehensive income of **$15,977 thousand** in the prior year, influenced by net loss and a positive change in cash flow hedge fair value[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Summary (in thousands, except shares) | Metric (in thousands, except shares) | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :---------------- | | Common Stock Shares | 31,779,706 | 31,171,804 | | Common Stock Amount | $318 | $312 | | Treasury Stock Amount | $(6,540) | $(6,540) | | Additional Paid-In Capital | $185,633 | $184,324 | | Retained Loss | $(22,737) | $(17,000) | | Total Stockholders' Equity | $156,674 | $159,494 | - Total stockholders' equity decreased from **$159,494 thousand** at December 31, 2020, to **$156,674 thousand** at September 30, 2021, primarily due to a net loss of **$10,195 thousand** in the third quarter of 2021[16](index=16&type=chunk) - The company issued additional common stock and restricted stock, increasing common stock shares and additional paid-in capital, partially offset by tax withholdings for stock-based compensation[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Metric (in thousands) | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $4,240 | $38,376 | | Net cash provided by (used in) investing activities | $14,489 | $(2,197) | | 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 end of period | $893 | $2,732 | - Net cash provided by operating activities significantly decreased from **$38.4 million** in 2020 to **$4.2 million** in 2021, primarily due to a net loss and changes in working capital[17](index=17&type=chunk) - Investing activities shifted from a net cash outflow of **$2.2 million** in 2020 to a net cash inflow of **$14.5 million** in 2021, largely driven by increased proceeds from the sale of property and equipment[17](index=17&type=chunk) - Financing activities resulted in a net cash outflow of **$19.4 million** in 2021, an improvement from **$34.5 million** outflow in 2020, due to changes in credit facility borrowings and payments[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business and Basis of Presentation](index=11&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Orion Group Holdings, Inc. provides specialty construction services across infrastructure, industrial, and building sectors in the US, Canada, and Caribbean, operating through Marine and Concrete segments - The Company operates in two reportable segments: Marine (infrastructure sector, e.g., marine construction, dredging) and Concrete (building sector, e.g., turnkey concrete services)[19](index=19&type=chunk)[20](index=20&type=chunk) - Marine segment operations are driven by macro-economic considerations like import/export seaborne transportation, energy infrastructure development, and waterway maintenance, subject to federal regulatory regimes[22](index=22&type=chunk) - Concrete segment operations are influenced by population movements, commercial real estate development, and institutional funding, primarily in Texas metropolitan areas, and are subject to similar regulatory regimes like OSHA[23](index=23&type=chunk)[24](index=24&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including revenue recognition, asset/liability classification, and fair value measurements - Revenue from construction contracts is generally recognized over time, measured by the percentage of actual contract costs incurred to total estimated costs[32](index=32&type=chunk) - The Company maintains insurance coverage for business operations, including property, equipment, automobile, general liability, and workers' compensation, with excess loss coverage totaling **$200 million** for both marine and concrete segments[73](index=73&type=chunk)[74](index=74&type=chunk) - The total accrual for insurance claims liabilities was **$67.4 million** at September 30, 2021, and the total accrual for insurance claims receivable was **$63.9 million**[78](index=78&type=chunk) [3. Revenue](index=28&type=section&id=3.%20Revenue) Contract revenues are disaggregated by service line within the Marine and Concrete segments, showing declines in Marine and mixed performance in Concrete Contract Revenues by Service Line (in thousands) | Service Line (in thousands) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Marine Construction | $38,883 | $86,505 | $121,678 | $205,459 | | Marine Dredging | $13,157 | $24,262 | $58,511 | $79,391 | | Marine Specialty Services | $2,699 | $2,114 | $10,638 | $5,699 | | Concrete Structural | $13,090 | $21,116 | $47,296 | $66,893 | | Concrete Light Commercial | $72,078 | $55,436 | $200,961 | $182,311 | | Total contract revenues | $139,907 | $189,433 | $439,091 | $539,766 | - Marine segment contract revenues decreased significantly by **51.5%** for the three months ended September 30, 2021, compared to the prior year, while Concrete segment revenues increased by **11.3%**[82](index=82&type=chunk) - For the nine months ended September 30, 2021, Marine segment revenues decreased by **34.3%**, and Concrete segment revenues saw a slight decrease of **0.4%**[82](index=82&type=chunk) [4. Concentration of Risk and Enterprise-Wide Disclosures](index=30&type=section&id=4.