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Orion Marine Group, Inc. Reports Second Quarter 2010 Results

HOUSTON, Aug. 5, 2010 (GLOBE NEWSWIRE) -- Orion Marine Group, Inc. (NYSE:ORN) (the "Company"), a leading heavy civil marine contractor, today reported net income for the three months ended June 30, 2010, of $7.0 million or $0.26 diluted earnings per share (based on 27,200,611 diluted shares outstanding). These results compare to net income of $6.3 million or $0.28 diluted earnings per share (based on 22,148,304 diluted shares outstanding) for the same period a year ago. 

"Our bid markets remain strong and there continues to be good drivers for long-term growth," said Mike Pearson, Orion Marine Group's President and Chief Executive Officer. "Overall, the second quarter showed good growth and we are pleased with the results."

Financial highlights of the Company's second quarter 2010 include:

Second Quarter 2010

  • Second quarter 2010 contract revenues were $87.1 million, an increase of 23.1%, as compared with the second quarter of 2009 revenues of $70.8 million. Second quarter revenues fell short of the Company's stated second quarter 2010 goal range of $90-$95 million due to changes in the timing of certain jobs.
     
  • Gross profit for the quarter was $19.6 million which represents an increase of $0.7 million as compared with the second quarter of 2009. Gross profit margin for the quarter was 22.5%, which was lower than the prior year period of 26.7%. During the second quarter 2009 gross profit margin was higher as a result of the timing of jobs in progress and higher self-performance.
     
  • The Company self-performed approximately 85% of its work as measured by cost during the second quarter 2010 as compared with 90% in the prior year period.
     
  • Selling, General, and Administrative expenses for the second quarter 2010 were $8.6 million which were in line with the prior year period.
     
  • The Company's second quarter 2010 EBITDA was $15.7 million, representing an 18.1% EBITDA margin, which compares to second quarter 2009 EBITDA of $15.2 million, or a 21.4% EBITDA margin. 

Backlog of work under contract as of June 30, 2010 was $218.1 million which compares with backlog under contract at June 30, 2009 of $141.8 million. In addition, the recently announced large project awards, including the announcement made this morning, add approximately $40 million to backlog. Including these projects, the Company has approximately $258 million worth of backlog. The Company reminds investors that backlog can fluctuate from period to period due to the timing and execution of contracts. Given the typical duration of the Company's projects, which range from three to nine months, the Company's backlog at any point in time usually represents only a portion of the revenue it expects to realize during a twelve month period. Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and not yet complete, and the Company cannot guarantee that the revenue projected in its backlog will be realized, or, if realized will result in earnings. 

"Backlog remains solid as we continue to see good demand for our services," said Mark Stauffer, Orion Marine Group's Executive Vice President and Chief Financial Officer. "As we look at the remainder of the year, our backlog indicates revenue continuing to build into the back half of the year with full year EBITDA margins in the 16% to 18% range."

2010 Outlook

The Company expects to continue to see positive long-term trends in port expansion, U.S. infrastructure updates, coastal and wetland restoration projects, expansion in the cruise industry and projects involving dredging services.

The Company is currently tracking $4.5 to $5.0 billion of bid opportunities. The Company continues to see strong bidding activity across its markets and geographic areas. However the cost of certain materials has declined recently, resulting in a reduction of contract values. Additionally, competition in the East Coast construction market has remained elevated with growing pressure on pricing. As a result of these two factors, the Company has re-evaluated its full year 2010 revenue goals and now believes revenue will be in the $360 to $370 million range for the full year. The Company's full year 2010 EBITDA margin goal remains 16%-18%.

"During the second quarter, we did not sustain our historical win rate in the East Coast construction market as a result of continued pressure on pricing," said Mr. Pearson. "Still the East Coast construction market remains strong. In fact, our bid activity level in the East Coast construction market has increased year-over-year, however our success rate has declined in this region as we have not waivered on our bid pricing discipline. We were hopeful the pricing pressure would alleviate in the back half of this year but all indications are that we will continue to see this pressure throughout 2010. As a result of this and the decline in the cost of certain materials, we felt it was prudent to re-evaluate our full year 2010 revenue goal. Despite a decrease from our previous expectations, we still remain optimistic about the road ahead. For the full year, we expect to post solid revenue growth including approximately $40 million from the acquisitions we made earlier this year. In fact, for the full year 2010, we already have $350 million of potential revenue; including the actual revenue realized in the first two quarters of the year, plus the amount we expect to liquidate during the remainder of the year from backlog and projects on which we are low bidder. Of course we will still need to execute the work in backlog, and sign contracts for our low bid projects. But this level of activity plus the continued strong market we are tracking give us confidence in the future. The long-term positive end market drivers remain and we are optimistic about the future."

For the third quarter 2010, the Company expects revenue will be in the $90 to $95 million range with third quarter 2010 EBITDA margin in the 16% to 18% range.

Conference Call Details

Orion Marine Group will conduct a telephone briefing to discuss its results for the second quarter 2010 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, August 5, 2010. To listen to a live broadcast of this briefing, visit the Investor Relations section of the Company's website at www.orionmarinegroup.com. To participate in the call, please call the Orion Marine Group Second Quarter 2010 Earnings Conference Call at 866-700-0161; participant code 54780015.

