ORN earnings call analysis

NYSE:ORN Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good morning and welcome to the Orion Group Holdings full year 2025 financial results conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, and then two. Please note, this event is being recorded. I would now like to turn the conference over to Margaret Boyce, Investor Relations for Orion. Please go ahead. Margaret Boyce | Investor Relations, Orion Group Holdings: Thank you, Operator, and thank you all for joining us today to discuss Orion Group Holdings' full-year 2025 financial results. We issued our earnings release after the market last night. It is available in the investor relations section of our website at oriangroupholdingsinc.com. I'm here today with Travis Boone, Chief Executive Officer of Orion, and Allison Boskett, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we will 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 the 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 10Q and 10K. With that, I'll turn the call over to Travis. Travis, please go ahead. Travis Boone | Chief Executive Officer, Orion Group Holdings: Thank you, Margaret, and good morning, everyone. Thank you for joining us today to discuss our 2025 results and 2026 guidance. Before we begin, I want to acknowledge the ongoing conflict involving Iran and the Middle East. We extend our sincere appreciation to the men and women bravely serving our country. We recognize the situation remains very fluid and we are actively monitoring developments and evaluating any potential impacts on our business and markets. Now onto my prepared remarks. 2025 was a year of strong operational execution and meaningful advancement of Orion's long-term strategic priorities. We drove both top and bottom line growth and generated good free cash flow. Across the organization, our team delivered with predictable excellence, executing projects safely and profitably, strengthening our balance sheet, and taking important strategic steps that position our company for continued growth ahead. Over the past several years, we have been very clear about what we set out to do, improve execution, strengthen margins, professionalize the organization, and build a platform capable of capturing the significant opportunities across mission-critical marine infrastructure, defense, and concrete construction. In 2025, we translated that strategy into results. Importantly, we took decisive strategic actions that advanced our long-term growth plan. In December, we closed a new $120 million senior credit facility that improves our liquidity, lowers our cost of capital, and provides flexibility to support both organic growth and accretive acquisitions. We also purchased a derrick barge in December to further increase capacity and execution flexibility. As many of you are aware, we've been on the hunt for a large Jones Act derrick barge that will enable our team to pursue a broader range of marine and defense-related work. The barge is currently undergoing some refurbishments, and we expect to deploy it into our operations later this year. Last month, we completed the acquisition of JE McCamus. The transaction greatly enhances our marine platform, particularly in complex jetty and breakwater construction, where McCamus has deep proven expertise. Their strong Pacific footprint, experienced workforce, and high quality equipment fleet expand our ability to execute large, technically demanding projects. Integration is well underway, and we're very encouraged by the strong cultural alignment and the collaboration we're seeing across the combined organization and contracts awarded to McCamus over the last several weeks. In 2025, we consolidated our Houston footprint into our new headquarters office, implemented a modern project management platform, favorably settled multiple litigation matters, and monetized non-strategic real estate. Collectively, these deliberate actions improve our readiness for the next wave of large-scale, mission-critical marine and concrete infrastructure opportunities and reflect tangible progress for our strategic plan. While most aspects of our performance met or exceeded expectations in 2025, backlog was the one area where results were not as we anticipated. Even though our wind weight in 2025 improved over 2024, For the year, we booked just over $763 million in new contracts and change orders across the company, which represented a 0.9 times book to bill. Customer decisions moved to the right primarily due to tariff-related uncertainty in the private sector at the beginning of the year, followed by the prolonged U.S. government shutdown later in the year, which delayed public sector bidding and awards. Importantly, We believe this is only a timing issue with the work simply moving to the right as opposed to going away. We remain confident in our strong demand outlook, which is supported by the tailwinds we're experiencing across our markets. In addition, recent developments in the Middle East may accelerate government action to approve additional defense funding. We remain bullish on our backlog trajectory and long-term growth outlook with a vibrant growing pipeline that is currently at $23 billion, which includes the JE McCamus pipeline of $1.4 billion. Our marine opportunity pipeline increased $3 billion or 21% sequentially to over $19.4 billion as of December 31st. This does not include the McCamus acquisition, which we closed on in February. This growth reflects building demand and urgency across both public and private sector clients And we're pleased with the 2026 funding for the Department of War Pacific Operations. Across our operating regions, we have a healthy volume of opportunities expected to be awarded throughout the year for clients spanning the US Navy, the Coast Guard, regional port authorities, state departments of transportation, and private energy and chemical clients. Moving on to concrete, where our opportunity pipeline grew to over $2.4 billion at the end of 2025. Over the last several years, our team has built a strong and expanding position in data centers and the mission-critical construction market. The team produced good bookings throughout 2025, increasing year-over-year backlog by 10%, with recent awards spanning data centers and other commercial structures. Our expansion into Florida and Arizona is paying dividends, fueled by a growing project pipeline and solid execution. I'd like to drill down into our data center work, a real highlight in our concrete business that is improving literally by the day. I spent a good amount of time with the team last week, and let me tell you, they are killing it. Today, our data center count stands at 46 projects, either completed or in progress, across Texas, Iowa, and Arizona. We're seeing a shift toward larger campus-style developments for which execution and schedule certainty reign supreme. and our team has earned an outstanding reputation as a reliable delivery partner on mission critical programs. In addition to construction of the buildings and foundations, we are increasingly engaging with key clients earlier to address constructability concerns and to implement targeted design improvements. To support these strategies, we've recently expanded into site civil and earthwork to strengthen execution certainty for our clients and also to broaden Orion's scope of services. We expect to see data centers contribute even more significantly to our concrete business this year with some large opportunities developing in our markets. In closing, as I reflect on the year, I'm excited about the deliberate execution of our strategic priorities buoyed by building momentum in our key end markets. With a $23 billion pipeline inclusive of McCamus, a healthy balance sheet, and the best client-centered execution team in the business. We have an excellent runway for 2026 and beyond. With that, I'll turn the call over to Allison to talk through our financial results and our 2026 guidance. Allison? Allison Boskett | Chief Financial Officer, Orion Group Holdings: Thanks, Travis. We were pleased with the financial and operational progress we delivered this year, reflecting disciplined executions across the organization and continued focus on profitable growth, cash generation, and balance sheet health. For the full year 2025, revenue increased to $852 million, operating income to $15 million, adjusted EBITDA to $45 million, and adjusted EPS to 25 cents per share. I am also very pleased to report that we generated full-year operating cash flow of $28 million and free cash flow of $14 million. Across all metrics, these results were a notable improvement over last year. From a segment perspective, in 2025, Marine delivered 545 million of revenue, a 4.5% annual growth, and more than doubled its adjusted EBITDA to 56 million for the year. This represents a 10% adjusted EBITDA margin compared to about 5% in 2024. The improvement in adjusted EBITDA was driven by favorable revenue mix, excellent execution, favorable equipment utilization, and positive project closeouts. For reference, Marine's contribution adjusted EBITDA margin for the year was 15%. In 2025, concrete revenues increased 12% annually to $307 million, and concrete reported an $11 million loss in adjusted EBITDA. The reported adjusted EBITDA loss is primarily attributable to the impact of corporate allocations in 2025 and favorable project closeout benefits in 2024 that did not reoccur in this year. Concrete's contribution-adjusted EBITDA margin for the year, excluding corporate, was 4.5%. To provide increased transparency on segment operating margins, we plan to update our reportable segments beginning in the first quarter of 2026. Specifically, we plan to break out corporate expenses separately as a non-operating segment and will no longer allocate those costs to marine and concrete for external reporting purposes. This change is intended to increase transparency of our operating segment's results. Moving on to the balance sheet. As many of you are well aware, late in the fourth quarter, we entered into a five-year, $120 million credit agreement with UMB Bank. This facility meaningfully improves our liquidity, reduces