%20Concentration%20of%20Risk%20and%20Enterprise-Wide%20Disclosures) The company's accounts receivable and contract revenues show concentrations across federal, state, local governments, and private companies, with private companies representing the largest portion Accounts Receivable by Customer Type | Customer Type | Sep 30, 2021 (Receivables) | Dec 31, 2020 (Receivables) | | :-------------- | :------------------------- | :------------------------- | | Federal Government | 2 % | 4 % | | State Governments | 1 % | - % | | Local Governments | 11 % | 13 % | | Private Companies | 86 % | 83 % | Contract Revenues by Customer Type | Customer Type | Q3 2021 (Contract Revenues) | Q3 2020 (Contract Revenues) | 9M 2021 (Contract Revenues) | 9M 2020 (Contract Revenues) | | :-------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Federal Government | 11 % | 9 % | 9 % | 6 % | | State Governments | - % | 3 % | - % | 5 % | | Local Government | 16 % | 29 % | 22 % | 29 % | | Private Companies | 73 % | 59 % | 69 % | 60 % | - Foreign revenues were **0.0%** and **0.9%** of total revenues for the three months ended September 30, 2021 and 2020, respectively, and **0.6%** and **1.8%** for the nine months ended September 30, 2021 and 2020, respectively[89](index=89&type=chunk) [5. Contracts in Progress](index=32&type=section&id=5.%20Contracts%20in%20Progress) Remaining performance obligations totaled approximately $572.8 million as of September 30, 2021, with 75% expected to be recognized in the next 12 months Contracts in Progress Summary (in thousands) | Metric (in thousands) | September 30, 2021 | December 31, 2020 | | :-------------------- | :----------------- | :---------------- | | Costs incurred on uncompleted contracts | $1,245,434 | $1,151,987 | | Estimated earnings | $189,553 | $202,369 | | Billings to date | $(1,442,948) | $(1,355,220) | | Net contracts in progress | $(7,961) | $(864) | - Remaining performance obligations were approximately **$572.8 million** as of September 30, 2021, with **$432.0 million (75%)** expected to be recognized in the next 12 months[91](index=91&type=chunk) - Contract assets included approximately **$3.8 million** related to claims and unapproved change orders at September 30, 2021[90](index=90&type=chunk) [6. Property and Equipment](index=33&type=section&id=6.%20Property%20and%20Equipment) The net book value of property and equipment decreased to $106.7 million at September 30, 2021, partly due to a $6.7 million gain from the sale of land and buildings Property and Equipment, Net (in thousands) | Asset Category (in thousands) | September 30, 2021 | December 31, 2020 | | :---------------------------- | :----------------- | :---------------- | | Automobiles and trucks | $2,354 | $2,379 | | Building and improvements | $34,797 | $44,324 | | Construction equipment | $137,134 | $142,661 | | Vessels and other equipment | $81,928 | $79,499 | | Office equipment | $6,263 | $5,577 | | Less: Accumulated depreciation | $(190,091) | $(186,615) | | Net book value of depreciable assets | $72,385 | $87,825 | | Construction in progress | $6,415 | $1,809 | | Land | $27,885 | $35,863 | | Total Property and equipment, net | $106,685 | $125,497 | - The Company sold its land, building, and improvements in Tampa, Florida, during Q2 2021, recognizing a net gain of **$6.7 million**[93](index=93&type=chunk) - Depreciation expense for the nine months ended September 30, 2021, was **$15.7 million**, compared to **$16.6 million** in the prior year[94](index=94&type=chunk) [7. Other Current Accounts Receivable](index=33&type=section&id=7.%20Other%20Current%20Accounts%20Receivable) Other current accounts receivable increased to $66.0 million at September 30, 2021, primarily driven by an increase in insurance claims receivable Other Current Accounts Receivable (in thousands) | Receivable Type (in thousands) | September 30, 2021 | December 31, 2020 | | :----------------------------- | :----------------- | :---------------- | | Insurance claims receivable | $63,870 | $57,021 | | Accident loss receivables | $1,361 | $1,448 | | Other current receivables | $810 | $1,023 | | Total other current accounts receivable | $66,041 | $59,492 | - Insurance claims receivable increased by **$6.8 million** from December 31, 2020, to September 30, 2021[96](index=96&type=chunk) [8. Fair Value](index=35&type=section&id=8.