A replay of this briefing will be available on the Web site within 24 hours and will be archived for at least two weeks. 

About Orion Marine Group

Orion Marine Group, Inc. provides a broad range of marine construction and specialty services on, over and under the water along the Gulf Coast, the Atlantic Seaboard, the West Coast, Canada and the Caribbean Basin and acts as a single source turn-key solution for its customers' marine contracting needs. Its heavy civil marine construction services include marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging, and specialty services. Its specialty services include salvage, demolition, diving, surveying, towing and underwater inspection, excavation and repair. The Company is headquartered in Houston, Texas and has an almost 80-year legacy of successful operations.

The Orion Marine Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4539

EBITDA and EBITDA Margin

This press release includes the financial measures "EBITDA" and "EBITDA margin". These measurements may be deemed "non-GAAP financial measures" under rules of the Securities and Exchange Commission, including Regulation G. The non-GAAP financial information may be determined or calculated differently by other companies. By reporting such non-GAAP financial information, the Company does not intend to give such information greater prominence than comparable and other GAAP financial information, which information is of equal or greater importance.

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

A reconciliation of the Company's future EBITDA margin to the corresponding GAAP measure is not available as these are estimated goals for the performance of the overall operations over the planning period. These estimated goals are based on assumptions that may be affected by actual outcomes, including but not limited to the factors noted in the "forward looking statements" herein, in other releases, and in filings with the Securities and Exchange Commission.

Forward-Looking Statements

The matters discussed in this press release may constitute or include projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of which the Company is availing itself. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'seeks', 'approximately', 'intends', 'plans', 'estimates', or 'anticipates', or the negative thereof or other comparable terminology, or by discussions of strategy, plans, objectives, intentions, estimates, forecasts, assumptions, or goals. In particular, statements regarding future operations or results, including those set forth in this press release (including those under "Outlook" above), and any other statement, express or implied, concerning future operating results or the future generation of or ability to generate revenues, income, net income, profit, EBITDA, EBITDA margin, or cash flow, including to service debt, and including any estimates, forecasts or assumptions regarding future revenues or revenue growth, are forward-looking statements. Forward looking statements also include estimated project start date, anticipated revenues, and contract options which may or may not be awarded in the future. Forward looking statements involve risks, including those associated with the Company's fixed price contracts, unforeseen productivity delays that may alter the final profitability of the contract, cancellation of the contract by the customer for unforeseen reasons, delays or decreases in funding by the customer, and any potential contract options which may or may not be awarded in the future, and are the sole discretion of award by the customer. Past performance is not necessarily an indicator of future results. In light of these and other uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that the Company's plans, estimates, forecasts, goals, intentions, or objectives will be achieved or realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update information contained in this press release whether as a result of new developments or otherwise.

Please refer to the Company's Annual Report on Form 10-K, filed on March 9, 2010, which is available on its website at www.orionmarinegroup.com or at the SEC's website at www.sec.gov, for additional and more detailed discussion of risk factors that could cause actual results to differ materially from our current expectations, estimates or forecasts.

 

Orion Marine Group, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except share and per share information)
     
  Three Months Ended
  June 30,
2010
June 30,
2009
  (Unaudited) (Unaudited)
Contract revenues  $ 87,126  $ 70,753
Costs of contract revenues   67,546   51,878
Gross profit  19,580  18,875
Selling, general and administrative expenses   8,562   8,739
Operating income   11,018   10,136
     
Interest income  (8)  (95)
Interest expense   18   231
Other (income) expense, net   10   136
Income before income taxes  11,008  10,000
Income tax expense   3,999   3,714
Net income  $ 7,009  $ 6,286
     
Basic earnings per share—Common  $ 0.26  $ 0.29
Diluted earnings per share—Common  $ 0.26  $ 0.28
Shares used to compute earnings per share:    
Basic—Common  26,889,672  21,622,219
Diluted—Common  27,200,611  22,148,304

 

Orion Marine Group, Inc. and Subsidiaries
EBITDA and EBITDA Margin Reconciliations
(In Thousands, except margin data)
     
  Three Months Ended
  June 30,
2010
June 30,
2009
  (Unaudited) (Unaudited)
Net income  $ 7,009  $ 6,286
Income tax expense  3,999  3,714
Interest (income) expense, net  10  136
Depreciation and amortization   4,712   5,028
EBITDA[1]  $ 15,730  $ 15,164
 
Operating Income Margin[2]
 12.7%  14.3%
 
Impact of Depreciation and Amortization
 5.4%  7.1%
 
EBITDA margin[1]
 18.1%  21.4%

[1] EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by contract revenues.

[2] Operating income margin is calculated by dividing operating income plus gain from bargain purchase of equipment by contract revenues.

 

Orion Marine Group, Inc. and Subsidiaries
Supplementary Financial Information
(In Thousands)
   
  Six Months Ended
  June 30,
2010
  (Unaudited)
   
Net cash flow from operating activities $ (2,661)
   
Capital Expenditures $    16,079
   
  Balance as of
  June 30,
2010
   
Cash and cash equivalents $ 15,798 
Term debt outstanding $ --
CONTACT:  Orion Marine Group, Inc.
          Mark Stauffer, Executive Vice President & CFO
          Chris DeAlmeida, Director of Investor Relations
          713-852-6506

Orion Marine Group, Inc. Logo

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