borrowing costs, extends maturity by two years, and positions a balance sheet to fund future investment. It includes a $60 million revolving line of credit, a $20 million equipment term loan facility, and a $40 million M&A term loan. It also includes an additional $25 million uncommitted accordion to fund future growth. The UMB facility refinanced and replaced our previous $88 million credit agreement, which was scheduled to mature in May of 2028. Borrowings under the UMB credit facility bear interest at a rate of SOFR plus 2.5% to 3%, a 40% reduction in our borrowing costs compared to the prior credit agreement. A big shout out to our treasury and legal teams for getting this across the line. In connection with this refinancing, we paid off our $23 million term loan and ended the year with net debt of just about $6 million. I would like to point out that subsequent to year end in February, we increased our senior borrowings by $47 million to fund the McCamus acquisition. I'll wrap up with our guidance update for 2026. We're very pleased to provide our full year 2026 guidance as follows. Revenue in the range of $900 million to $950 million a 9% increase from 2025 at the midpoint. Adjusted EBITDA in the range of 54 million to 58 million, a 24% increase from 2025 at the midpoint. Adjusted EPS in the range of 36 cents to 42 cents, a 56% increase from 2025 at the midpoint. And capital expenditures in the range of 25 to 35 million consistent with last year. That's it for me. Back to you, Travis. Travis Boone | Chief Executive Officer, Orion Group Holdings: Thank you, Allison. We're very proud of what we accomplished in 2025, and we view this year as a bridge, not a destination. Over the past 12 months, our operations team executed projects safely while growing revenues and adjusted EBITDA. Meanwhile, our corporate team sold the East West Jones property, restructured our credit facility, purchased the Derek Barge, and acquired J.E. McCamus. None of this progress would have been possible without the hard work, dedication, and commitment of our people. I want to thank them for their outstanding efforts. With a strong operating platform, expanded capabilities, and favorable market tailwinds, we're excited about the opportunities ahead and believe Orion is well positioned as we look to capture more work and continue to execute for our employees, clients, and shareholders in 2026 and beyond. We'd now like to open up the call for your questions. Operator | Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. At this time, we will pause momentarily to assemble our roster. And the first question will come from Tomo Sano with JP Morgan. Please go ahead. Tomo Sano | Analyst, JP Morgan: Hi, good morning, everyone. spk05: Morning, Tomo. Morning, Tomo. Tomo Sano | Analyst, JP Morgan: Thank you. In Q4, you talk about some of the delay of the revenue recognitions for awarded projects. And could you talk about the impact your reported sales and margins in Q4? And could you specify which segments or projects, experiences that delays and quantify the revenue and margins impact in 2026, please? Thank you. Allison Boskett | Chief Financial Officer, Orion Group Holdings: I'll start, and Travis, if you want to add in. But from a 2024 perspective or from a Q4 perspective, the fourth quarter came in generally in line with what we expected. We didn't see a lot of softness in the quarter coming generally kind of in line with what we were targeting and in line with the guidance that we had set out for the full year. I'll say that things do typically in construction, they will move around a bit in terms of just timing and cadence. And you probably saw some of that in terms of just margin profiles for the individual segments. But from an overall perspective, things came in in line, including from a corporate perspective. Does that answer your question, Tomo? Travis Boone | Chief Executive Officer, Orion Group Holdings: There were a few, there were some opportunities that slid out of Q4 that we were pursuing. But that's not on the, that's more on the kind of pipeline side of things. Tomo Sano | Analyst, JP Morgan: Yeah, thank you. So could I double click on your commentary about the margins, Alison, if you could talk about the 2026 outlook by segment in terms of the margins expansions from 2025 to 2026? Allison Boskett | Chief Financial Officer, Orion Group Holdings: Sure, I'd be happy to. We are continuing to expect that we will have modest margin expansion across the business, both from the favorable impacts of blending McCamus into the marine business. As you probably well recall, McCamus operates at a meaningfully higher margin than the rest of Orion. So we are expecting to see some favorable blend associated with that acquisition and incorporation of their results. And then from a concrete perspective, we do expect that concrete will deliver margins in the mid-single digits. For the year in 2025, concrete delivered margins of right around 4.5%. And we do expect to nudge that up in 2026, just as a function of some favorable demand signals that we're seeing in terms of the work that we're bidding on, the work that we are winning and bringing into backlogs. as well as just continued growth and scale, which benefits our concrete business pretty meaningfully. Tomo Sano | Analyst, JP Morgan: Thank you. If I may squeeze one more on a data center, Travis, you talk about data centers. Could you quantify the impact in 2026 in terms of the revenue compositions as well as some competitive advantages in data center projects for Orion, please? Travis Boone | Chief Executive Officer, Orion Group Holdings: I'm not sure if I'm ready to point to the fence yet on where we're going to land with data centers. As Allison just mentioned, we're seeing a large amount of opportunities that are lining up well with our capabilities and relationships and all of that. We've got We did start, as I mentioned, we've started doing site civil work on some of these data centers, which has been very well received, and we're doing well with that work. So I think that'll expand and continue. And I think we're going to keep seeing just a large amount of data center work happening. I mean, right now it's 40% of our concrete business is data centers. I expect that to probably go up a little in the next year. Tomo Sano | Analyst, JP Morgan: Thank you. I appreciate it. Operator | Conference Operator: The next question will come from Aaron Spahala with Craig Hallam. Please go ahead. Aaron Spahala | Analyst, Craig Hallam: Yeah, good morning, Travis and Allison. Thanks for taking the questions. Morning, Aaron. Morning. You know, maybe first for me, just on the pipeline, you know, can you talk a little bit more about that? Sounds like, you know, the expansion pretty broad-based. You know, any thoughts on kind of timeline, you know, conversion to orders? I know you've had a slide that kind of has laid out, you know, timing potential there. And then just, you know, maybe talk about the kind of market and margins you're seeing, you know, quotes and then kind of backlog wise. Travis Boone | Chief Executive Officer, Orion Group Holdings: Yeah. So the pipeline is, um, has expanded some of that then because things have slid, right. Um, so it's kind of, it's building, but there's also some things sliding, which makes it, uh, get, look like it's getting, uh, even more big, but it's, it's, uh, we've got quite a few near-term opportunities is in 2026, um, that are, you know, a hundred million plus projects, uh, more, let's say more than a dozen, uh, very real, uh, opportunities that are, you know, over, over a hundred million in, uh, in size, which are, you know, gives us a lot of confidence, even though our backlog is down. Um, we're, we're one job away. One project went away from, from the backlog being in, being in good shape. So we're, we're not worried. We're, we're bidding projects, uh, in the real near term here that we feel good about. So, um, we're not, uh, I know maybe, maybe some concern about backlog, but from our, in our minds, we're, uh, we're, we're, we're, we're nowhere near, uh, getting worried. We're, we're in good shape. Uh, we have, we have all the opportunities in front of us and, uh, Like I said, we're one win away from being just fine on the backlog for our marine business. And our concrete business pipeline is growing and looking really strong. As you may recall, our concrete pipeline is typically fairly small because there's a lot of book and burn activity. and its private sector opportunities, which are not super visible, you know, long in advance. So we're excited to see the concrete pipeline creeping up as well as the marine pipeline continuing to expand. And then we added in McCamus that makes it even, gives us even more opportunities to pursue. Aaron Spahala | Analyst, Craig Hallam: And then, you know, outside of McCamus, are you on margins kind of in the, you know, as you're going to bid projects? Is that still, you know, how's that looking? Travis Boone | Chief Executive Officer, Orion Group Holdings: On the McCamish side of things, nothing has changed as far as, you know, margins, bid margins and things like that. They're going to continue pursuing projects as they have. Allison Boskett | Chief Financial Officer, Orion Group Holdings: And on the rest of the business? Travis Boone | Chief Executive Officer, Orion Group Holdings: And the rest of the business. Things are looking good. We're not seeing any, like, downturns or anything like that. In fact, I would say more the opposite in several of our markets. Aaron Spahala | Analyst, Craig Hallam: Good. Good. And then, you know, maybe second, you know, on the data center side of things, you kind of talked about an expansion, you know, site and civil and earthwork. Any thoughts, high level, what that means for, you know, maybe average project size or, you know, how quickly these projects can continue to turn with that dynamic? Travis Boone | Chief Executive Officer, Orion Group Holdings: Probably not going to give too much information just for competitive reasons, but... I think it depends on where the data center is and how much infrastructure and dirt work and things like that need to be