%20Fair%20Value) The company's recurring fair value measurements primarily include the cash surrender value of life insurance policies, with derivatives eliminated upon term loan extinguishment Fair Value Measurements (in thousands) | Financial Instrument (in thousands) | Carrying Value (Sep 30, 2021) | Level 2 Fair Value (Sep 30, 2021) | Carrying Value (Dec 31, 2020) | Level 2 Fair Value (Dec 31, 2020) | | :---------------------------------- | :---------------------------- | :-------------------------------- | :---------------------------- | :-------------------------------- | | Cash surrender value of life insurance policy | $3,417 | $3,417 | $3,169 | $3,169 | | Derivatives | $0 | $0 | $1,602 | $1,602 | - The company's interest rate swaps were canceled during Q2 2021 following the extinguishment of the term loan, eliminating derivative financial instruments[99](index=99&type=chunk)[129](index=129&type=chunk) - The fair value of the company's debt was approximately **$19.4 million** at September 30, 2021, and **$35.1 million** at December 31, 2020, approximating its carrying value[104](index=104&type=chunk) [9. Goodwill and Intangible Assets](index=37&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) Total net intangible assets decreased to $8.9 million at September 30, 2021, primarily due to amortization of finite-lived assets, with no impairment recorded for the infinite-lived trade name Intangible Assets, Net (in thousands) | Intangible Asset (in thousands) | September 30, 2021 | December 31, 2020 | | :------------------------------ | :----------------- | :---------------- | | Net finite-lived intangible assets | $2,044 | $3,185 | | Infinite-lived intangible assets | $6,892 | $6,892 | | Total net intangible assets | $8,936 | $10,077 | - For the nine months ended September 30, 2021, **$1.1 million** of amortization expense was recognized for finite-lived intangible assets[105](index=105&type=chunk) - The infinite-lived trade name is tested annually for impairment using the relief from royalty method, and no impairment was recorded in the most recent test[106](index=106&type=chunk) [10. Accrued Liabilities](index=38&type=section&id=10.%20Accrued%20Liabilities) Accrued liabilities decreased to $83.4 million at September 30, 2021, driven by lower accrued salaries, wages, and benefits, partially offset by increased insurance claims liabilities Accrued Liabilities Summary (in thousands) | Accrued Liability (in thousands) | September 30, 2021 | December 31, 2020 | | :------------------------------- | :----------------- | :---------------- | | Accrued salaries, wages and benefits | $7,537 | $15,071 | | Accrual for insurance claims liabilities | $67,414 | $60,365 | | Sales taxes | $4,162 | $5,909 | | Property taxes | $1,167 | $908 | | Total accrued liabilities | $83,419 | $84,637 | - Accrued salaries, wages, and benefits decreased by approximately **$7.5 million**, while accrual for insurance claims liabilities increased by approximately **$7.0 million**[107](index=107&type=chunk) [11. Long-term Debt and Line of Credit](index=38&type=section&id=11.%20Long-term%20Debt%20and%20Line%20of%20Credit) Total debt decreased to $19.4 million at September 30, 2021, primarily due to the full extinguishment of the term loan, with $29.3 million in available borrowing capacity Debt Summary (in thousands) | Debt Type (in thousands) | September 30, 2021 | December 31, 2020 | | :----------------------- | :----------------- | :---------------- | | Revolving line of credit | $19,000 | $0 | | Term loan - current | $0 | $4,344 | | Other current debt | $139 | $0 | | Revolving line of credit (long-term) | $0 | $4,826 | | Term loan - long-term | $0 | $24,697 | | Other long-term debt | $295 | $0 | | Total debt | $19,434 | $33,867 | - The term loan component of the Credit Facility was fully extinguished during Q2 2021, using proceeds from property sales, which also led to the cancellation of interest rate swaps and a **$1.3 million** loss[122](index=122&type=chunk)[129](index=129&type=chunk) - As of September 30, 2021, the company had **$19.0 million** in borrowings under the revolving line of credit and **$29.3 million** in maximum borrowing availability[121](index=121&type=chunk) [12. Other Long-Term Liabilities](index=46&type=section&id=12.