ORN 8-K
Orion Group Holdings Inc (ORN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
After almost 17 years of service on the Board of Directors (the “Board”) of Orion Group Holdings, Inc. (“Orion” or the “Company”), including 13 years of service as Non-Executive Chairman of the Board and one year as Lead Independent Director, Mr. Richard Daerr, Jr. informed the Chairman of the Board of Orion on March 21, 2024 pursuant to Orion’s Amended and Restated Bylaws that Mr. Daerr does not intend to stand for re-election at the Company's next Annual General Meeting of Stockholders on May 16, 2024 (the “Annual Meeting”), but instead intends to retire from the Board effective at the conclusion of the Annual Meeting. The anticipated retirement of Mr. Daerr from the Board did not arise from any disagreement with the Company on any matters relating to the Company’s operations, policies or practices. Mr. Daerr intends to serve out the rest of his term as a Class II director on the Board and a member of the Compensation Committee of the Board.
Item 7.01 Regulation FD Disclosure.
On March 25, 2024, the Company issued a press release announcing the retirement of Richard Daerr, Jr. as a Class II director on the Board and a member of the Compensation Committee of the Board, effective as of May 16, 2024. The text of the press release is set forth in Exhibit 99.1 attached to this Current Report on Form 8-K and is incorporated herein by reference.
On March 26, 2024, the Company’s executive management team intends to meet with current and potential investors as part of a non-deal roadshow in New York City. The presentation that the Company's executive management team will cover during those meetings is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. All information included in the presentation is presented as of the dates indicated, and the Company does not assume any obligation to correct or update such information in the future. In addition, the Company disclaims any inferences regarding the materiality of such information that may arise as a result of it furnishing such information under Item 7.01 of this Current Report on Form 8-K.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 7.01, Exhibit 99.1 and Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
The Exhibits to this Current Report are furnished in the Exhibit Index, which appears at the end of, and is incorporated by reference into, this Current Report.
Exhibit No. | Description |
Press Release of Orion Group Holdings, Inc. dated March 25, 2024. | |
Orion Group Holdings, Inc. Investor Presentation for March Roadshow | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Orion Group Holdings, Inc. | ||
Dated: March 25, 2024 | By: | /s/ Travis J. Boone |
President and Chief Executive Officer | ||
Exhibit 99.1
Orion Group Holdings, Inc. Announces Retirement of Board Member
HOUSTON – March 25, 2024 – Orion Group Holdings, Inc. (NYSE: ORN) (“Orion” or the “Company”), a leading specialty construction company, announced today that Richard L. Daerr, Jr., who has served as an independent member of the Company’s Board of Directors (the “Board”) since 2007 and was Chairman of the Board from 2007 to 2020 as well as Lead Independent Director from 2022 to 2023, informed the Company that he has chosen not to stand for re-election and instead retire from the Board effective at the Company’s upcoming Annual General Meeting of Stockholders on May 16, 2024. Effective upon Mr. Daerr’s retirement, the Board has determined to reduce its size from eight directors to seven directors, six of whom are independent.
Austin Shanfelter, Orion’s Chairman of the Board, commented, “We want to thank Richard for his years of service to the Company and his many valuable contributions, including his board leadership in the transition of Orion to a public company, establishing the standards for governance, the growth of the Company, and agreeing to serve as our Lead Independent Director through our recent executive transition. We wish him all the best in his future endeavors.”
Mr. Daerr stated, “It has been my distinct honor to serve on this Board for almost seventeen years and lead the Board for almost all of that time. I am proud of the tremendous transformation the Company has achieved over this time, and I leave with great confidence in Orion’s future and the strength of its Board.”
About Orion Group Holdings
Orion Group Holdings, Inc., a leading specialty construction company serving the infrastructure, industrial and building sectors, provides services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through its marine segment and its concrete segment. The Company’s marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design and specialty services. Its concrete segment provides turnkey concrete construction services including place and finish, site prep, layout, forming, and rebar placement for large commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas. The Company’s website is located at: https://www.oriongroupholdingsinc.com.