put in before the concrete and foundations happen. But there can be fairly significant amounts of work that goes into that. And it gives us something else to sell to our customers. And as many of them are kind of shifting to bigger campuses, sometimes those get to be much larger, right? They still do these data centers, and we've talked about this before, but they don't, even though it may be a really large data center, they kind of go a little piece at a time. And it's literally, you know, here's one little piece and another little piece and another little piece, and then you look back, you know, six months later, and you've done a ton of work over a period of time. So it's It's these things turn in from, you know, from a $500,000 task order. And next thing you know, you've done $50 million worth of work a little out of time. So, well, a little out of time, but very quick. Allison Boskett | Chief Financial Officer, Orion Group Holdings: Yeah. And I think the other important thing there is as our team, because our team has such a high level of credibility in this really critical aspect on the critical path of these projects in terms of just the buildings, the structure, the infrastructure to support all the really important internal things. But because our team has such credibility in that area, we are being engaged earlier in terms of, as Travis mentioned in the call, some of the constructability, some of the concerns, some of the things that we have seen over the now 46 and counting data centers and campuses that we've worked on in incorporating those lessons for our clients. Our clients are seeing that as a really valuable opportunity. level of expertise that we bring to the table, which means that ultimately, you know, we do become a trusted partner in this aspect of the building and the construction. So it's a pretty exciting time. I mean, really my hat's off to that team who's built very, very strong relationships with a number of key players. Aaron Spahala | Analyst, Craig Hallam: That sounds great. Thanks for taking the questions. I'll turn it over. Thanks, Aaron. Thanks, Aaron. Operator | Conference Operator: Again, if you have a question, please press star and then one. The next question will come from Jerry Sweeney with Roth Capital. Please go ahead. Jerry Sweeney | Analyst, Roth Capital: Good morning, Travis and Allison. Thanks for taking my call. Good morning, Jerry. Margaret Boyce | Investor Relations, Orion Group Holdings: Hi, Jerry. Jerry Sweeney | Analyst, Roth Capital: Just a couple of follow-up questions, maybe. But just looking at the marine side, obviously, pipeline is growing. You said some of the projects pushed to the right, per se. But are you hearing anything, or do you have any anecdotal commentary on – maybe once some of these projects may come to fruition, obviously they're quite large, complicated. We've had a government shutdown and then we have, you know, escalating conflict in the middle East, but, uh, all that said and done, I'm just curious as to maybe some of the anecdotal, uh, uh, items that you're hearing on those opportunities. Travis Boone | Chief Executive Officer, Orion Group Holdings: So, uh, I mean, we're bidding one of them. We're bidding a nice project this week. Um, There are things moving forward now. I guess there's not like a theme, if you will, of the different reasons that they've moved. Some of them move for different things, but they are just shifting to the right. It's not a never-ending shift to the right. They are actually coming to roost at some point, like the one I just mentioned. That was originally supposed to be last year, and we're finally bidding it this week. So there are projects that are coming through. We're bidding quite a few jobs in the next six months, pretty nice ones, along with the normal kind of run-of-the-mill projects that we always go after. But I don't know if I answered your question. Yeah, sorry, go ahead. Allison Boskett | Chief Financial Officer, Orion Group Holdings: Well, I'll just add, Jerry, that as we look at the – The pipeline does continue to be very robust. We continue to have our good line of sight into eight, eight and a half billion of opportunities that we expect to be awarded in 2026. And that's pretty normal. We have seen some clients really engage in a more meaningful way, which to us signals that some decisions are likely going to be made in the near term. But as we think about the pipeline, it stacks up to be probably about a 40-60 split in terms of what's going to, for the 2026, what we have visibility into of what will be awarded in the first half versus the second half, which is pretty normal, just given in the federal government there's usually a spike in the third quarter. And so, yes, there are a good number of opportunities that we have both at we are working on bidding on. And then a lot of times we will talk about the number of opportunities that we have provided all information on that we are just awaiting award from the client. And that number continues to sit at right around a billion dollars. So to us, that's a little bit higher than normative, but it's been consistently at that billion dollar mark throughout 2025 and continues to be around a billion dollars now. So that might just be the new norm in terms of You know, when Travis talks about holding the pipeline a little longer, we do continue to see that number just stay right around a billion. But we are seeing some awards, some clients like moving and being more active. Jerry Sweeney | Analyst, Roth Capital: Gotcha. And at some point, that billion kind of breaks loose, which is positive, obviously, right? That's right. Yeah. Okay. That's it for me. I appreciate it. Thanks. Operator | Conference Operator: Thanks, Jared. The next question will come from Alex Regal with Texas Capital. Please go ahead. Alex Regal | Analyst, Texas Capital: Thank you, Travis and Allison. Travis, your historical win rate on bids sort of is in that mid-teens range. Is there any reason to believe that historical win rate will be any different going forward? Travis Boone | Chief Executive Officer, Orion Group Holdings: No, we saw that win rate kind of between from 24 to 25, it tipped up, even though our, you know, even though our backlog was down, our win rate was up. So it tells you that things were sliding. So we have seen it head in the right direction just a little bit, a percent or two. And I don't expect it to change much. I mean, it might continue to go up a little, but I don't expect it to be any large jump up or down on the win rate. We kind of like to be in that let's say 15 to 20% win rate sort of range. And that's where we are and feel pretty good about where we are. Alex Regal | Analyst, Texas Capital: And then as it relates to your adjusted EBITDA guidance of 54 to 58 million, can you bridge that delta from the 45 million you just reported and help us to understand sort of what's organic versus inorganic? And as it relates to sort of the organic Kind of how that's broken out by segment. Allison Boskett | Chief Financial Officer, Orion Group Holdings: Sure. I'll give some high-level commentary. I would say that we are always gearing the business toward what we view as good organic growth. So that is like first and foremost really what we are doing to position the company is to invest in organic growth. Organic growth in 2026 is good. I would say it's probably, just in terms of stepping back, I'd say it's in the kind of upper single to low double-digit growth rate from an organic perspective, just because of some of the opportunities that we see moving a bit to the right, specifically in the marine business. I do think that concrete will grow very favorably in 2026. We have signals that that is happening and that it's real. But for Marine, those opportunities, they just take time to get through the pipeline, to get through all of the machine associated with bringing those opportunities to market by our client and then ultimately getting those things awarded. So some of those things that we expected we would see in 2026 have moved a bit to the right. That being said, we do expect that our marine business will continue to grow in 2026. Will it be at the dynamic growth rates that we are anticipating with some of the many things that are coming to market in 26 and 27? Probably you'll see that, I would expect, over the midterm, but that is not today built into our 2026 guidance. What I will say is I'll say that also from a McCamus perspective, that we have good line of sight into what we expect McCamus will deliver, which is right in line with kind of what we set out in the call back in February. They come with a very highly qualified, very reputable, very credible group of people. It's a phenomenal team. It's a phenomenal leadership organization there. We're very excited about bringing them into the portfolio. And we're also very excited about some of the projects that they have won just recently. So they continue to perform. They continue to perform well. And we'll look forward to just bringing them into more of our opportunities and our projects to make our pursuit teams even stronger as we look ahead. Alex Regal | Analyst, Texas Capital: Very helpful. And then the outlook for backlog near term, I kind of get a sense here that it's probably flattish to maybe trending a little bit down in the first quarter and the second quarter, but you expect a strong rebound in the third and fourth quarters. Is that a fair conclusion to come to? Allison Boskett | Chief Financial Officer, Orion Group Holdings: It's hard to tell just from a backlog perspective. We are working – We are gearing the organization around really a book to build that is greater than one. That is our objective. Our objective is to always be booking more backlogs than we are burning. With that in mind, it's hard from a quarter-to-quarter perspective to predict what backlog is. It does move around just based on how we burn, how operational cadence of the project, and then what gets awarded within a quarter. But from a full year perspective, we do expect to meaningfully deliver good bookings, which ultimately will serve to elevate our backlog balances. I'll also say that from