%20Other%20Long-Term%20Liabilities) Other long-term liabilities increased to $23.0 million at September 30, 2021, primarily due to the deferral of payroll taxes under the CARES Act Other Long-Term Liabilities (in thousands) | Liability Type (in thousands) | September 30, 2021 | December 31, 2020 | | :---------------------------- | :----------------- | :---------------- | | Sale-leaseback arrangement | $16,164 | $16,712 | | CARES Act deferred payroll taxes | $3,821 | $0 | | Deferred compensation | $2,760 | $2,818 | | Accrual for insurance claims liabilities | $262 | $307 | | Total other long-term liabilities | $23,007 | $19,837 | - The company deferred approximately **$7.6 million** in Social Security taxes under the CARES Act, with **$3.8 million** reflected as a long-term liability due in December 2022[132](index=132&type=chunk)[133](index=133&type=chunk) [13. Income Taxes](index=48&type=section&id=13.%20Income%20Taxes) The company recorded income tax expense of $1.0 million for Q3 2021, with negative effective tax rates primarily due to valuation allowance movements and non-deductible items Income Tax Metrics (in thousands, except percentages) | Metric (in thousands, except percentages) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax expense | $1,001 | $303 | $341 | $1,660 | | Effective tax rate | (10.9)% | 2.5 % | (6.3)% | 9.1 % | - The effective tax rates for both the three and nine months ended September 30, 2021, were negative, primarily due to the movement in the valuation allowance for current year activity, state income taxes, and non-deductibility of other permanent items[134](index=134&type=chunk) - Management believes a valuation allowance on the net deferred tax assets at September 30, 2021, remains appropriate[135](index=135&type=chunk) [14. Earnings Per Share](index=48&type=section&id=14.%20Earnings%20Per%20Share) Basic and diluted earnings per share calculations reflect net losses for the three and nine months ended September 30, 2021, with potentially dilutive securities excluded due to their antidilutive nature Weighted Average Shares Outstanding | Metric | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic Weighted average shares outstanding | 30,979,207 | 30,372,310 | 30,707,426 | 30,020,258 | | Diluted Weighted average shares outstanding | 30,979,207 | 30,372,310 | 30,707,426 | 30,020,258 | - Basic and diluted (loss) earnings per share were **$(0.33)** and **$(0.19)** for the three and nine months ended September 30, 2021, respectively[14](index=14&type=chunk) - Potentially dilutive securities were antidilutive and thus not included in the computation of diluted earnings per share for the periods ended September 30, 2021 and 2020[139](index=139&type=chunk) [15. Stock-Based Compensation](index=50&type=section&id=15.%20Stock-Based%20Compensation) Stock-based compensation expense for the nine months ended September 30, 2021, was $2.2 million, with approximately $3.8 million in unrecognized expense remaining Stock-Based Compensation Expense (in thousands) | Metric (in thousands) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $500 | $300 | $2,200 | $1,900 | | Payments related to tax withholding | $700 | $200 | $900 | $200 | - In May 2021, **489,850 shares** of restricted common stock were granted, including performance-based awards to executives, with a fair value of **$6.01** per share[143](index=143&type=chunk)[144](index=144&type=chunk) - Total unrecognized compensation expense related to unvested stock was approximately **$3.8 million** at September 30, 2021, to be recognized over approximately **2.3 years**[148](index=148&type=chunk) [16. Commitments and Contingencies](index=52&type=section&id=16.%20Commitments%20and%20Contingencies) The company recognized $102.1 million in total liabilities for a dredge fire incident in August 2020, with insurance carriers reimbursing $37.8 million to date - A dredge fire incident in August 2020 resulted in five fatalities, injuries, and an oil discharge, leading to multiple lawsuits against the company[149](index=149&type=chunk) - As of September 30, 2021, the company recognized **$102.1 million** in total liabilities for the incident, comprising **$39.6 million** paid and **$62.4 million** in accruals[149](index=149&type=chunk) - Insurance carriers have reimbursed the company **$37.8 million** to date, and the company believes it has adequate insurance coverage for all potential liabilities[151](index=151&type=chunk) [17. Segment Information](index=54&type=section&id=17.