Good morning, and welcome to the Orion Group Holdings First Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce of Investor Relations for Orion. Please go ahead.

Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings' First Quarter 2024 financial results. We issued our earnings release after market last night. It's available on the Investor Relations section of our website at Orion Group Holdings inc.com. I'm here today with Travis Boone, Chief Executive Officer of Orion, and Scott Thanisch, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we'll open up the call for your questions. Before we begin, I'd like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts are forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of these factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-K. With that, I'd now like to turn the call over to Travis. Travis, please go ahead.

Thank you, Margaret, and good morning, everyone, and thank you for joining our first quarter 2024 conference call. I'll start with a quick overview of our first quarter results, as well as providing more color on the tremendous opportunities before us. Then I'll turn it over to Scott to cover our financial results. We generated first quarter revenue of $160.7 million and adjusted EBITDA of $4.1 million. We are continuing to focus on increasing our margins. We expect revenue to build throughout the year with our current backlog and strong pipeline of opportunities. In addition to first quarter being our seasonally slowest period, revenue was affected by reduced activity on two major projects related to scheduling impacts outside of our control. These delays should not impact the critical completion of these large projects under contract for the total anticipated revenues or margins generated from these contracts. It is normal on construction projects for unexpected delays to occur. We have strong project teams that are nimble and able to respond quickly to get the projects back where they need to be. We expect to recover this work in the upcoming quarters with strong momentum in the back half of the year. Based on the activity level that we are seeing for our services, especially in marine construction, we are reiterating our full year 2024 expectations for revenue in the range of $860 million to $950 million and adjusted EBITDA in the range of $45 million to $50 million. We entered the first quarter with a solid foundation and a much healthier business. After our hard work transforming the business throughout 2023, we are now in a position to reap the benefits. We have put disciplines, processes, and procedures in place. Expectations are crystal clear for our teams, and everyone is aligned on the same mission: delivering predictable excellence through outstanding execution. We invested in strategic growth and have vastly improved our business development team and processes. Finally, we strengthened the balance sheet and monetized noncore assets. These changes are driving energy and momentum throughout the organization. The best way to measure opportunity is our pipeline and a count of all potential projects we might pursue. In just over a year, our pipeline of opportunities has grown from $3 billion to over $11 billion. The increased volume, in large part, reflects the investments we have made in our business development efforts that are gaining real traction. In addition, the marine construction industry is exploding, and we are intensifying our attention on that market. In the coming years, we believe demand for specialized construction could exceed supply. The diversity of both projects and funding sources, overlaid with our geographic footprint and areas of expertise, gives me great confidence in our ability to win new contracts and drive growth. Given the number of quality projects in this space that fit Orion's unique capabilities, our energy and focus will mainly be on capitalizing on marine construction opportunities. We expect dredging to remain an integral part of our marine business as we grow, but it will be a smaller portion of our revenue in comparison to marine construction. Strong secular trends are driving these opportunities, and here are some examples. First, the $1.2 trillion infrastructure bill will provide a multiyear catalyst for public sector projects such as transportation funding, ports, waterways, water infrastructure, and bridges, among other things. The government has planned $6 billion for ports and waterways and $174 billion for roads, bridges, and major projects. We are just beginning to see these funds start to flow and believe they will drive more projects in 2025 and beyond. Second, ships are much larger today than they were 30 or 40 years ago. The expansion of the Panama Canal allows larger ships to pass through ports. As a result, infrastructure upgrades are required all along the Eastern Seaboard and the Gulf to expand ports and deepen channels. The unfortunate KeyBridge incident in Baltimore shines a spotlight on the infrastructure upgrades needed throughout the country to accommodate larger vessels passing through the ports. The U.S. Navy is spending billions on the Pacific Deterrence initiative to protect U.S. interests. Our project in Pearl Harbor, where we are a subcontractor to the $2.8 billion joint venture team to build a dry dock for nuclear submarines, is the largest construction project in U.S. Navy history, but not for long. The Navy has planned a much larger investment to revitalize the Puget Sound Naval Shipyard and other marine facilities in the Pacific. We have a well-established presence in the Pacific Northwest, and we are now established in Hawaii. We intend to leverage this presence to capitalize on the billions being invested in the Pacific. In February, I attended the Navy's anchoring ceremony at Pro Harbor. The Orion team was honored to drive the first ceremonial pile on this critical Navy project. We are now into our core construction activities, and pile driving has continued by our crews. We have been a critical part of the team on this high-profile Navy project. Based on our work in Pearl Harbor, we are in a strong position to compete for additional U.S. Navy contracts in the Pacific. Finally, there is growing construction activity in the Gulf. As I have mentioned before, coastal restoration is a critical need in many areas, and there's $10 billion planned by multiple agencies for coastal restoration in Louisiana alone. Coastal restoration work typically includes a combination of both dredging and construction. LNG, methane, and ammonia terminals are also being constructed to advance green energy initiatives. These projects are a perfect fit for Orion, which is why we have invested there and opened a new office in New Orleans. We've been engaged in these projects and expect more work in the future. Many of our long-standing private sector petrochem clients are also planning major capital projects, and we are engaged in planning and design with them, and we'll be building these projects as well. We expect to see project volume ramp up in 2024 through 2025, and the investments we are making to improve our fleet, our systems, and our teams will enhance our competitive position. Turning to our concrete business, we are also seeing strong demand drivers in this segment. Data centers are the necessary infrastructure for artificial intelligence, and the number of AI-driven data centers is expected to double in the next year. North Texas now ranks second among U.S. markets by inventory of data centers, with a 173% increase in the second half of last year. Orion Concrete is well established in this market. And to date, we have already built or are building 19 data centers in Texas. Beyond Texas, we're also pursuing opportunities in Utah, Arizona, and Nevada through our strong relationships with general contractors working in those states. Our competitive advantage is not only our experience and the high quality of our work, but also our unmatched safety record, which is extremely important to the owners of these data centers. For two years in a row, we have had zero lost time incidents, and we have an extraordinary safety culture focused on our people going home safely every day. While the data center market is booming, we are seeing headwinds in our traditional developer-driven concrete markets due to the persistently high interest rates. With commercial construction taking a pause, we are shifting our concrete resources to the data center market, which is hot. In summary, we've now set the company up for success and are focused on driving growth for the remainder of 2024 and then in 2025 and beyond. Our leadership and platform are in place to capitalize on the immense opportunity ahead. Looking forward, we expect the business to accelerate in the second quarter with strong growth in the back half of the year. Before I turn it over to Scott, I'd like to thank our retiring Board member, Richard Daerr, for his 17 years of service on our board. Richard has been with Orion since going public in 2007, serving as Chairman for most of those 17 years. He has been a valuable asset to both management and the Board and will officially step down next month at our Annual Meeting of Stockholders. We wish him the very best in his well-earned retirement. I also want to encourage stockholders to cast their votes and participate in our virtual meeting on May 16. You can find the details in the materials and on our website. I'll now turn the call over to Scott.

Thanks, Travis, and good morning, everyone. Starting with our first quarter financial results. We generated revenue of $160.7 million, up 1% over last year. As Travis mentioned, we experienced a schedule shift during the first quarter in two large projects and expect to recover this work over upcoming quarters in 2024. While total revenue for the quarter remained largely flat compared to last year, the mix of revenue changed dramatically, with marine revenue up 34% and concrete revenue down 32%. This change in mix reflects our focus on marine segment growth opportunities as well as the disciplined bidding standards we adopted to win quality work at attractive margins in our concrete segment. We have learned to walk away from work that doesn't fit us and direct our energy to projects that deliver solid margins. With the shift towards marine projects, we are also increasing the average size of projects in our backlog. To give you a sense of typical project size in our marine segment, a $150 million project is right down the middle of the fairway for us. And in our concrete segment, that's about $30 million for a large project. Data center projects in concrete may run between $20 million and $50 million. Targeting these larger projects ultimately gives us better revenue visibility over longer time periods. We also gained efficiencies in managing resources for a large project versus many small projects. Our goal is to have a more reliable and predictable revenue stream. Three to four large projects rolling out over a one to two-year time line would help dampen some of the quarterly revenue fluctuations driven by job starts and completions. At this time last year, we had just a couple of large projects in our opportunity pipeline. Today, our business development team is pursuing over 20 of these types of projects. First quarter gross profit margin increased to $15.5 million or 9.7% of revenue, up from $5.8 million or 3.7% of revenue in the first quarter of last year. Both segments increased both gross margin dollars and gross margin percentage over the prior year. The 600 basis point increase in consolidated gross margins was primarily driven by improved pricing of high-quality projects and improved execution in both segments. SG&A expenses were $19 million, up from $17 million in the first quarter of 2023. As a percentage of total contract revenues, SG&A expenses increased to 11.8% from 10.7% last year. The increase in SG&A dollars reflected greater spending in IT and business development, as well as higher legal costs to pursue project-related claims. We are on track with our IT implementations. And over the next several months, we will be rolling out new tools and processes for our operations and our back office. We're implementing software tools that share information and provide status of projects, improving our ability to effectively manage projects on the ground. And migrating our business segments to the same financial platform will deliver efficiencies and greatly improve our line of sight across the entire business. Turning to profitability, we reported an adjusted net loss of $4 million or $0.12 per diluted share in the first quarter compared to an adjusted net loss of $10.3 million or $0.32 per diluted share in the prior year period. This result excludes $2.1 million or $0.07 of diluted earnings per share of nonrecurring items. Our GAAP net loss for the first quarter of 2024 was $6.1 million or $0.19 loss per diluted share. EBITDA for the first quarter was $3 million and adjusted EBITDA was $4.1 million. Adjusted EBITDA margin was 2.5%, up from negative 2.6% in the prior year period. Moving on to bidding metrics. In the first quarter, we bid on approximately $1.1 billion worth of opportunities, winning $155 million. This resulted in a contract value weighted win rate of 15.4% and a book-to-bill ratio of 0.97x for the quarter. As of March 31, our backlog was $756.6 million compared to $762.2 million at December 31, 2023. Breaking out our first quarter backlog, $569.9 million was in our marine segment and $186.7 million was in our concrete segment. In April, we have been awarded an additional $42 million for new marine segment project work and $59 million for concrete segment work. We continue to deliver on our promise to improve profitability by implementing a more disciplined bidding process and winning quality work at attractive margins. During the first quarter, adjusted EBITDA margin in the marine segment was 0.9%, up from negative 1.6% last year. Adjusted EBITDA margin in our concrete segment improved to 5.7%, up from negative 3.5% in the first quarter last year. As a reminder, our goal is to generate adjusted EBITDA margins in the low double digits for marine and the high single digits for concrete. Turning to the balance sheet, as of March 31, we had $4.6 million in cash with negligible outstanding borrowings under our revolving credit facility. Our plan to monetize noncore assets is on track. We are working on completing our $34 million land sale contract for our East West Jones property with an expected close in June. With the completion of this transaction, in total, we will have unlocked over $60 million of value from our balance sheet to reduce debt and invest in growing our business. We are increasing our CapEx spending over 2023 to upgrade our fleet and be prepared for accelerated growth through 2025 and beyond. To give us more flexibility to make these investments, we have amended our credit agreement to lower our minimum fixed charge coverage ratio covenant to 1:1 for the remainder of 2024 and reduced our June 30 prepayment from $15 million to $10 million in conjunction with a one-year extension. Our first quarter FCCR was 1.32:1. As Travis mentioned, we anticipate growing our backlog and the top line substantially over 2023 and expect revenue to ramp up in the back half of the year. At the same time, we plan to continue to improve margins by managing the business more efficiently and productively. For the full year 2024, we reconfirm our guidance both for anticipated revenue in the range of $860 million to $950 million and expected adjusted EBITDA in the range of $45 million to $50 million. And with that, we'll open up the call for questions.

We will now begin the question-and-answer session. At this time, we'll pause momentarily to assemble a roster. Our first question comes from Julio Romero from Sidoti & Company.

I wanted to start with talking about Marine and wanted to talk about the increasing number of bidding opportunities there. Specifically, if we could go into the magnitude of the U.S. enabled defense spending opportunity. You guys talked about the Pearl Harbor project and that you expect it won't be the largest U.S. Navy project for long. I guess if you could help us understand kind of how big the opportunity is relative to the past?

Based on our findings, the potential opportunity in the Pacific is in the tens of billions, although we do not have an exact figure as it has not been published. By aggregating information from various projects we are aware of, we know it's a substantial figure in the multibillions.

Okay. Got it. And then talking about the concrete business, can we just talk about your shift in focus to data centers for a bit? Maybe help us understand how much of like trailing 12 months sales in concrete are from data centers and maybe what percentage of concrete revenues do you anticipate that makes up a year from now?

I'm not certain of the exact number off the top of my head. However, our largest contract in concrete so far was a data center project valued at approximately $55 million, which we signed last year and are completing this year. There are several other contracts as well. As Scott noted during the call, the typical range for these contracts is between $20 million and $50 million, and we've seen many opportunities arise in the past couple of years, particularly as we've completed more of them. This trend is continuing to grow, especially as demand for AI-driven infrastructure is currently high.

Got it. And then just if you can help us understand how a data center project is maybe a little different than your traditional concrete project from a concrete contractor perspective. Would there be some incremental complexity or specialization of the project? And does that lend itself to hopefully higher bid margins for that type of project?

It's not necessarily that it's super different work than what we already do in concrete. We do a lot of complex concrete work in our concrete business on a regular basis, and it's pretty similar to what we do; it's just put together a slightly different for a data center, but it's a very similar work to what we normally do. Typically, as far as we've performed, we've done very well on the data centers that we've done. I'm not going to speak to specific project metrics. But generally speaking, we've done very well on our data center work.

Understood. I'll pass it on and I'll hop back in the queue.

The next question comes from Alex Rygiel from B. Riley.

A couple of quick questions here. First, the Commercial Concrete segment margins were very positive. Congratulations about that. But how confident are you that that's going to continue?

Thanks, Alex. That's a good question. We're confident in our concrete business. Over the past year and a half, we've focused on being disciplined about our project pursuits and our minimum bid margins, which has enhanced our ability to deliver projects profitably. We believe we can maintain strong performance in our concrete business due to this discipline. While the specific margins will be influenced by market conditions and other factors, we generally feel positive about continuing to achieve profitability in this area.

Yes, I do think the first quarter was a little bit higher than average just based on the contracts that completed during that time frame. So I wouldn't necessarily take Q1 and then run that out the rest of the year. But we do expect that we continue to see year-over-year progress on our margins as we go forward.

That's perfect. And then can you remind us what your CapEx budget is for 2024? And maybe talk about a couple of the larger components within that.

The CapEx budget for the year... Yes. So we have maintenance CapEx needs that we always have every year, and we've typically talked about that being about $50 million a year for resets and just normal maintenance on our fleet. And then we've talked about investments that we're making to grow our fleet about $30 million in a dredge build program over the next couple of years. So that's kind of the things that we have in mind right now. There may be, according to the opportunities, some shift of dollars, but I think those are probably the quantities that you should expect going forward.

Super helpful. And then lastly, can you remind us what the timeline for the Pearl Harbor project is moving forward now? Sort of when do you see construction activity and how long does it last for?

Yes. So we'll be kind of fully ramped up and operating at peak capacity near the middle of this year until, let's call it, the middle of next year before it kind of starts ramping down somewhat in the latter half of next year.

The next question comes from David Storms from Stonegate Capital.

Just hoping we could start with the current backlog. It had a nice jump. You mentioned roughly $100 million since the end of the quarter. Was this a timing thing? Was this just one big win that came through? Kind of what drove that backlog jump?

It was just a timing thing. There wasn't one specific win that drove that. There were quite a few wins in both Concrete and Marine that drove that number. And so it wasn't one specific project, which is a good thing. It's not just driven by one. I think that's had a pretty good run of wins that drove that number.

Understood. And then just on the scheduling delays that you mentioned, are you able to give us a sense of maybe the magnitude of that and the spacing of any catch-up? Should we expect most of that to be in Q2? Or will it kind of be equally spread out through the remainder of the year? How should we be thinking about that?

Yes, it will be spread out through the remainder of the year. Some of it, I think, on one of the projects, most of the catch-up will happen in Q3, and the other one will be probably sort of some in Q2, and then more in 3 and 4.

Understood. And then just one more for me. Your press release mentioned that your opportunity pipeline has almost quadrupled. Are there any specific initiatives that you're onboarding to try to capture, obviously, as much of this pipeline as you can?

We've been in progress for the last year plus working on quite a few things to capture that market. We had a pretty strong sense that it was going to be improving significantly, which has driven a lot of the investments and work that we've been doing over the past year plus, David. So it's been not necessarily that we're starting something new now. We've already been working on it for quite some time as we saw the market starting to blossom.

Good luck in the second quarter.

Our next question comes from Josh Zoepfel from Noble Capital Markets.

It's filling in for Joe. So you guys talked a little bit about Hawaii. It seems to be obviously having some delays. But can you guys just provide any additional color on the Grand Bahama project? How is that looking?

It's looking very good. We had some delays with a subcontractor, but kind of moved some noncritical path work to the right. They got a little delayed on some other things, and we'll be starting up a little later on their portion of the work than we had anticipated. But it was, again, noncritical path work, and it didn't impact the schedule of the project or any of our work. It just sort of delayed their work until the end of the second quarter.

Okay. Perfect. And obviously, there hasn't been a lot of time between the fourth quarter and now. But can you speak on the judging environment? You guys mentioned kind of the pick back later in the later half of this year, but you still kind of expect that.

We are optimistic that things will start improving later this year. We haven't observed signs of change yet, but the situation has remained consistent for a while. We believe that operations will become more stable with the core activities as the year progresses.

Okay. Perfect. And then I guess last one I’ll squeeze in here. I guess in the SG&A, obviously, it's higher than we kind of anticipated. Should we expect this to kind of continue throughout the year, this kind of run rate?

Yes, I think that this absolute dollar amount is probably a good run rate to use going forward as we continue to incur some costs related to claims and as we make the most of our business development opportunities by investing in that function. Thanks, Josh. And while we wait for more calls, it might be a good time to say there was a typo in our press release that went across the wires, and that was to the balance sheet, which had an incorrect current debt number. That has been corrected in the 8-K, which was filed with the press release there.

There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Travis Boone for any closing remarks.

Thank you. Thank you, everyone, for joining today. We appreciate your time. I guess in closing, I just want to thank all of our employees who are working really hard in our business every day to work safely and profitably and bring the best that they can to work every day. I also want to thank our shareholders for their continued confidence in us and look forward to continued growth in the company here going forward. Thanks, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.