a concrete perspective and really from a dredging perspective as well, Like those two businesses have a very quick book to burn, and so they may have phenomenal years, but you may not see a lot of that manifested in the backlog at quarter ends or year ends just because of the amount of book and burn projects that they get awarded. But are we targeting elevated backlog through the year? Yes, that is absolutely a goal, and we'll track that really through kind of the book to bill and kind of how the organization is delivering on that. Alex Regal | Analyst, Texas Capital: Thank you. Allison Boskett | Chief Financial Officer, Orion Group Holdings: Thank you. Thank you. Operator | Conference Operator: The next question will come from Liam Burke with B Reilly Securities. Please go ahead. spk05: Thank you. Good morning, Travis. Good morning, Allison. Good morning, Liam. Travis, you talked about closing on the DEREC in late 2025. How quickly, it's a fairly significant commitment, capital commitment. How quickly do you anticipate that investment turning into some sort of measurable return? Travis Boone | Chief Executive Officer, Orion Group Holdings: We'll get it, as I mentioned, we've got some work being done on it for the next, I don't know, six to, let's say six to eight months. And once it's kind of in the condition and ready to go, we'll have it. we'll get it busy and get it operational or get it working somewhere in our business. As far as, you know, payback on it, I think we got a pretty good price on it, so I don't think it's going to be a long time to get to kind of return on the investment. spk05: Great. Thank you. And on the M&A front, the McCamus was opportunistic. Obviously, You don't have a pipeline of opportunistic acquisitions, but what does the acquisition pipeline look like for you? Travis Boone | Chief Executive Officer, Orion Group Holdings: It's a pretty active market out there at the moment. Lots of different things happening in the, I don't know, it seems like it's not just across the board. It seems like acquisitions have really gotten pretty strong across all sectors. I'm seeing it kind of all over the place, lots of different acquisitions and activity happening. I mean, we saw, you know, we saw Great Lakes just recently get acquired and go private, and just lots of things happening out there that will give us, potentially give us opportunities to do more in the next year or so. spk05: Thank you, Travis. Operator | Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Travis Boone for any closing remarks. Travis Boone | Chief Executive Officer, Orion Group Holdings: Thank you all for joining us today. We look forward to talking to you again soon. Operator | Conference Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. jsPDF 3.0.3 D:20260606090332-00'00'

NYSE:ORN Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Allison | Chief Financial Officer: 14 million year to date. We wrapped up the quarter with 21 million of net debt or just under half a turn of leverage on a TTM EBITDA basis, which is a very healthy place for Orion. As the boss covered earlier, in October, we were very happy to close on the sale of the East West Jones property. The transaction resulted in a significant cash upside of over $22 million net of commissions and taxes and a nominal book charge, which will be reflected in our fourth quarter results. We expect to use the proceeds to pay down debt and for general corporate purposes. From a backlog perspective, we added approximately $160 million in new awards and change orders in the quarter, and at quarter end, backlog stood at $679 million. Moving on to segment results. From a segment perspective, marine revenues increased just about 2% over the third quarter of 2024 and 6% sequentially to $143 million in the quarter. And marine adjusted EBITDA grew over 50% to $18 million in the quarter, which represents a 12% margin this period compared to 7% in the same quarter of 2024. Strong marine margins are attributable to a greater mix of higher margin revenue, excellent execution and project closeouts, and favorable equipment utilization. Concrete revenues decreased 5% over prior years and were up 17% sequentially to $82 million in the quarter, and concrete incurred a $4 million loss in adjusted EBITDA for the quarter compared to a $4 million profit in the third quarter of 2024. The reported adjusted EBITDA reduction is primarily attributable to favorable project closeout benefits in 2024 that did not reoccur in 2025. Some weather issues in the quarter also impacted chargeability in our concrete business this quarter. For reference, concrete's contribution EBITDA margin in the quarter was right at 2%. I'll wrap up with our guidance update. We're very pleased to update our full year 2025 guidance as follows, increasing our revenue guide to $825 million to $860 million, increasing our adjusted EBITDA guide to $44 million to $46 million, increasing our adjusted EPS guide to $0.18 to $0.22, and reiterating our CapEx guide of $25 to $35 million. I'll now pass it back to Travis to wrap it up. Travis Boone | Chief Executive Officer: Thanks, Allison. We have all the pieces in place to finish the year strong, and I'm even more excited about what lies ahead in 2026 and beyond. I want to thank our shareholders for their continued confidence in us and our people for the exceptional work they do every day in the field to deliver safely for our customers. Operator, we're ready to take questions. Operator | Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. And our first question today will come from Erin Spectula with Craig Hallam. Please go ahead. Erin Spectula | Analyst, Craig-Hallam & Co.: Yeah, good morning, Travis and Allison. Thanks for taking the questions. You know, first for me, you know, noticed a slide in the deck on the pipeline, you know, detail on award dates and opportunity size. Can you just maybe talk a little bit about that? You know, has that split by opportunity size been pretty consistent? And just any thoughts on expected traction with some of those larger opportunities? Travis Boone | Chief Executive Officer: Good morning, Aaron. Sure, yeah, we can hit on that slide. So it's um you know we we have been talking about our pipeline for uh for a while in the in the in the increase in size of our pipeline so we have been working to kind of provide some more information on the pipeline based on a lot of questions about about it and so we uh we we just could try to find a way to break it up so people could have a little better fuel for what's in there, when it's coming, and the size of the opportunities. But generally speaking, I would say it's fairly consistent. Our pipeline for next year is very strong. Still got some good opportunities this year that we're working on bringing in the door, and good, very strong opportunities for 2026. So anything to add to that? Allison | Chief Financial Officer: Just to reiterate the comment from the call on the over a billion dollars of projects and opportunities that we have that are in the queue awaiting award decisions. The number has stayed pretty consistent around that 1.2 billion, so over a billion, which is a really healthy place for us to be. That number has actually grown through the year. If we look back through the earlier part of the year, just because of some of the delays that we're seeing with some of our clients and some of the pauses that our clients have put on. So it's nice to see that bid submitted and awaiting award number continue to be a very robust 1.2 billion. Erin Spectula | Analyst, Craig-Hallam & Co.: Understood. Uh, thanks for the color there. And then, you know, does that include the, the, the opportunity in Washington with the estuary or, or, you know, maybe just, can you give an update there on, on how, uh, that. Yeah, good. Travis Boone | Chief Executive Officer: Good question. So that's the, uh, the Deschutes estuary project that we won, uh, almost a year ago when I believe in late, late 2024, early 2025 timeframe. Uh, it's, it's not included in the, in the pipeline. Um, it's kind of in a weird spot where it's, uh, It's an awarded, not booked project because we've won it, but it's not – so it doesn't show up in backlog, nor does it show up in our pipeline. It's in kind of a weird limbo spot until we actually get under contract to do the work, which is probably going to be about a year or so out before we actually start that work. So good question. Erin Spectula | Analyst, Craig-Hallam & Co.: Got it. And then – You know, can you just give a little bit more detail on the data center opportunity? Just, you know, how much of the concrete business does that represent today and maybe the pipeline there? You know, are you seeing quoting, you know, pickup, any, you know, average deal size pickup and just how you're thinking about opportunity there as we head into 2026? Travis Boone | Chief Executive Officer: Definitely, it's remained very steady on the data center opportunity side of things. We've been, you Bidding quite a large number of projects on data centers. To your question specifically, it's about 27% of our pipeline is data centers and about 27% of our current revenue in 2020 and the quarter, I should say, for concrete was 27% of concrete's revenue for Q3 was data centers. And lots of continuing activity there with bid opportunities. Erin Spectula | Analyst, Craig-Hallam & Co.: Understood. Thanks for taking the questions. I will turn it over. The next question is from Liam Burke with B Reilly Securities. Operator | Conference Operator: Please go ahead. Liam Burke | Analyst, B. Riley Securities: Thank you. Good morning, Travis. Good morning, Allison. Good morning, Liam. Travis, you had, or Allison touched on the negative operating profit for concrete. We're looking at sequential backlog step up. Could we anticipate a more profitable mix in the backlog as we move into the fourth quarter? Travis Boone | Chief Executive Officer: Yes, definitely. We're expecting concrete to continue to be in a good place. As she mentioned, when you compare it over last year, it doesn't look super favorable based on some big pickups around this time last year. But as far as the concrete business, we remain confident in the profitability and the good business that it is. Liam Burke | Analyst, B. Riley Securities: Great. Thank you. And have you seen any either good or bad movement on major projects due to policy changes with the administration? Travis Boone | Chief Executive Officer: None that affect us, no. We haven't seen any movement related to policy changes. Some of the movement that's happened has been related to You know, there's been movement in the private sector over the last couple of quarters with awarding projects based on kind of uncertainty around tariffs and things like that. There's been some movement in other, you know, whether it's the Navy opportunities in the Pacific that I talked about last quarter, some of that slid out a year based on funding from Congress and some other things, but no policy-related shifts or changes. Allison | Chief Financial Officer: Yeah, I would... I would just add that from a regulatory perspective, I mean, the deregulation that we're seeing happening is a benefit to our clients, and some of the tax benefits that are coming in on deductibility of interest and deductibility of fixed assets, the acceleration of those things, those things should continue to reduce the outlook for our commercial clients especially. Liam Burke | Analyst, B. Riley Securities: Great. Thank you, Travis. Thank you, Allison. Operator | Conference Operator: Of course. The next question will come from Brent Salmon with DA Davidson. Please go ahead. Brent Salmon | Analyst, D.A. Davidson: Hey, thanks. Good morning. I guess Travis or Allison, maybe the first question just back to Maureen. I'm trying to think through these really strong results here, the contribution from your two big projects to those margins. And then I guess really get into the point of, you know, what we think is kind of a sustainable solution margin threshold going forward through the segment, especially considering some of the somewhat slower bookings here in the last couple quarters. Allison | Chief Financial Officer: Sure. I'll start on that. From a margin perspective, we were really pleased with the Marines' performance in the quarter. And I would say that there were some – we saw some benefits that came through, some upsides. But I would also add that they were not unusual in terms of the amounts or the magnitudes we had – or the magnitude. We had really great performance across the business. We had great performance. across the Atlantic, in the Gulf. We had really strong performance in dredging, which you'll see just the uptick in those when we publish the queue later today. But the dredging was very strong in the quarter, which ultimately benefits us, top line and bottom line, because of the very favorable equipment utilization that we get out of that. While there were a handful of upsides that we recognized in the quarter, I wouldn't say they were meaningful. I would say that the more meaningful driver of performance was really the operational performance really led this quarter by dredging so hats off to that team. Brent Salmon | Analyst, D.A. Davidson: Okay. And then the elevated SG&A, Allison, as you mentioned, is sort of a factor for the lower year-on-year performance. EBIT performance. I guess your thoughts on where that goes going forward. What is that predominantly focused toward? How do you harvest that investment you're making in the business as we think about that going forward? Allison | Chief Financial Officer: Sure. I would say that A couple of million of the SG&A uptick from a year-over-year perspective is related to investments in the business, like just directly in the advancement of or the expansion into the Atlantic or region for concrete into Phoenix, some of those offices that we're investing in that we're setting up so that they will fuel some of the organic growth that we are expecting going forward. And then I would say that probably the other big driver is there is some lumpiness associated with how certain employee costs were recorded last year as compared to this year that created a quarter over quarter increase, but from a sequential perspective, pretty consistent and in line. Brent Salmon | Analyst, D.A. Davidson: Okay. And then last one, just in consideration of the balance sheet here, you've obviously got the property sale, which comes in at the end of the year. Maybe just your expectations for cash flow in the fourth quarter, I guess, especially as some of these larger projects wind down, presumably receivables come in. Should we or could we see sort of a big windfall in cash flow into year end? Allison | Chief Financial Officer: The East West Jones for sure, results in just a $23 million of cash that drops to the bottom line. Now, that'll go through investing, so that'll be an investing activity, not an operating activity, but cash in our treasury, which is nice. And that cash, we have already received that cash, so it's nice to have that in our pocket now. From the rest of the business perspective, I don't see really a downturn in the cash collection cadence. The team is really focused on very keenly identifying, targeting, and going after and reducing our past due balance sheet and really optimizing the working capital on the balance sheet. And I think that you can see that while we only report from a quarter to quarter perspective, you can see that really in the interest expense and the significant step down that we had this quarter from an interest expense perspective. And that step down is related to Just a significant amount of work that the team has put into optimizing the balance sheet so that we could minimize borrowings under the revolver. So do I think that from a fourth quarter perspective, we could see good cash? We will see good cash from East West Jones. We've not seen a slowdown in cash collection activity in the rest of the business. We have a couple of months to go, so we'll see. But so far through October, it's been good. Operator | Conference Operator: Great. Thank you. Travis Boone | Chief Executive Officer: Thanks, Brent. Operator | Conference Operator: The next question will come from Alex Rigel with Texas Capital. Please go ahead. Alex Rigel | Analyst, Texas Capital: Thank you. Good morning, Travis and Allison, and congratulations on the sale of EastWest. That's great news. Travis Boone | Chief Executive Officer: Thanks, Alex. You've been hearing us talk about that for a lot of years, so. Alex Rigel | Analyst, Texas Capital: Good to see you got the sale done. Quick question for you on that. Is there a way for us to think about what the present value of the dredge spoil sort of 10-year agreement is at that site? Travis Boone | Chief Executive Officer: Yeah, probably we're going to keep the details on that. just for competitive advantage purposes to ourselves. But part of the reason we were okay taking a lower purchase price on that is because we were able to find a way to kind of use the property again through being able to use it for dredge spoils going forward. It's good news. Alex Rigel | Analyst, Texas Capital: And then as it relates to your expanded bonding capacity, can you talk about the value of bonds you have outstanding right now? And I guess what I'm trying to get to here is just what is the kind of remaining opportunity balance that you have with that new bonding capacity? Travis Boone | Chief Executive Officer: I'll say it this way. We had a fair amount of available capacity before we got this increase. What this does is just allow us to – continue to bid larger projects and facilitate the growth that we see coming here in the next few years. So obviously we're going to keep working on adding additional bonding capacity to the mix to continue to kind of stay in front of our ability to grow and bid bigger projects. Alex Rigel | Analyst, Texas Capital: And then lastly, as it relates to the data centers, Have you seen a notable increase in the size of the project opportunity for these data centers? And how does that compare to, say, two or three years ago? Travis Boone | Chief Executive Officer: Compared to two or three years ago, I would say definitely there's some bigger ones in the mix now. We did do a large one a couple of years ago in North Texas, and that was kind of a one-off, but it seems like now there are more of those larger type – larger data centers that we have visibility to and are bidding on. We've talked about the one we're working on in Iowa. It's a large data center, a very large data center. Thank you very much. Operator | Conference Operator: Again, if you have a question, please press star, then 1. Our next question will come from Jason Usainer with Bumbershoot Holdings. Please go ahead. Jason Usainer | Analyst, Bumbershoot Holdings: Good morning. Thanks for taking my questions and congrats on finally closing the East West Jones sale in a great quarter. It was about a year ago that I was asking you during the World Series about this field of dreams vision and there was kind of clear daylight for significant growth in demand for the marine services coming over the next couple of years and just not a lot of contention it felt like that you've kind of built the right platform to capitalize it and so the question i had then was kind of really around execution and margin profile and so it feels like kind of this year some of those big pursuits with the navy slid out a little bit um you know kind of started to talk about the transformational growth 2026 and beyond and so not a lot of change in the vision but just kind of maybe this delayed onset so just kind of to update on the overall long-term vision that you're you know you're building it and that it's coming on the demand side, everything from your prepared script, you know, the bonding, the pre-approved Mac team kind of sounds like there's still a lot of clear catalysts that all the growth is coming and, you know, answered it a little bit in the Q and a, but maybe just, reiterate anything that could cause shocks to that investment in the Pacific and just sort of this whole vision of demand materializing. And then, you know, to the extent that it does kind of come the way you're envisioning, whether, you know, you still think it's likely to translate to some of those long-term profitability targets that you previously laid out. Travis Boone | Chief Executive Officer: Sure. Yeah. Thanks, Jason. I think you kind of answered your question for me, I think, a little bit, but it definitely – The way we saw it a year ago, we still see everything the same, if not even more confident now, because we've delivered on getting some things accomplished over the last year that we were working toward. And so as far as the vision, if you will, is still the same. The only thing that's changed a little bit is some of those delays and some of the bigger changes contract opportunities in the Pacific that slid out a year. So that's really the only thing that's changed from a year ago. And so we're continuing to invest and work toward the growth opportunity that we see in front of us. Everything is going as planned. Everything that's in our control is going better than planned, I would say. And there's a couple of, you know, the biggest thing out of our control is those opportunities sliding to the right. But we feel like we've executed well on our plan, and we've delivered, and we're going to continue to do that. And, you know, when those opportunities do show up, we're going to knock them down and keep going. Allison | Chief Financial Officer: Yeah, and I would just ask that, Jason, that, I mean, the beautiful part about this business is it's not singularly threaded. Like, this is a multifaceted business, and so the opportunities in the Pacific are exciting, and they, you know, afford us, you know, some pretty interesting growth catalysts in the future. But, you know, today we're starting on, you know, a large project or starting on a large project in Texas on a large bridge project over water. We have a big port project that's going on in South Carolina. So there are a number of other opportunities that we pursue and that we win and that we are executing that are outside of the Pacific. The Pacific is exciting, but it's not the only story here. Jason Usainer | Analyst, Bumbershoot Holdings: Okay, great. Appreciate the answers and congrats on a great quarter. Travis Boone | Chief Executive Officer: Thanks, Jason. Operator | Conference Operator: Thanks. This concludes our question and answer session. I would like to turn the conference back over to Mr. Travis Boone for any closing remarks. Please go ahead. Travis Boone | Chief Executive Officer: Thank you all for joining our call today. We're super excited about where we are as a company and looking forward to coming back to you with our year-end results here in a few months. And also want to thank our team, all of you guys working hard every day to make this business work. Operator | Conference Operator: The conference is now concluded. Thank you for attending today's presentation. 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NYSE:ORN Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good morning and welcome to the Orion Group Holdings Second Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would like now to turn the conference over to Margaret Boyce, Investor Relations for Orion. Please go ahead. Margaret Boyce | Investor Relations: Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings Second Quarter 2025 Financial Results. We issued our earnings release after market last night. It's available in the Investor Relations section of our website at oriongroupholdingsinc.com. I'm here today with Travis Boone, Chief Executive Officer, and Alison Vasquez, 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 Law. 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 conditions and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these statements are contained in our SEC filings, including our reports on Foreign 10Q and 10K. I'd also like to let you know that a reconciliation of unburdened EBITDA for our segments is available on the Investor section of our website at oriongroupholdings.com. With that, I'll now turn the call over to Travis. Travis, please go ahead. Travis Boone | Chief Executive Officer: Thank you, Margaret, and good morning, everyone, and thank you for joining our second quarter 2025 conference call. Before we cover the financial results, I'd like to introduce our new CFO, Allison Vasquez, who joined us last month. Allison has deep leadership experience across finance, M&A, and the construction industry with several Fortune 500 public companies. With the first phase of our transformation largely complete, Allison brings the right to the attention of our clients, and she's the one who's going to be leading the financial discipline and strategic insight to help guide us through the next phase of our growth strategy. After my market overview, I'll turn it over to Allison to discuss our financial results. On to the quarter. We've delivered another strong performance in the second quarter, with revenue increasing 7% to $205 million and adjusted EBITDA doubling to $11 million from the second quarter last year. On a sequential basis, revenue grew 9% and adjusted EBITDA increased 34%. Our results were primarily driven by new contract awards in both segments and reflect our commitment to disciplined, profitable growth. We continue to see strong demand across the markets we serve as evidenced by our backlog for both operating segments growing over the first six months of the year. Our opportunity pipeline also grew from $16 billion last quarter to $18 billion today, fueled by diverse growth drivers with multiple sources of public and private funding, which gives us continued confidence in our plans for growth. We remain focused on our business development strategy that prioritizes mission-critical projects with good margins for high-quality clients. In our marine segment, we see robust opportunities resulting from the U.S. Navy's strategy in the Pacific, port expansions and maintenance, and coastal rehabilitation and energy infrastructure. Our pipeline remains robust with several large-scale opportunities under active pursuit that represent potential work over the next couple of years and align well with our strategic growth objectives. Overall, we are encouraged by the breadth and quality of the prospects ahead and will continue to see momentum remain strong. In the quarter, our marine business was awarded a contract for an export dock replacement project in the Pacific Northwest to remove and replace an existing timber berth structure and replace it with a new concrete structure supported by large-diameter steel pipe piles. This project is expected to be completed in the third quarter of next year. We also won two projects with the Port of Tampa Bay. The first is a three-year maintenance dredging contract for the port, which is estimated to begin later this quarter and continues our long history of providing maintenance dredging for the Port of Tampa Bay. The second award is for a critical port infrastructure improvement project to support the rapid population growth in the Tampa region and increasing demand for construction and bulk materials. In our concrete business, we have strong opportunities with an expanding base of clients. Data center investment from hyperscalers and the AI race remains exceptionally strong. While we are experiencing increased competition on data centers from new market entrants in the concrete business, we continue to win a healthy share of opportunities coming to market by consistently exceeding client expectations, particularly in schedule, quality, and safety performance. Our pipeline is diverse and in the quarter we were awarded contracts for new projects spanning energy, consumer goods, and transportation. These projects are expected to commence in the third quarter of 2025 with an estimated duration of about a year. Last year we expanded into Florida with minimal upfront investment and the results have been very encouraging. Both of our operating segments are now actively executing projects across the state of Florida. Building on that momentum, we recently opened an office in Phoenix to capitalize on continued data center investments and other commercial growth in Arizona. As we look ahead, we are enthusiastic about our long-term growth opportunities which are driven by multiple concurrent sources of public and private funding. The recent move to our new headquarters in central Houston has brought our teams across Houston together under one roof, fostering stronger collaboration and a unified culture. With the best operations teams in the industry, an outstanding safety record, and high barriers to entry that limit competition, we are well positioned to capitalize on the significant demand for marine infrastructure and concrete construction projects. The political winds are blowing in our favor with President Trump and the federal government focused domestically on reshoring manufacturing and shipbuilding in the U.S. and internationally on investing in military infrastructure in the Pacific over other geopolitical regions. In addition, we believe that the recently passed One Big Beautiful Bill Act will have several notable positive impacts for our marine and concrete businesses. Specifically, the bill appropriates $4.4 billion for shoreside infrastructure including ports, maintenance facilities, and training centers. It also includes wide-ranging benefits for our energy and industrial clients to make their projects more financially compelling. For example, the bill includes provisions to lower operating costs, expedite permitting, and minimize taxes. Also, last week's executive orders were intended to further American AI dominance by incentivizing fresh investments in new data centers and related infrastructure. Combined, these tailwinds are expected to benefit the Bookings environment over the next several years and will serve as a significant catalyst for our long-term growth. I'll now turn it over to Allison to discuss the second quarter financials. Allison? Allison Vasquez | Chief Financial Officer: Thanks, Travis. I'm delighted to be here. There's a real sense of momentum throughout the organization and I've been thoroughly impressed by the caliber and the commitment of the team. Top to bottom, the people of Orion are aligned and energized around our strategy to be the premier specialty construction partner delivering with predictable X1. It's clear that a great deal of work has gone into professionalizing both front and back offices and the team has built a solid foundation, maturing the organization such that today we are well positioned to pursue disciplined growth in attractive, expanding markets. I see tremendous potential for Orion to capitalize on favorable tailwinds across multiple mission critical themes. Infrastructure modernization, AI investment, defense, and energy security, great people, differentiated capabilities, happy clients, and healthy end markets, what's not to love. And I definitely know that I made the right choice in joining Orion. I now will turn to the second quarter results. As Travis highlighted, we delivered an excellent second quarter with consistent execution that translated to top line growth, improved margins, and meaningful earnings growth on both a gap and adjusted basis. I'll start with the consolidated results where revenues increased 7% over 2Q2024 and 9% sequentially to $205 million in the quarter. The increase was driven by new bookings and increased volume across both of our business segments. Gap net income for the second quarter was $800,000 or $0.02 per share and adjusted net income was $2.7 million or $0.07 per share. Adjusted EBITDA doubled to $11 million in the quarter compared to 2Q24 with margins improving 240 basis points to 5.3%. The overall increase in profitability is primarily attributable to strong performance across both segments that I'll touch on momentarily as well as moderation of G&A, reduced borrowing costs, and some benefits from taxes coming through the quarter. Laura Meyer | Analyst, B. Riley Securities: In this Allison Vasquez | Chief Financial Officer: quarter, we used about $5.6 million of cash for operations, primarily attributable to working capital timing on a couple of large projects, and we used about $6 million of cash for investing activities. We ended the quarter with approximately $31 million of net debt. From a backlog perspective, we added approximately $111 million in new awards and change orders in the quarter, as Travis mentioned earlier, and combined with a particularly strong first quarter, we reported backlog of almost $750 million, which is up modestly for the first half of 2025. From a segment perspective, marine revenues increased 3% over 2Q24 and 6% sequentially to $135 million in the quarter, and marine adjusted EBITDA grew to $12.7 million for the quarter, a .4% margin for the marine operations. The marine EBITDA dollar and margin growth from last year are primarily attributable to efficiently closing out projects in 2025 and project delays in 2024 that did not recur in 2025. For the concrete segment, revenues increased 14% over 2Q24, or 14% sequentially, to $70 million in the quarter, and concrete adjusted EBITDA was a $1.7 million loss compared to $4 million of profit in 2024. The EBITDA reduction year over year is primarily attributable to favorable project closeout benefits in 2024 that did not reoccur in 2025. It's worth noting that our reported segment EBITDA margins are fully burdened with both corporate SG&A and segment SG&A and corporate SG&A. If we exclude corporate SG&A from the operating segment, concrete standalone contribution EBITDA margin would have been right at 5% and marine would have been 13%, both generally in line with management expectations. Moving on to our financial outlook, we're pleased to reaffirm our full year 2025 guidance of revenue in the range of $800 to $850 million, adjusted EBITDA in the range of $42 to $46 million, adjusted EPS in the range of $0.11 to $0.17, and capex of $25 to $35 million. Now back to Travis to wrap it up. Travis Boone | Chief Executive Officer: Thanks, Allison. We've delivered a strong quarter of revenue, EBITDA, and EPS growth and are tracking nicely with our 2025 guidance. We have a healthy pipeline of private and public opportunities that support multiple enduring growth themes. The recent consolidation of our offices to our new headquarters has brought our teams together under one roof, fostering stronger collaboration and a unified culture. And we have the right team to execute on the next phase of our strategy. Finally, I want to thank all of our employees for continuing to execute safely and with predictable excellence, and to our shareholders for continuing to believe in us. Thank you for attending our earnings call. I'll now turn it over to the operator for question and answers. Operator | Conference Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Aaron Spichala of Craig Hallam. Please go ahead. Aaron Spichala | Analyst, Craig Hallam: Yeah, good morning, Travis and Allison. Thanks for taking the questions. Maybe first for me, you know, good to see the pipeline grow to 18 billion. Can you just kind of talk about some of the key drivers of the expansion there and then, you know, just thoughts on converting some of that to orders in the back half? Are you seeing any, you know, slowing or extending of kind of quote to orders? Thanks. Travis Boone | Chief Executive Officer: Good morning, Aaron. We I think part of the part of the driver on the growth of the pipeline, we did have it was a little bit lighter of a quarter for bookings in the second quarter from the first quarter. And I think some of some of the slide of and that's are mostly attributable to private sector clients that maybe tap in the brakes just a bit with uncertainty with economic things or tariff situations, whatever it might be that made some of the private sector, like I said, sort of tap the brakes on awarding some projects. So I think there was there was a shift, a shift from the second quarter kind of into the back half of the year as kind of confidence gets regained and and people start to maybe, you know, whether it's interest rates drop, things like that. I think everybody's kind of not everybody, but there are there are some clients that are holding off on making making big decisions on on awarding projects until they see see some some of the ups and downs slow down as well as maybe see interest rate relief and that sort of thing. Aaron Spichala | Analyst, Craig Hallam: All right. I appreciate the color there. And then maybe second on concrete, you know, can you just maybe give a little more color on the data center opportunity, what that pipeline looks like and growth outlook there and then just on margins, you know, sounds like some kind of close outs and some of the corporate burden, but just maybe talk about the confidence and hitting some of the targets you've laid out for high single digit margins there. Travis Boone | Chief Executive Officer: Yeah, I guess first on the on the high single digit margins, we talk about that for for concrete. That's not necessarily immediate term. That's more in the longer term. So keep that in mind. But as far as the data center kind of pipeline and activity there, it's still still fairly fairly hot. We haven't seen it. We haven't seen it slow down a lot. What we have seen is a few new entrants into the market, as I mentioned on the call that, you know, adding adding some additional competition. But we're we're still we're still feeling really good about about our opportunities, our partnerships with with general contractors and and our ability to continue to do data center work. Aaron Spichala | Analyst, Craig Hallam: All right. And then just maybe last on the balance sheet and cash flow. You know, how how are you thinking about free cash flow kind of conversion in the back half? Sounds like there's some working capital in the second quarter. Thanks. Allison Vasquez | Chief Financial Officer: Thanks for the question, Aaron. We there definitely was some use of capital in the first half of 2025. I would say that it's a bit modulated or a bit improved over what we saw last year. But we are seeing some good indications just in the month of July. We've seen some good traction from a collections perspective. So some reverting back to the norm spk00: from Allison Vasquez | Chief Financial Officer: a balance sheet and working capital perspective. We also ended July or we're ending July with, you know, paydown of the borrowing that we had on the revolvers. So that's nice to see in terms of just strength of the overall balance sheet and working capital focus across the organization. And we are seeing some improvement in that area. So we do expect the back half of the year to be good. Aaron Spichala | Analyst, Craig Hallam: All right. Thanks for taking the questions. I'll turn it over. Travis Boone | Chief Executive Officer: Thanks, Aaron. Operator | Conference Operator: The next question comes from Julio Romero of Sudoti and Company. Please go ahead. Julio Romero | Analyst, Sudoti and Company: Thanks. Good morning, Travis and Allison. Last quarter, I think you had mentioned four large pursuits with decisions expected in the next couple of months. I wanted to ask if you had any additional visibility into those specific pursuits and the decision timeline for those particular projects? Travis Boone | Chief Executive Officer: Yeah, those that I referred to were all part of when I – in the last question when I was saying there were some delays on decisions when the private sector, all four of those slid a little out of the second quarter. One of those has been submitted and we expect here in the next month or so. And then a couple of them are in – will be later in the third quarter. Julio Romero | Analyst, Sudoti and Company: So. Okay, great. And does the new tax reform guidance passed in July, does that help at all with regards to customer decision making going forward? Travis Boone | Chief Executive Officer: On the – what was that again, Julio? Sorry. Julio Romero | Analyst, Sudoti and Company: The tax reform bill, the reconciliation bill, does that help your customers with regards to kind of yay-nay on decision making for some of these projects? Travis Boone | Chief Executive Officer: I think it will. I mean, I think there's – like I said, there's uncertainty and I think the more certainty that customers get, the more likely they are to make the decision