%20Segment%20Information) The Marine segment experienced significant revenue decline and operating loss, while the Concrete segment saw revenue growth but also an operating loss due to project performance issues Segment Performance (in thousands) - Three Months Ended September 30 | Segment (in thousands) | Q3 2021 Contract Revenues | Q3 2020 Contract Revenues | Q3 2021 Operating (Loss) Income | Q3 2020 Operating (Loss) Income | | :--------------------- | :------------------------ | :------------------------ | :------------------------------ | :------------------------------ | | Marine | $54,739 | $112,881 | $(4,965) | $12,025 | | Concrete | $85,168 | $76,552 | $(3,778) | $1,060 | Segment Performance (in thousands) - Nine Months Ended September 30 | Segment (in thousands) | 9M 2021 Contract Revenues | 9M 2020 Contract Revenues | 9M 2021 Operating (Loss) Income | 9M 2020 Operating (Loss) Income | | :--------------------- | :------------------------ | :------------------------ | :------------------------------ | :------------------------------ | | Marine | $190,827 | $290,549 | $6,489 | $21,584 | | Concrete | $248,264 | $249,217 | $(7,611) | $(50) | - Corporate overhead costs were reallocated from the marine segment to the concrete segment as part of operating income for each segment, correcting immaterial errors in prior period reporting[156](index=156&type=chunk) [18. Leases](index=57&type=section&id=18.%20Leases) Total lease assets were $27.3 million and total lease liabilities were $27.7 million at September 30, 2021, with a total lease cost of $8.6 million for the nine months ended September 30, 2021 Lease Assets and Liabilities (in thousands) | Lease Metric (in thousands) | September 30, 2021 | December 31, 2020 | | :-------------------------- | :----------------- | :---------------- | | Operating lease right-of-use assets, net | $15,193 | $18,874 | | Financing lease right-of-use assets, net | $12,135 | $12,858 | | Total assets | $27,328 | $31,732 | | Current lease liabilities | $5,378 | $8,890 | | Noncurrent lease liabilities | $22,357 | $22,913 | | Total liabilities | $27,735 | $31,803 | Lease Cost Components (in thousands) | Lease Cost Component (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $4,510 | $4,815 | | Short-term lease cost | $1,432 | $2,914 | | Interest on lease liabilities | $369 | $410 | | Amortization of right-of-use assets | $2,259 | $2,487 | | Total lease cost | $8,570 | $10,626 | - ROU assets obtained in exchange for new operating lease liabilities were **$818 thousand** and for new financing lease liabilities were **$4,329 thousand** for the nine months ended September 30, 2021[164](index=164&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes the company's financial performance, highlighting decreased revenues and net loss for Q3 and 9M 2021, driven by marine segment decline and concrete segment issues [CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS](index=59&type=section&id=CAUTIONARY%20STATEMENT%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements subject to various business, economic, competitive, and regulatory risks - The report contains forward-looking statements regarding future production, revenues, income, and capital spending, which are subject to significant business, economic, competitive, regulatory, and other risks[166](index=166&type=chunk)[167](index=167&type=chunk) - Key risks include the duration of the COVID-19 pandemic, unforeseen productivity delays, government funding levels, and contract cancellations[167](index=167&type=chunk) [Overview](index=59&type=section&id=Overview) Orion Group Holdings, Inc. provides specialty construction services in marine and concrete segments, with most revenue from fixed-price contracts recognized over time - Orion Group Holdings, Inc. provides specialty construction services in marine and concrete segments across the US, Alaska, and the Caribbean Basin[169](index=169&type=chunk)[171](index=171&type=chunk) - Most revenue is derived from fixed-price contracts, with revenue recognized over time based on the percentage of actual contract costs incurred[173](index=173&type=chunk) - Factors affecting contract performance include bid accuracy, commodity price increases, customer delays, weather, labor availability, and equipment/material proximity[173](index=173&type=chunk)[176](index=176&type=chunk) [Third Quarter 2021 Recap and 2021 Outlook](index=61&type=section&id=Third%20Quarter%202021%20Recap%20and%202021%20Outlook) Consolidated backlog increased to $572.8 million, with the company focusing on organic growth and strategic acquisitions despite a net loss in Q3 2021 Key Financial Metrics (in millions) | Metric (in millions) | Q3 2021 | Q3 2020 | | :------------------- | :------ | :------ | | Revenues | $139.9 | $189.4 | | Net (Loss) Income | $(10.2) | $11.8 | - Consolidated backlog stood at **$572.8 million** at the end of Q3 2021[174](index=174&type=chunk) - The company continues to