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 “safe harbor” provisions of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, of which provisions the Company is availing itself. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'seeks', 'approximately', 'intends', 'plans', 'estimates', or 'anticipates', or the negative thereof or other comparable terminology, or by discussions of strategy, plans, objectives, intentions, estimates, forecasts, outlook, assumptions, or goals. In particular, statements regarding future operations or results, including those set forth in this press release, and any other statement, express or implied, concerning future
operating results or the future generation of or ability to generate revenues, income, net income, gross profit, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, or cash flow, including to service debt, and including any estimates, forecasts or assumptions regarding future revenues or revenue growth, are forward-looking statements. Forward-looking statements also include project award announcements, estimated project start dates, anticipated revenues, and contract options which may or may not be awarded in the future. Forward-looking statements involve risks, including those associated with the Company's fixed price contracts that impacts profits, unforeseen productivity delays that may alter the final profitability of the contract, cancellation of the contract by the customer for unforeseen reasons, delays or decreases in funding by the customer, levels and predictability of government funding or other governmental budgetary constraints, and any potential contract options which may or may not be awarded in the future, and are at the sole discretion of award by the customer. Past performance is not necessarily an indicator of future results. In light of these and other uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that the Company's plans, estimates, forecasts, goals, intentions, or objectives will be achieved or realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update information contained in this press release whether as a result of new developments or otherwise, except as required by law.
Please refer to the Company's 2023 Annual Report on Form 10-K, filed on March 1, 2024, which is available on its website at www.oriongroupholdingsinc.com or at the SEC's website at www.sec.gov, for additional and more detailed discussion of risk factors that could cause actual results to differ materially from our current expectations, estimates or forecasts.
Contact:
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Margaret Boyce
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| Orion Group Holdings, Inc. Delivering Predictable Excellence March 2024 |
| DISCLAIMER This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about: our business strategy; our financial strategy; our industry outlook; and our expected margin growth; and our plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical fact included in this presentation, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this presentation are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this presentation are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the “Risk Factors” section in our filings with the U.S. Securities and Exchange Commission and elsewhere in those filings. Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made. The forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. This presentation may contain the financial measures: adjusted net income, EBITDA, adjusted EBITDA, and adjusted EPS, which are not calculated in accordance with U.S. GAAP. If presented, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure will be provided in the Appendix to this presentation. |
| AT A GLANCE Orion is a leading marine and specialty construction company in the U.S., Canada and Caribbean Basin KEY STATISTICS $711.8M 2023 Revenue $23.8M 2023 Adj. EBITDA 1994 Founded Houston, TX Headquarters ORN(NYSE) Ticker ~2,400 Employees COMPANY OVERVIEW Marine Transportation facility & infrastructure construction; dredging SERVICES Concrete Commercial, structural, and industrial Q4 2023 vs Q4 2022 Revenue +3% GAAP EPS +13% Adjusted EBITDA +366% Adjusted EBITDA Margin +570bps |
| PHASE 1 OF STRATEGIC PLAN COMPLETED Improved profitability in the concrete business Strengthened business development to drive growth Fortified financial flexibility to optimize growth potential opportunities Implemented minimum bid margins – Pursuing work with strong value proposition –Bolstering management oversight with experienced leaders Recruited high-caliber talent – Investing in resources to deepen client relationships – Doubled backlog - Building on significant contract wins Secured $103M ABL credit facility – Monetized $26M of non-core assets – Investments in IT infrastructure and fleet 01. 02. 03. |