to make capital investments. So, to me, it's all about comfort and clarity and certainty on the variables that have been kind of presented to everybody over the last six months. So, the more comfortable people feel with – that they know what the future holds, then I think, you know, the pocketbooks open up and projects start going. Allison Vasquez | Chief Financial Officer: Yeah, and I'll add to that by just saying that the bill absolutely makes permitting easier just from a deregulation perspective. There are definitely some tax benefits to make some of the investments a lot more financially attractive quicker. So, it does help from an outlook perspective as our clients are thinking through what investments they make and where it will help them expedite some of those decisions by making those capital decisions a little more financially feasible in the near term. Julio Romero | Analyst, Sudoti and Company: Very helpful. And then one more, if I could, is on the concrete segment. I know you spoke a little bit about the competitive environment and some new entrants coming in, especially on the data center side. Can you maybe just talk about, Orion, and how you're positioning yourself to win as that environment has evolved? Travis Boone | Chief Executive Officer: Yeah, I mean, the good thing about, you know, the relationships we have with the general contractors that do a lot of data center work, we've got deep, long relationships. We've done a large number of data center projects, well over 30 projects that we've either completed or are in the process of completing with very strong, great work on the safety side and the quality side, meeting schedules, all the things that owners and general contractors care about on the data centers. So, we're still in great shape from the relationship perspective and proof that we can deliver. And so, that gets us a lot of credibility. And, you know, as we see some of these new entrants come in, I think they'll either fail and find their way out or, you know, I'm not concerned about it, I guess. I wanted to point it out because it's just in the interest of transparency, but we're still feeling really good about data centers and the number of opportunities in our relationships. Julio Romero | Analyst, Sudoti and Company: Very helpful. I'll pass it on. Thanks, guys. Travis Boone | Chief Executive Officer: Thanks, Julio. Operator | Conference Operator: Our next question comes from Brent Tillman of D.A. Davidson. Please go ahead. Brent Tillman | Analyst, D.A. Davidson: Great. Thanks. Good morning. Aaron Spichala | Analyst, Craig Hallam: Morning, Brent. Brent Tillman | Analyst, D.A. Davidson: Yeah, I guess I wanted to pick a bit more on what the major drivers were to the strong bottom line performance at Marine this quarter. What sort of carries forward for you in terms of projects into the second half? How much do you still have to go out and get, I guess, ultimately to drive this? Yeah, kind of the reaffirmed guidance here for that business group. Travis Boone | Chief Executive Officer: Sure. I think the biggest drivers, we've got multiple good sized projects going at once. Kind of the, beyond just, you know, kind of last year, we talked about two major projects that were real contributors on the Marine side. That was, you know, the Hawaii projects with Pearl Harbor as well as the Grand Bahama Shipyard. Well, we've got those two going. Plus, we've got multiple other fairly large projects that are underway and contributing a lot to the kind of to the mix here. So it's more than just a tale of two projects. It's multiple projects contributing strong delivery by our teams, good discipline and focus on the bids and bidding at the right numbers. And I think that's going to continue as we see all of these opportunities coming in front of us in the next 6, 12, 18 months. Brent Tillman | Analyst, D.A. Davidson: Travis, presumably Hawaii and Bahamas wind down in the second half, but you've got a lot of other things going that I would think maybe help smooth that transition. Is that fair? Travis Boone | Chief Executive Officer: That's fair, Brent. We've got Hawaii and Grand Bahama will start to kind of ramp down, but not a ton until kind of later, late in the year and into next year. But they will start winding down. But we've got several other good projects that are contributing. Allison Vasquez | Chief Financial Officer: Yeah, and I'll just add to that by saying that from a work under contract perspective, as we enter the second half, the work under contract outlook is quite good, which is Travis mentioned in his opening remarks. And then also from a margin perspective, that the margin performance through the first half of the year has been right in line with what we expected, right in line with the guide. And we expect to see just a continuation of the consistent delivery of both top line and the bottom line from an overall perspective. Brent Tillman | Analyst, D.A. Davidson: Okay. I know there was some pretty atrocious weather in some parts of your concrete business this last quarter, I guess, is the sun shines again. Maybe you could just talk about maybe the pick up you're seeing in that business group here this summer. Travis Boone | Chief Executive Officer: Definitely. Let the record note that you brought up weather, not us. Oh, I hear about Travis. Yeah, it is. It was definitely a factor in actually the first half of the year. We've had a tough year for concrete, lots of weather in Texas and in Florida for our concrete guys, which has been challenging to overcome. And it has impacted us on the revenue side of things. You know, we're optimistic that the back half of the year, typically the back half of the year, the weather is better in these areas, generally speaking, not to throw out the chance of a big named storm or whatever. But generally speaking, the back half of the year, the weather is better and we're expecting to kind of recover some of the lost revenue in the first half in the back half in the concrete business. Brent Tillman | Analyst, D.A. Davidson: Maybe just one more. The federal military kind of naval opportunities are vast, I know. Is the update Travis on timing maybe I know is normal for these things to move around. But what are the award timing opportunities here for those things you're tracking and particularly in the Pacific? Travis Boone | Chief Executive Officer: Yeah, we're definitely seeing some sliding around with some of these Navy opportunities. They have been, seems like they tend to slide to the right and take longer to award than we would think they should. And we are we are seeing more of that. As far as, you know, expected timing, I don't anticipate that. Well, I'm pretty confident we won't get awarded anything this year. There won't be much effect. As of the as of last night, the update I saw, I don't expect there to be projects awarded this this fiscal year. Hopefully by mid next year, we'll see a couple of those things come come in, but it'll be it'll be next year at best. Brent Tillman | Analyst, D.A. Davidson: And sorry, but absent that. Do you feel pretty comfortable? There's pretty good opportunities to build the backlog into the end of the year. Does the private side hesitation give you a pause on that? Maybe that if you could just comment on that. Travis Boone | Chief Executive Officer: Yeah, there's there's still a ton of opportunities, Brent. It's on it's on the private side as well as public side across the business that we feel we still feel really good about, you know, building building backlog. It might, you know, maybe it's we're not quite as ambitious as we were early in the year with with kind of having a quarter of of slower slower opportunities, but definitely still optimistic about the year and building our backlog this year. Brent Tillman | Analyst, D.A. Davidson: Great, great. Thanks. Operator | Conference Operator: As a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Our next question comes from Laura Meyer from B Riley securities. Please go ahead. Laura Meyer | Analyst, B. Riley Securities: Hi, Travis and Allison. Good morning. My first question is you mentioned developing relationships with strong partners in data centers. Are you seeing opportunities to expand these relationships into other verticals? Travis Boone | Chief Executive Officer: Good question. Yes, definitely. We've got some of our strongest relationships with some of these general contractors. We are leveraging those to be we were working on a medical project, for example, with one of our our strong partners doing some kind of higher ed as well as some kind of more commercial commercial type industrial projects. So definitely we've been able to leverage those relationships and other types of opportunities. Laura Meyer | Analyst, B. Riley Securities: Great. And then one more. Are your order wins coming from market growth or more taking share from competitors and how sustainable is this competitive advantage? Travis Boone | Chief Executive Officer: Are you referring to concrete or marine or all of the above? Laura Meyer | Analyst, B. Riley Securities: All of the above, Travis. Travis Boone | Chief Executive Officer: Okay, I would say we're It's probably a mix a little where we're taking it from taking it from competitors and as well as having a better approach to to win in the work as far as, you know, putting a lot of effort into upfront development of the of our bids and our proposals and And doing the work upfront necessary to have a better have a better mousetrap, so to speak, to win the win the project. Laura Meyer | Analyst, B. Riley Securities: Great. Thanks. Operator | Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Travis Boone for any closing remarks. Travis Boone | Chief Executive Officer: I just want to thank everybody for joining. Appreciate everybody sitting through our call today as well as also want to as as always thank our guys out in the field working in the elements day in and day out to to help us deliver our business. Have a good day. Operator | Conference Operator: This concludes our presentation. Thank you for attending today's conference. You may now disconnect. jsPDF 3.0.3 D:20260606090334-00'00'