focus on organic growth, greenfield expansion, and strategic acquisition opportunities across infrastructure, industrial, and building sectors[175](index=175&type=chunk) [Marine Segment](index=63&type=section&id=Marine%20Segment) Demand for marine construction services continues with bid opportunities for infrastructure maintenance and expansion, supported by long-term positive trends - Demand for marine construction services continues, with bid opportunities for maintaining and expanding infrastructure on waterways[180](index=180&type=chunk) - Long-term positive trends include the need to repair U.S. marine infrastructure, increased cargo volume requiring port expansion and dredging, and potential work from the Water Resources Reform and Development Act (WRRDA Act) and RESTORE Act funds[181](index=181&type=chunk)[183](index=183&type=chunk) - Concerns exist regarding short-term cruise line capital expenditures and the timing of energy-related project awards due to COVID-19 uncertainties[180](index=180&type=chunk) [Concrete Segment](index=65&type=section&id=Concrete%20Segment) Long-term demand for concrete construction services in Texas is driven by population and business growth, with potential opportunities from federal infrastructure funding - Long-term demand for concrete construction services in Texas is driven by population and business growth, leading to new distribution centers, educational facilities, and multi-family housing[184](index=184&type=chunk) - Positive trends include corporate relocations to Texas, investment in warehouse/distribution space, and a shift from inner cities to suburban areas[187](index=187&type=chunk) - Potential opportunities could arise from a federal infrastructure bill and federal funding for disaster recovery in Texas[183](index=183&type=chunk)[187](index=187&type=chunk) [Consolidated Results of Operations](index=65&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated results show significant declines in contract revenues, gross profit, and operating income for both the three and nine months ended September 30, 2021 [Backlog Information](index=65&type=section&id=Backlog%20Information) Consolidated backlog increased to $572.8 million at September 30, 2021, primarily driven by new jobs in the marine segment Backlog by Segment (in millions) | Segment (in millions) | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | | :-------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Marine segment | $379.9 | $170.2 | $154.8 | $202.6 | $241.7 | | Concrete segment | $192.9 | $224.2 | $210.0 | $236.9 | $187.1 | | Consolidated | $572.8 | $394.4 | $364.8 | $439.5 | $428.8 | - Consolidated backlog increased to **$572.8 million** at September 30, 2021, primarily driven by new jobs in the marine segment[186](index=186&type=chunk) - The company had **$2.0 billion** of quoted bids outstanding at quarter-end, with **$103 million** on which it is the apparent low bidder or has been awarded contracts subsequently[186](index=186&type=chunk)[189](index=189&type=chunk) [Three months ended September 30, 2021, compared with three months ended September 30, 2020](index=67&type=section&id=Three%20months%20ended%20September%2030,%202021,%20compared%20with%20three%20months%20ended%20September%2030,%202020) Contract revenues decreased by 26.1% year-over-year, leading to a significant decline in gross profit and a net loss for the quarter Consolidated Results (in thousands) - Q3 Comparison | Metric (in thousands) | Q3 2021 | Q3 2020 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Contract revenues | $139,907 | $189,433 | $(49,526) | (26.1)% | | Gross profit | $6,578 | $22,501 | $(15,923) | (70.8)% | | SG&A expenses | $15,733 | $15,270 | $463 | 3.0% | | Operating (loss) income | $(8,743) | $13,085 | $(21,828) | (166.8)% | | Net (loss) income | $(10,195) | $11,803 | $(21,998) | (186.4)% | - The decrease in contract revenues was primarily due to the timing and mix of large marine projects not replicated in the current year, partially offset by increased concrete segment activity[191](index=191&type=chunk) - Gross profit percentage decreased from **11.9%** to **4.7%**, driven by decreased marine activity leading to under-recovery of indirect costs and concrete segment project performance issues[192](index=192&type=chunk) [Nine months ended September 30, 2021, compared with nine months ended September 30, 2020](index=69&type=section&id=Nine%20months%20ended%20September%2030,%202021,%20compared%20with%20nine%20months%20ended%20September%2030,%202020) Contract revenues decreased by 18.7% year-over-year, resulting in a substantial decline in gross profit and a net loss