| 2023 ACCOMPLISHMENTS FINANCIALS $711.8M 2023 Revenue $23.8M 2023 Adj. EBITDA GAAP EPS Loss of $0.55 Adjusted EPS Loss of $0.35 per share per diluted share Phase 1 of strategic plan completed • Returned the Concrete segment to profitability • Significant wins: o $435M contract to build dry dock in Pearl Harbor, HI (largest win in company history) o $120M contract to build dry dock in Grand Bahamas shipyard • Attracted high-caliber business development executives • Invested in systems, training and tools • Rebranded TAS Construction to Orion – all segments operating under the Orion banner • Fortified balance sheet • Quadrupled shareholder value trailing twelve months WE DID WHAT WE SAID WE WOULD DO |
| Driving our growth potential Foundation in place, turning full attention to growth PHASE 2 OF STRATEGIC PLAN Demand for specialized Marine construction exceeds supply Strategic M&A/Geographic expansion Build out IT capabilities for greater efficiency Integrating all business units on a single platform In a little over a year, we almost quadrupled our pipeline of opportunity from $3B to over $11B Massive opportunities in marine construction New potential in concrete both private and public sector, enabling infrastructure for AI driven data centers |
| STRONG INDUSTRY TAILWINDS $1.2 trillion Infrastructure Act 01. Multi-year catalyst for public sector projects such as transportation funding, ports, waterways, water infrastructure and bridges. Port expansion and maintenance 02. Larger ships passing through the expanded Panama canal demand larger ports and shipping channels. U.S. Navy expansions in the Pacific 03. U.S. Navy investments in assets to support the U.S. Navy fleet. Coastal rehabilitation 04. Increased disaster recovery from regional weather events, environmental remediation and sea level rise; $10B projected in Louisiana alone. Growing public sector construction market 08. Presents new market for Orion Concrete Data centers demand 07. AI driving need for more data centers in North Texas and other weather-safe regions. Economic Growth and expansion 06. Leading job and population growth rates in Texas. Downstream energy 05. Private investment in LNG and methanol terminals. $30B TAM. Diverse end markets. Multiple sources of funding. |
| $340.7 $202.6 $376.9 $216.7 $602.5 2019 2020 2021 2022 2023 $369.1 $388.2 $263.9 $339.2 $395.9 10.4% 12.3% 8.1% 9.3% 5.2% 2019 2020 2021 2022 2023 Marine Revenue Adj EBITDA Margin MARINE SEGMENT OVERVIEW Orion Marine benefits from high -margin projects with high barriers of entry and consistent maintenance demand • Services the infrastructure sector to carry out construction, design and specialty services for marine structures • Construction services include construction, restoration, maintenance & repair of ports and docks, marine pipelines, marine transportation facilities, bridges and environmental structures • Dredging services generally enhance or preserve the navigability of waterways through the removal of soil, sand or rock. Added benefits of protecting shorelines with replenishment of material. • Specialty services include design, salvage, demolition, surveying, towing, diving and underwater inspection, excavation and repair • The Jones Act prevents foreign competition from dredging in the U.S. market CONSTRUCTION DREDGING SPECIALTY Marine Revenue & Adj EBITDA Margin Marine Revenue Backlog ($ in millions) ($ in millions) |
| $231.6 $236.9 $213.1 $232.1 $159.7 2019 2020 2021 2022 2023 $339.3 $321.8 $337.4 $409.1 $315.9 0.3% 2.1% -1.2% -2.1% 1.0% 2019 2020 2021 2022 2023 Concrete Revenue Adj EBITDA Margin CONCRETE SEGMENT OVERVIEW Improved project margin focus has laid the groundwork for future success • Provides turnkey concrete construction services for building construction including place and finish, site work, layout, forming, rebar • Light Commercial: Services include horizontally poured concrete for large tilt walls, slabs, foundations, and paving • Structural: Services include elevated concrete pouring for columns, decking, elevated beams and structural walls up to 45 stories • Implementing minimum bid margins and upgrading project management systems to drive improved profitability LIGHT COMMERCIAL STRUCTURAL Concrete Revenue & Adj EBITDA Margin Concrete Revenue Backlog ($ in millions) ($ in millions) |
| BACKLOG WINS $572.3 $439.5 $590.0 $448.8 $762.2 2019 2020 2021 2022 2023 ($ in millions) +70% 2022 vs. 2023 Record Backlog Entering 2024 $435M contract (largest in company history) to build dry dock in Pearl Harbor, HI $120M contract to build dry dock in Grand Bahamas shipyard Quadrupled pipeline opportunity from $3B to $11B in just over a year +70% Backlog year/year |
| DEEP AND TALENTED MANAGEMENT TEAM Travis Boone, PE Chief Executive Officer Leadership and management experience in civil, utility/pipeline, commercial building and construction industries. Former regional Chief Executive of AECOM Ardell Allred Executive Vice President Orion Concrete Group Held construction and management roles at companies including Kiewit and Zachry Construction Scott Thanisch Chief Financial Officer Multi-disciplinary finance experience, including corporate development, FP&A, treasury, strategy and accounting across numerous industries Scott Cromack Executive Vice President Orion Marine Group Recently served as a Senior Vice President at Texas Sterling Construction. Also held roles at Kiewit and Zachry Construction Chip Earle General Counsel impressive legal, compliance and risk management background. Recently served as General Counsel of Newpark Resources, Inc. and Bristow Group Alan Eckman Senior Vice President, Strategy & Growth Recently served as Vice President of Business Development at AECOM |
| Financial Review |
| FINANCIAL OVERVIEW $708.4 $709.8 $601.4 $748.3 $711.8 2019 2020 2021 2022 2023 Annual Revenue ($ in millions) $39.6 $54.4 $17.3 $22.9 $23.8 2019 2020 2021 2022 2023 Adj EBITDA ($ in millions) Revenue by Segment Adj EBITDA by Segment Backlog by Segment 56% 44% Marine Concrete 79% 21% Marine Concrete 87% 13% Marine Concrete |
| Q4 2023 Q4 2022 Growth (YoY) Revenue $201.6M $196.2M +3% GAAP EPS ($0.13) ($0.15) +13% Adjusted EBITDA $14.8M $3.2M +366% Adjusted EBITDA Margin 7.3% 1.6% +570 bps FOURTH QUARTER 2023 |
| BALANCE SHEET AND LIQUIDITY Cash & Cash Equivalents $30.9M Net Debt Outstanding $37.2M Availability on Credit Facility $47.7M December 31, 2023 On December 1, 2023, Orion and White Oak amended Orion’s credit facility to extend the maturity date for the $15.0 million pre-payment, and then on February 27, 2024, Orion and White Oak further amended the credit facility to lower the interest rate for the Company’s $65 million revolver by 50 basis points and the Company’s $38 million term loan by 100 basis points. As of 12/31/23, Orion monetized $26 million in sale leaseback transactions |
| Q1 2024 FY 2024 Revenue $170M - $190M $860M - $950M GAAP EPS ($0.33) – ($0.20) $0.00 - $0.15 Adjusted EPS ($0.29) – ($0.16) $0.16 - $0.33 Adjusted EBITDA $0M - $4M $45M - $50M 2024 OUTLOOK • Revenue and EBITDA lower in Q1 due to normal seasonality and to delays on two major projects, expected to be recoverable in the year |
| INVESTMENT HIGHLIGHTS Mission Critical Specialty Construction Provider with Sustainable Competitive Advantages 01. Experienced Management Team Focused on Improved Financial Performance 02. Large Market Opportunity with Strong Tailwinds and Demand Drivers 03. Diversified Revenue with Blue-Chip and Government Clients 04. Strong Execution of Strategic Plan To Deliver Enhanced Growth and Returns 05. Significant Upside Potential: Strong demand in both concrete and marine segments 06. |
| APPENDIX |
| NON-GAAP SUPPLEMENTAL INFORMATION Net Income to Adjusted Operating EBITDA Reconciliation Three months ended Year ended December 31, December 31, 2023 2022 2023 2022 Net loss $ (4,365) $ (4,949) $ (17,875) $ (12,612) Income tax (benefit) expense (145) 33 330 429 Interest expense, net 3,972 1,510 11,556 4,352 Depreciation and amortization 6,996 5,631 23,878 24,057 EBITDA (1) 6,458 2,225 17,889 16,226 Stock-based compensation 209 639 2,042 2,754 Net gain on Port Lavaca South Yard property sale — — (5,202) — ERP implementation 568 308 1,378 1,867 Professional fees related to management transition — — — 1,118 Severance 683 4 809 948 Intangible asset impairment loss 6,890 — 6,890 — Adjusted EBITDA(2) $ 14,808 $ 3,176 $ 23,806 $ 22,913 Operating income margin (0.3)% (1.8)% (0.9)% (1.1)% Impact of depreciation and amortization 3.5 % 2.9 % 3.3 % 3.2 % Impact of stock-based compensation 0.1 % 0.3 % 0.3 % 0.4 % Impact of net gain on Port Lavaca South Yard property sale — % — % (0.7)% — % Impact of ERP implementation 0.3 % 0.2 % 0.2 % 0.3 % Impact of professional fees related to management transition — % — % — % 0.1 % Impact of severance 0.3 % — % 0.1 % 0.2 % Impact of intangible asset impairment loss 3.4 % — % 1.0 % — % Adjusted EBITDA margin(2) 7.3 % 1.6 % 3.3 % 3.1 % • EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization. • Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for stock-based compensation, net gain on Port Lavaca South Yard property sale, ERP implementation, professional fees related to management transition, severance and intangible asset impairment loss. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues. |
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