Orion (ORN) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Highlights Orion Group Holdings reported a strong second quarter of 2025, demonstrating significant year-over-year improvements in key financial metrics Q2 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------- | :------ | :------ | :----------- | | Revenue | $205.3M | $192.2M | +7% | | GAAP Net Income | $0.8M | ($6.6M) | +$7.4M | | GAAP EPS | $0.02 | ($0.20) | +$0.22 | | Adjusted EBITDA | $11.0M | $5.5M | +100% | | Adjusted EPS | $0.07 | ($0.12) | +$0.19 | - Adjusted EBITDA margins increased 240 basis points to 5.3%[6] - Contracted backlog at the end of Q2 2025 was $750 million, with over $450 million in new contract wins during the first half of 2025[6] Management Commentary and Outlook Management highlighted strong Q2 performance driven by new contract awards and disciplined growth, with robust demand across both segments - Revenue increased 7% year-over-year and 9% sequentially over Q1, while Adjusted EBITDA doubled year-over-year and grew 34% sequentially[4] - The opportunity pipeline grew from $16 billion last quarter to $18 billion, fueled by diverse growth drivers and multiple funding sources[5] - Strong demand observed in the Marine segment from U.S. Navy deterrence strategy, port expansions, coastal rehabilitation, and energy infrastructure, and in the Concrete segment from the data center sector[5] - Management reaffirmed full year 2025 financial guidance, with the majority of 2025 work already under contract[6][8] - Alison Vasquez was added as CFO to strengthen the management team and execute the next phase of the Company's growth strategy[6] Second Quarter 2025 Financial Performance Consolidated Results Orion's Q2 2025 consolidated results showed significant improvements, with contract revenues increasing due to new awards and higher volume - Contract revenues were $205.3 million, up 7% year-over-year from $192.2 million and up 9% sequentially from $188.7 million in Q1 2025, driven by new awards and higher volume in Marine and Concrete segments[9] - Gross profit increased 41% year-over-year to $25.8 million from $18.3 million, and 12% sequentially from $23.0 million, primarily due to increased revenue and improved operational performance[10] - Selling, general and administrative (SG&A) expenses rose to $22.8 million from $21.1 million in Q2 2024, mainly due to increased spending supporting business growth[11] - GAAP net income for Q2 was $0.8 million ($0.02 per diluted share), a significant improvement from a net loss of $6.6 million ($0.20 per diluted share) in Q2 2024[11] - Adjusted EBITDA doubled to $11.0 million from $5.5 million in Q2 2024 and increased 34% from $8.2 million in Q1 2025, driven by revenue growth and gross profit expansion[12] Backlog Orion's total backlog increased to $745.7 million by the end of Q2 2025, reflecting strong new contract awards across both its segments Contracted Backlog | Segment | June 30, 2025 ($M) | December 31, 2024 ($M) | | :-------- | :----------------- | :--------------------- | | Marine | 554.8 | 582.8 | | Concrete | 190.9 | 146.3 | | Total | 745.7 | 729.1 | - Second quarter 2025 backlog included over $100 million in new awards[13] - Marine segment secured an export dock replacement project and two projects with the Port of Tampa Bay[13] - Concrete segment was awarded multiple new projects spanning data centers, energy, consumer goods, and transportation[13] Balance Sheet As of June 30, 2025, Orion maintained a solid financial position with $280.0 million in current assets and manageable total debt - Current assets totaled $280.0 million as of June 30, 2025[14] - Unrestricted cash and cash equivalents were $1.7 million[14] - Total debt outstanding was $33.4 million, with $10.0 million borrowed under its revolving credit facility[14] Fiscal Year 2025 Guidance Reaffirmed Full Year 2025 Guidance Orion Group Holdings reaffirmed its financial guidance for the full fiscal year 2025, projecting continued growth in revenue and Adjusted EBITDA Fiscal Year 2025 Guidance | Metric | Range | | :---------------- | :-------------------- | | Revenue | $800 million to $850 million | | Adjusted EBITDA | $42 million to $46 million | | Adjusted EPS | $0.11 to $0.17 | | Capital expenditures | $25 million to $35 million | Company Information About Orion Group Holdings Orion Group Holdings, Inc. is a leading specialty construction company providing diverse services through its Marine and Concrete segments - Orion Group Holdings is a specialty construction company serving infrastructure, industrial, and building sectors across the continental United States, Alaska, Hawaii, Canada, and the Caribbean Basin[17] - The Marine segment offers construction and dredging services for marine transportation, pipelines, environmental structures, and waterways[17] - The Concrete segment provides turnkey concrete construction services for large commercial and structural projects[17] Conference Call Details Orion Group Holdings hosted a conference call to discuss its second quarter 2025 financial results, with details provided for participation - A conference call was held on Wednesday, July 30, 2025, at 9:00 a.m. Eastern Time/8:00 a.m. Central Time[16] - Participants could join by calling (844) 481-2994 and asking for the Orion Group Holdings Conference Call[16] - A live audio webcast and archived replay were available on the Investor Relations section of Orion's website[16] Supplemental Information Backlog Definition Backlog represents projects under contract that are either unstarted or in progress, with typical project durations ranging from three months to multiple years - Backlog consists of projects under contract that are either not yet started or are in progress but incomplete[18] - The Company cannot guarantee the realization of implied revenue or resulting earnings from backlog, which can fluctuate due to contract timing and execution[18] - Typical project durations range from three to nine months for shorter projects to multiple years for larger ones[18] Non-GAAP Financial Measures This section defines Orion's use of non-GAAP financial measures, including Adjusted Net Income, Adjusted EPS, EBITDA, and Adjusted EBITDA - Non-GAAP measures used include 'adjusted net income/loss,' 'adjusted earnings/loss per share,' 'EBITDA,' 'Adjusted EBITDA,' and 'Adjusted EBITDA margin'[19] - Adjusted net income/loss and adjusted EPS exclude certain one-time items or items whose timing/amount cannot be reasonably estimated[20] - EBITDA is defined as net income/loss before net interest expense, income taxes, depreciation, and amortization[21] - Adjusted EBITDA further adjusts EBITDA for items like share-based compensation and is used internally to evaluate operating performance[21][30] - These non-GAAP measures have limitations and should not be used as substitutes for GAAP measures like net income or cash flows[22] Forward-Looking Statements This section provides a cautionary statement regarding forward-looking statements, highlighting the inherent risks and uncertainties - Forward-looking statements include projections regarding the pipeline of opportunities, financial guidance, future operations, and project awards[23] - These statements involve risks such as impacts from fixed-price contracts, unforeseen productivity delays, contract cancellations, and funding delays[23] - Readers are cautioned not to place undue reliance on these statements, and the Company assumes no obligation to update them[23] - Additional risk factors are discussed in the Company's 2024 Annual Report on Form 10-K[24] Condensed Consolidated Financial Statements Statements of Operations The statements of operations detail financial performance for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Selected Data) | Metric | Three months ended June 30, 2025 ($K) | Three months ended June 30, 2024 ($K) | Six months ended June 30, 2025 ($K) | Six months ended June 30, 2024 ($K) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Contract revenues | 205,286 | 192,167 | 393,939 | 352,839 | | Gross profit | 25,797 | 18,281 | 48,812 | 33,819 | | Operating income (loss) | 3,432 | (2,768) | 4,265 | (5,892) | | Net income (loss) | 841 | (6,603) | (573) | (12,660) | | Diluted income (loss) per share | 0.02 | (0.20) | (0.01) | (0.39) | Reconciliation of Adjusted Net Income (Loss) This reconciliation details adjustments from GAAP net income (loss) to Adjusted Net Income (loss) for the three and six months ended June 30, 2025 and 2024 Reconciliation of Adjusted Net Income (Loss) | Metric | Three months ended June 30, 2025 ($K) | Three months ended June 30, 2024 ($K) | Six months ended June 30, 2025 ($K) | Six months ended June 30, 2024 ($K) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income (loss) | 841 | (6,603) | (573) | (12,660) | | Share-based compensation | 1,519 | 1,556 | 2,642 | 1,914 | | ERP implementation | 225 | 613 | 830 | 1,299 | | Severance | 547 | 19 | 577 | 81 | | Adjusted net income (loss) | 2,681 | (4,093) | 2,941 | (7,714) | | Adjusted EPS | 0.07 | (0.12) | 0.07 | (0.23) | Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations (Consolidated) This reconciliation provides a consolidated view of adjustments from net income (loss) to EBITDA and Adjusted EBITDA for relevant periods Consolidated Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations | Metric | Three months ended June 30, 2025 ($K) | Three months ended June 30, 2024 ($K) | Six months ended June 30, 2025 ($K) | Six months ended June 30, 2024 ($K) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income (loss) | 841 | (6,603) | (573) | (12,660) | | EBITDA | 8,687 | 3,322 | 14,957 | 6,290 | | Adjusted EBITDA | 10,978 | 5,510 | 19,144 | 9,584 | | Adjusted EBITDA margin | 5.3% | 2.9% | 4.9% | 2.7% | Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment This section provides a detailed breakdown of Adjusted EBITDA and margin for both the Marine and Concrete segments Marine Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations | Metric | Three months ended June 30, 2025 ($K) | Three months ended June 30, 2024 ($K) | Six months ended June 30, 2025 ($K) | Six months ended June 30, 2024 ($K) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Contract revenues | 135,302 | 130,953 | 262,465 | 237,278 | | EBITDA | 10,626 | (461) | 19,959 | (348) | | Adjusted EBITDA | 12,656 | 1,472 | 23,535 | 2,427 | | Adjusted EBITDA margin | 9.4% | 1.1% | 9.0% | 1.8% | Concrete Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations | Metric | Three months ended June 30, 2025 ($K) | Three months ended June 30, 2024 ($K) | Six months ended June 30, 2025 ($K) | Six months ended June 30, 2024 ($K) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Contract revenues | 69,984 | 61,214 | 131,474 | 115,561 | | EBITDA | (1,939) | 3,783 | (5,002) | 6,638 | | Adjusted EBITDA | (1,678) | 4,038 | (4,391) | 7,157 | | Adjusted EBITDA margin | (2.4)% | 6.6% | (3.3)% | 6.2% | Statements of Cash Flows The statements of cash flows present cash generated from or used in operating, investing, and financing activities for the six months ended June 30 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 ($K) | 2024 ($K) | | :---------------------------------- | :---------- | :---------- | | Net cash used in operating activities | (9,005) | (38,157) | | Net cash used in investing activities | (14,976) | (6,133) | | Net cash (used in) provided by financing activities | (2,603) | 18,189 | | Net change in cash, cash equivalents and restricted cash | (26,584) | (26,101) | | Cash, cash equivalents and restricted cash at end of period | 1,732 | 4,837 | Balance Sheets The balance sheets provide a snapshot of Orion's financial position as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Selected Data) | Metric | June 30, 2025 ($K) | December 31, 2024 ($K) | | :-------------------------- | :----------------- | :--------------------- | | Total current assets | 279,972 | 269,328 | | Total assets | 432,723 | 417,317 | | Total current liabilities | 203,052 | 191,173 | | Total liabilities | 279,530 | 266,638 | | Total stockholders' equity | 153,193 | 150,679 | Guidance Reconciliations This section provides reconciliations for the full-year 2025 guidance for Adjusted EBITDA and Adjusted EPS from their nearest GAAP measures FY 2025 Guidance – Adjusted EBITDA Reconciliation | Metric | Low Estimate ($K) | High Estimate ($K) | | :-------------------------- | :---------------- | :---------------- | | Net (loss) income | (2,226) | 1,533 | | EBITDA | 32,911 | 36,911 | | Adjusted EBITDA | 42,000 | 46,000 | FY 2025 Guidance – Adjusted EPS Reconciliation | Metric | Low Estimate ($K) | High Estimate ($K) | | :---------------------------------- | :---------------- | :---------------- | | Net (loss) income | (2,226) | 1,533 | | Adjusted net income | 4,302 | 6,900 | | Adjusted EPS | 0.11 | 0.17 |