for the nine-month period Consolidated Results (in thousands) - 9M Comparison | Metric (in thousands) | 9M 2021 | 9M 2020 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Contract revenues | $439,091 | $539,766 | $(100,675) | (18.7)% | | Gross profit | $34,334 | $63,003 | $(28,669) | (45.5)% | | SG&A expenses | $44,078 | $47,651 | $(3,573) | (7.5)% | | Operating (loss) income | $(1,122) | $21,534 | $(22,656) | (105.2)% | | Net (loss) income | $(5,737) | $16,554 | $(22,291) | (134.7)% | - The decrease in contract revenues was primarily due to severe winter weather in Texas, reduced marine segment activity, and decreased project performance in the concrete segment[199](index=199&type=chunk) - Gross profit percentage decreased from **11.7%** to **7.8%**, mainly due to decreased activity, under-recovery of indirect costs from weather delays, and decreased concrete segment project performance[201](index=201&type=chunk)[202](index=202&type=chunk) [Segment Results](index=71&type=section&id=Segment%20Results) Segment results show a significant decline in Marine segment operating income and an increased operating loss for the Concrete segment for both the three and nine months ended September 30, 2021 [Three months ended September 30, 2021 compared with three months ended September 30, 2020](index=72&type=section&id=Three%20months%20ended%20September%2030,%202021%20compared%20with%20three%20months%20ended%20September%2030,%202020) Segment Performance (in thousands) - Q3 Comparison | Segment (in thousands) | Q3 2021 Contract Revenues | Q3 2020 Contract Revenues | Q3 2021 Operating (Loss) Income | Q3 2020 Operating (Loss) Income | | :--------------------- | :------------------------ | :------------------------ | :------------------------------ | :------------------------------ | | Marine | $54,739 | $112,881 | $(4,965) | $12,025 | | Concrete | $85,168 | $76,552 | $(3,778) | $1,060 | - Marine segment revenues decreased by **51.5%** due to the timing and mix of large projects, leading to a **$17.0 million** decrease in operating income[211](index=211&type=chunk)[212](index=212&type=chunk) - Concrete segment revenues increased by **11.3%** due to increased production volumes, but operating income decreased by **$4.9 million** due to decreased project performance and lower margins[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) [Nine months ended September 30, 2021 compared with nine months ended September 30, 2020](index=74&type=section&id=Nine%20months%20ended%20September%2030,%202021%20compared%20with%20nine%20months%20ended%20September%2030,%202020) Segment Performance (in thousands) - 9M Comparison | Segment (in thousands) | 9M 2021 Contract Revenues | 9M 2020 Contract Revenues | 9M 2021 Operating (Loss) Income | 9M 2020 Operating (Loss) Income | | :--------------------- | :------------------------ | :------------------------ | :------------------------------ | :------------------------------ | | Marine | $190,827 | $290,549 | $6,489 | $21,584 | | Concrete | $248,264 | $249,217 | $(7,611) | $(50) | - Marine segment revenues decreased by **34.3%** due to the Texas winter storm and reduced project activity, leading to a **$15.1 million** decrease in operating income[218](index=218&type=chunk)[219](index=219&type=chunk) - Concrete segment revenues slightly decreased by **0.4%**, but operating loss increased by **$7.5 million** due to decreased production volumes from weather impacts, project performance, and lower margins[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Liquidity and Capital Resources](index=76&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital decreased to $49.2 million, with primary liquidity needs for working capital, capital expenditures, and strategic acquisitions expected to be met by operating activities and credit facilities Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | 9M 2021 | 9M 2020 | | :-------------------------------- | :------ | :------ | | Operating activities | $4,240 | $38,376 | | Investing activities | $14,489 | $(2,197) | | Financing activities | $(19,425) | $(34,533) | - Working capital was **$49.2 million** at September 30, 2021, down from **$54.8 million** at December 31, 2020[224](index=224&type=chunk) - The company's primary liquidity needs are for working capital, capital expenditures, and strategic acquisitions, expected to be met by operating activities and credit facilities[223](index=223&type=chunk)[225](index=225&type=chunk) [Bonding Capacity](index=79&type=section&id=Bonding%20Capacity) The company maintained at least $750 million in bonding capacity at September 30, 2021, with approximately $85 million of projects currently bonded - The company's bonding capacity under its current arrangement was at least **$750 million** at September 30, 2021, with approximately **$85 million** of projects being bonded[235](index=235&type=chunk) - The company believes its strong balance sheet and working capital position will allow continued access to bonding capacity[235](index=235&type=chunk) [Effect of Inflation](index=79&type=section&id=Effect%20of%20Inflation) The company is subject to inflation effects on raw materials, fuel, concrete, and steel costs, with anticipated price increases generally included in bid costs due to short project durations - The company is subject to inflation effects on raw materials, fuel, concrete, and steel costs[236](index=236&type=chunk) - Due to the short-term duration of projects, anticipated price increases are generally included in bid costs[236](index=236&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from commodity price fluctuations and interest rates, managing interest rate risk by monitoring rates and reducing debt - The company is exposed to commodity price risk for concrete, steel products, and fuel, but generally includes anticipated price increases in bids due to short project durations[238](index=238&type=chunk) - Interest rate risk is managed by monitoring rates and using cash from operations to reduce debt[239](index=239&type=chunk) - At September 30, 2021, outstanding borrowings under the credit facility were **$19.0 million**, with a weighted average interest rate of **2.93%**[239](index=239&type=chunk) [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The company's disclosure controls and procedures were deemed effective as of September 30, 2021[240](index=240&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended September 30, 2021[241](index=241&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings involving the company is incorporated by reference from Note 16 to the condensed consolidated financial statements - Legal proceedings are detailed in Note 16 of the financial statements[242](index=242&type=chunk) [Item 1A. Risk Factors](index=81&type=section&id=Item%201A.Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2020 Form 10-K - No material changes to risk factors since the 2020 Form 10-K[243](index=243&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period ended September 30, 2021 - No unregistered sales of equity securities in the period ended September 30, 2021[244](index=244&type=chunk) [Item 3. Defaults upon Senior Securities](index=81&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[245](index=245&type=chunk) [Item 4. Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[246](index=246&type=chunk) [Item 5. Other Information](index=81&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information to report[247](index=247&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws[249](index=249&type=chunk) - Employment agreements for Mark R. Stauffer and Peter R. Buchler are filed as exhibits[250](index=250&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Act are included[250](index=250&type=chunk) SIGNATURES The report is duly signed on October 29, 2021, by Mark R. Stauffer, President and Chief Executive Officer, and Robert L. Tabb, Executive Vice President and Chief Financial Officer, on behalf of Orion Group Holdings, Inc - The report was signed by Mark R. Stauffer, President and CEO, and Robert L. Tabb, EVP and CFO, on October 29, 2021[254](index=254&type=chunk)

Orion Group Holdings, Inc. (NYSE:ORN) Q3 2021 Earnings Conference Call October 28, 2021 10:00 AM ET Company Participants Francis Okoniewski - VP, IR Mark Stauffer - President, CEO & Director Conference Call Participants Marco Rodriguez - Stonegate Capital Markets Julio Romero - Sidoti & Company Alexander Rygiel - B. Riley Securities Charles Fratt - NOBLE Capital Markets Tristan Richardson - D.A. Davidson & Co. Operator Greetings, and welcome to the Orion Group Holdings, Inc. Third Quarter 2021 Conference Ca ...

Orion Group Holdings, Inc. (NYSE:ORN) Q2 2021 Earnings Conference Call July 29, 2021 10:00 AM ET Company Participants Fran Okoniewski – Vice President-Investor Relations Mark Stauffer – President and Chief Executive Officer Robert Tabb – Executive Vice President and Chief Financial Officer Conference Call Participants Alex Rygiel – B. Riley FBR Julio Romero – Sidoti & Company Marco Rodriguez – Stonegate Capital Markets Poe Fratt – NOBLE Capital Markets Operator Greetings, and welcome to Orion Incorporated S ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 1-33891 ORION GROUP HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware ...