Q2 2020 Orion Group Holdings Inc Earnings Call

July 30, 2020

[music].

Good morning, everyone and welcome to Orion Group Holdings second quarter, 2020, <unk> earnings conference call and webcast.

Joining me today are Mark Stauffer, Orion Group Holdings, President and Chief Executive Officer, and Robert Tab, Our Vice President and Chief Financial Officer.

Regarding the format of the call we've allocated about 10 minutes for prepared remarks in which Mark and Robert will highlight a result and update our market outlook. We we'll then open the call for questions.

Of course of this conference call will make projections and forward looking statements regarding among other things our end markets revenues growth <unk> gross profit gross margin EBITDA EBITDA margin backlog projects and negotiation and pending awards as well as our estimates and assumptions regarding our future growth.

Administrative expenses and capital expenditures.

These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements. Moreover, past performance is not necessarily an indicator of future results.

<unk>, providing this information we undertake no obligation to update or revise any new projections or forward looking statements, whether as a result of new developments or otherwise also please note that adjusted net income adjusted earnings per share EBITDA, and EBITDA margin or non-GAAP financial measures under the rules is securities Nick.

Change to Michigan, including regulation G.

Please refer you refer to the reconciliations and definitions inclusive to the most comparable GAAP measures and reconciliation tables accompanying the earnings call within the press release issued this morning. The press release can be found on our website at Www Dot Orion Group Holdings Inc. Dot com.

Also for additional discussion of risk factors that could cause actual results to differ materially from our current expectations.

Please.

Please refer to our quarterly and annual filings with the FCC, which are also available in the Investor Relations section of our website.

And with that I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Please go ahead Sir.

Thank you and good morning, everyone. Thanks for joining our call.

Today, we will discuss or 2022nd quarter results and provide you with an update on the current state of the business as we continue to navigate through the cobot 19 pandemic.

I'll begin with a few comments on the quarter, then turn the call over to Robert You review, our financial results in more detail and then I'll make some concluding remarks before we turn to keep an eye.

First I'd like to extend our deepest sympathies to those that our company and others, who had been affected by or have had family members were friends affected by the Koby 19 garbage.

I'd also like you sincerely. Thank our team members, who continue to safely work at a project sites construction yards shops and field support offices around the country.

It's through the combined efforts of our entire team that we've continued to be able to perform during these unprecedented college.

Our focus has been and will remain on ensuring the health and safety of our people.

Even with recent spike of Cold in 19 cases, and some of our markets. We've continued working on projects with only minor disruptions.

To ensure that health and safety of our employees all measures we implemented in response to cope with my team will be kept in place for the foreseeable future.

In the second quarter, we continue to post year over year improvements in both revenue and profitability.

And generated solid free cash flow all of which reflects the benefits of the operational improvement initiatives, we've implemented over the last 18 months.

We remain encouraged by our elevated backlog or continued productivity during this period and the variety and resiliency of the end markets that we serve.

A wide array of end markets that we serve enabled us to pursue the most attractive bid opportunities in the end markets that are performing best at any given point in time.

This strategy has served us well historically and will serve us well in this environment and we will continue to focus our efforts on targeting the end markets and projects, we expect to have the best opportunities to be profitable moving forward.

We have also taking the necessary steps to ensure that our liquidity position is solid and enables us to continue executing on projects in backlog and pursue new bid opportunities.

We believe we entered this pandemic from position of strength and let these challenges head on.

I'm confident that we'll be able to navigate the effects of the pandemic as we move through the year with the safety and health bar employees as our for most of priority.

Now I'll turn the call over to Robert to discuss our Q2 results in more detail Robert.

Thank you Mark and thanks, everyone for joining us before I get into the quarterly details I'd like to point out over the past two a month well run is generated over $50 million with adjusted EBITDA and posted four straight quarters of positive or something that is indicative of the hard work that all of our employees have contributed over this past year.

Revenues for the second quarter 2020, 483.7, the compared to 166 million in the second quarter 20, uniting the growth in revenue was driven by increased production at our concrete segment.

Second quarter 2020 reported gross profit was 20.7 billion or 11.3% as compared to 15 billion or 9% in the second quarter of last year.

A year over year increase in margin was driven by 300 basis point improvement to indirect project support costs.

Now moving to the segments.

Excluding the gross up impacts of accounting for uninstalled materials, the marine segments margins increased by 95 basis points year over year of which 245 basis points came from indirect expenses, such as labor and equipment utilization, partially offset by 150 basis point decrease in project level margin.

Which is attributable to changes in the mix of projects executed from period to period.

Now turning to the concrete segment.

The concrete segment year over year margins improved a 135 basis points of which 65 basis points came from indirect project support costs and 70 basis points came from project level margins. This improvement in our concrete segments project related margins was driven by an increase in labor efficiency.

Moving to ask Tonight for the second quarter 20, each one.

<unk> expenses were 16 point Bubbling up from 15.1 billion in the second quarter 20, Ninee team [noise].

The increase was driven primarily by the full ratable accrual of the annual incentive compensation plans.

During the current year period as a percentage of revenues second quarter 2020, SGN, They was 9% down slightly from 9.1% in the prior year quarter.

We remain focused on s. DNA being at or below 8.5% of revenues for the full year recognizing that we made.

See quarterly fluctuation.

Second quarter 2020, operating income was 4.1 billion compared to an operating loss of 24 million in the second quarter of last year.

After the bottom line results for the second quarter 2020 reported net income was $2 million for earnings of seven cents per share. These results compared to a net loss at 1.6 million or a loss of six cents per share with the same period a year ago.

After adjusting for approximately $350000, a pretax non recurring costs and $1 million a benefit associated with the reduction of certain tax valuation allowances net income for the second quarter.

2020 would've been 1.3 million or earnings of four cents per share.

Second quarter 2020, adjusted EBITDA was 12.6 million, representing an adjusted EBITDA margin of 6.9% compared to adjusted EBITDA 10 million.

For a margin of 6.1% in the second quarter last year.

In the second quarter 20, Twond, we bid on approximately 1.2 billion worth of opportunities and were successful on 120 million.

This resulted in a win rate of 10% a book to Bill <unk> 0.65 times as of June Thirtyth 20, Twond backlog was 528 million of which 312 million was associated with the marine segment and totaling 12 million or the concrete segment surely the company has 1.3 billion worth the bids outstanding.

Including 73 million board of which is apparent low bidder or has been awarded contracts subsequent to the end of the second quarter 2020, something that we view is indicative of the strength of our end markets.

In total we currently have over 600 billion of projects between backlog and low bit.

Moving into further discussion I'll provide an update on the proactive measures we continue.

As always we continue to monitor our capex needs and operating costs as a result.

We continue to be selective with certain capital in operational expenditures also we continue to operate hi controls around cash management broader risk management and mitigation, we announced on the Q1 earnings call to that end during the quarter. We entered into any new 360 day 20 million dollar revolver that adds to our exists.

In credit facility. This increase provides us with more than sufficient financial flexibility to container pursue new awards and execute projects in backlog.

Our current liquidity position of solid which was further enhanced in the second quarters. We generated 16 million is free cash flow.

We are pleased with our free cash flow generation over the last six months.

In the first two quarters or 2020 Orion has generated more free cash flow than in any all year in company history.

At the end of Q2, we had 10.3 million of cash on hand, and access to almost 50 million under our revolving loan credit which includes 20 million from the new revolver. We didn't according with 54 million in total debt of which 80 million was related to the revolver and 36 million related to terminal. This translated into a 1.13 times leverage.

Ratio any fixed charge ratio of 3.66 times, we're comfortable with our cards leverage profile. However, we will continue to evaluate opportunities to enhance our liquidity position, including continuing with the processes selling noncore assets I want to reiterate my comfort level with the current liquidity situation, which will enable us to execute on our strategy pursue new away.

And perform work in backlog now I'll turn the call back over to Mark to wrap up.

Thanks, Robert turning to our markets, we continue to see bidding activity in both our segments, while some bid opportunities and impacted end markets have shifted to the right then opportunities in other end markets continue to move forward due to our diversified customer base and end markets.

Our focus is on profitably bidding these opportunities.

We have strong track record of adjusting between end market opportunities and we will also continue our pursuit of select larger and longer duration projects.

We continue to interface with our customers and monitor their spending plans and we continue to target government bid opportunities across your federal state and local agencies.

In the Marine segment, we recently announced $32 million of dredging awards in both the public and private sectors, which will contribute to maintaining utilization of our dredged fleet during the back half of 2020 and into the first part of 2021.

One of these announced project is the is as a result of Hurricane Harvey relief funding and we expect additional significant bid opportunities.

Related to Harvey really funding in the coming quarters.

We also continue to track any movement on a federal infrastructure bill either as a replacement for the fast act or that may be part of future stimulus spending plans in response to covert 19.

Any action on the infrastructure funding will provide significant bid opportunities that we are well position to capitalize on.

In the concrete segment, we continue to execute on our strategy of expanding our structural business as evidenced by the $30 million structural concrete project, we recently announced.

The competitive dynamics of structural projects have led to an increase in awards for this type of work in our performance on these projects has significantly contributed to the improved operating performance of our concrete business.

We continue to monitor the distribution and technology center growth in Texas, which continues to provide bid opportunities for our light commercial projects. In addition to general business in the industry relocations into the Texas market.

We completed the first half of 2020 with solid and much improved operating performance and we entered the second half of the year with combined backlog and low bid at strong levels. Despite covert 19 impacts.

We currently have $1.3 billion of bids outstanding slightly higher than we had in the prior year period.

I'm confident that we have the team in place to continue to perform despite the challenges in the current environment. We are and we will always be focused on safely meeting our customers' needs.

And we remain confident in a long term drivers and sustainability of our markets.

We will get through this pandemic and we will be well positioned to take advantage of post <unk> post pandemic market conditions.

Once again, our deepest sympathies go out to those have been affected by the virus and likely again. Thank our team members for all their efforts with that I'll turn the call back to the operator for questions.

Thank you at this time of the conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question Ken.

Let me first start to if you'd like to remove your question from the Q.

Participants you think speaker equipment, it may be necessary to pick up your handset before passing the starkey.

Our first question comes from the line of Alex ride out with B. Riley FBR. Please proceed with your question.

Yes, good morning, and very nice quarter gentlemen.

Thanks, Alex Thanks.

Can you give us a little bit of an update on.

Some of your real estate up sales are listings and how that's proceeding and then or any other update on any other.

Dispute resolutions or claims that could be settled up sort of in the next six months.

Yeah, I'll take the real estate update the market talk little about the claims well the real estate update is pretty much where it was before we would continue to.

Of course, the move those properties or you know that covert going on or the timing could could be a little shaky, but I'm confident that we will be able to move on from the pieces.

We deem as noncore assets.

Yeah and on on the.

On the other pace remind me Alex rather I'm, sorry, what was the other over the other part of that like claims.

Claims dispute resolution I apologize err on the claims side.

We continue to focus on that we're making progress on on and some of these.

I think it's probable that we'll have a.

Some of these resolved this year I think on on others are probably a little bit longer duration. So.

I'm not not prepared to quantify what we think the impact of that might be but I think again. They are part of that will get jet resolve this year and depending on how the other one guys. It could it could push off into next year.

And then secondly, the commercial concrete margins were fantastic congratulations on that how sustainable is that and how does this business up kind of changed over the last up kind of year or two as you pursue the structural business.

Well I think you know again a lot of the things that we did a that we've kind of focused on an operational improvements over the last year are bearing fruit for us that we you know our focus on is on keeping that sustainable.

The team and the concrete group has done a fantastic job. We again, we think we have the right right people in place in the right spot and again part of the part of the strategy. There too has been to expand our structural business that we're seeing that in saying that pay off and.

We continue to be focused on.

Improving from where we are today were very pleased I'm very pleased with the progress we've made in the last year, but we think theres more progress that we can make and again, we're focused on bringing or you know, bringing her out projects then at or above.

What we bid on that and ER and controlling our indirects than we've done a good job in that division, making that making progress on that and we think we've got more progress that we can make going forward.

And then just up circling back to your comments about SGN, a and the incentive comp accrual STN in the second quarter was a little bit higher than were always looking at I suspect that was due to the insurance top accrual excuse me. They the the bonus topic roll up did did you recognize sort of up of six months worth of that Oh.

This accrual in the second quarter is that why look little high.

So the bonuses being so you know accrue.

<unk> every quarter I'm actually enablers was up a little bit just by you know the nature of the timing of.

Different expenses and were they fall, but you know as I mentioned in my my note Oh, we do expect it to the taper off a it'd be close it or even have presented below by year end.

Perfect.

During this quarter congratulations thanks. Thanks.

Thank you. Our next question comes from the line of Marco Rodriguez with Stonegate capital markets. Please proceed with your question.

Hi, Good morning, guys. Thank you for taking my question.

Hey, Mark up.

Hey, I always pretty things you got to spend a little bit more time on the gross margins in the segments. I'm. You know you did push out or rather you called out the improvement from a basis point standpoint that you talked through the indirect cost and then the the project level margin I was wondering if maybe you could talk a little bit more about those indirect costs, what's your kind of.

Doing there are per group to make those improvements go forward.

Well I get it kind of goes back to what I said a minute ago. You know again as we is the process improvements that Oh, we addressed over the last 18 months a lot of those if you'll recall were directed around labor efficiency and equipment efficiency. So.

That's been a big focus of a of of our effort of our teams and ER and again you know is just as or kind of a reminder, about that one of the things. We did last year only we did our view was just a it'll improve or enhance.

Some of the tools that it was that we're providing a information back to our.

Back to our managers I'm, so that they can try to make better decisions and faster and quicker decision. So again I think that that's been a.

Huge focus of ours, it's going to continue to be a focus vars and Ah, yes, we're saying they the benefits of that are reflected in the hit the margins.

Hi, there and I believe you mentioned I mean, you had some pretty good improvements year over year.

On the marine seismic or in the margin side.

But I thought that I read in your prepared remarks that that the dredging equipment was was offline for little while Peter some some maintenance can you maybe kind of quantify the drive you saw there on the utilization levels on the marine dredging equipment.

Yeah, I mean, we don't get you know two specific on on dredge utilization just for competitive reasons, but you know again, if we kind of think about the first quarter, we were sort of in the zone above a well above that 80, 85%.

Utilization that we like to see I'm, a we did dip below that in Q2 and again around scheduled maintenance and just on that point of scheduled maintenance, yeah, we scheduled maintenance, but sometimes you know again that that can fluctuate and flow depending on.

What are a project schedules are so that's very we're very adaptable to that so we saw.

You know during the quarter based off the schedule of of work that we either we're.

Anticipating getting or that we were getting and Ah you know took it took some time in the second quarter to.

Go ahead of that and address some of the scheduled maintenance on some dredges and that's really what what what pull that back again as we talked about in my remarks earlier, a we've we've.

Recently announced several projects and Ah that are going to contribute to that utilization and so that's that's why we worried I would have to get some of the main its knocked out.

During the second quarter.

Got it and then I'm looking at the concrete segment I'm, just kind of echoing the prior comment very very impressive margins versus the historical run rate. If you will I'm, just trying to kind of understand a little bit more here.

Your your shifting your appetite if I'm trying to do structural work is that a little bit of a higher margin business. The kind of helps the situation or is this sort of more of the indirect cost focus that kind of hoping that margin come back up versus the its recent historical trends yeah. I think it's a combination of several things.

I think one as we said, it's our focus on Oh, our interacts and controlling knows and you know I've spoken to that.

To a structural work I think we you know we're good at what we were good at all at what we do but our structural group performed as well we have different competitive dynamics in that business, meaning I mean to that and those types of projects meeting you know it where we're usually going up against a.

A different type of competitors.

Less of the smaller competitors. So the bidding dynamics are are a little bit better and that work for us, but our light commercial group a again, our guys are performing well.

And really you know kind of a big change there is we're performing better on projects across all of our markets and ER and we've had we had you know in the in the quarter, we had good weather as well. So we had good production so.

And that's really been true for the first the first half of the year I think again you know what.

Some of the changes we've made in the focus we've made in that business.

Around you're performing better on our light commercial work is starting to pay offs that we're getting a little bit more of a consistency on that and add and not having a you know projects that you know we're not performing on a yep pull pulled out of that margin. So I think its combination of all three of those things.

Great very helpful. And then last question just again on a concrete segment I know in the past.

We've discussed pricing pressures in the bid market that you've seen down in the Houston area, specifically I'm, so kind of sounds like you're movement toward the structural work has kind of alleviating that somewhat but I was I was wondering if you can maybe comment a little bit more on the pricing environment for bidding contracts in Houston, Dallas, and Austin, where you.

Your your concrete work for now.

Well of course, it you know it it is competitive business it remains competitive and I want to be careful to say that you know we're still focused on pursuing like commercial work. It makes that a significant part of the business or the business opportunities.

In concrete.

It's still competitive again like I said, there earlier, we do look like the favorability of the the competition or.

Dynamics in the structural business, but also on the other like commercial side again, depending on the projects.

You know it couldn't be more or less competitive.

As we as I kinda talk about our overall it out at our in my comments earlier, our overall strategy in both businesses, including concrete is.

You know target the work that's coming out a target those sectors was that are moving forward with with things, obviously and focus on those opportunities that we think give us the best opportunity to ER to perform to win the work and then for format. So.

We're trying we're being very disciplined in our approach we are as we bid. This work and so you know again that it's always going to be competitive out there, but again, we're trying to the b are very strategic about what we go after so that we can achieve our objectives.

Understood. Thanks, a lot guys I really appreciate your time.

[music].

Thank you. Our next question comes online Oh frat with noble capital markets. Please proceed with your question.

Good morning, I'm Mad follow up on that claims can you just quantify just I know you didn't want to quantify and the potential impact, but could you quantify the amount of claims outstanding you have.

I think Oh, <unk>, we won't quantify the total amount I do think a that you'll see in the queue that Oh, we have booked about in the quarter. We booked some claims about a million well a woman 1.7 and claims outstanding that are actually booked.

And again, that's a fraction of the overall claims, but I don't want to get into the total amount of our claims just for a.

Just for for reasons of you know not not negotiating and public.

Okay, great, but they'll be details in the queue.

Yep.

Great. Thanks, and then could we focus on you know your free cash flow generation operating rep work's been pretty consistent over the first two quarters of the year, but then part of that is because your capex FINRA running below average below 3 million a quarter can you give us an idea how.

Capex looks over the second half of the year and then also on the working capital crime. You know when you look at the net cash flow or net free cash flow. That's been positive because of concept working capital changes and can you just highlight sort of expectation for the second half because a year there.

Yeah, well I'll take this yeah capex for the first half of your roughly 5 million a I do expect up for the rest of the year somewhere between five to 7 million. So bringing US 10 to 10 to 12 million full year, but we'll continue to monitor and watch it and are well see you know what we need to get done this year, obviously want to do with.

What's right for the business and continue to keep our assessing been good working condition well, you're absolutely right a working capital liquidation has been good in the first half a year I know last year the back into the year. We saw it really build up a so when I think about the second half for the year I do expect a little bit of a buildup.

In Q3.

And they see that you know liquidate into Q4 Q1 of next year, but you know we talked about some of how you controls that we put in place around cash management and working capital management. So we're going to really really try to you know to minimize the uptick but it's just the time of year where are we.

See more calls burn we see more you know HP Ron So you tend to see you know working capital build though.

Great. That's helpful. And then you know it looks like Marine you know well backlog was scam quarter. You do have 60 million of low bids pending awards. It in that 32 million I assume is that already has been awarded as part of that number.

I believe it is yes it is.

Okay.

In the context of second quarter maintenance is to have any maintenance scheduled for the second half for the year Mark.

[laughter], we do I mean that Didnt, you know kind of that left or less than duration today that could change, but right now its its kind of the normal quick hit stuff. The stuff. We did in the second quarter was kind of a little bit more involved.

Just to get ready for for some of the upcoming work.

Okay, great and I'm not sure people kind of its in the past been to quantify would you be able to quantify how much it terminal fibest left in your backlog.

Well, we might have to get back I think we're probably about 40% complete on that project right now plus or minus.

Familiar hundred million Lumewave, Yeah, we still we still have Ah you know a a ways to go on that.

Okay, Great and then I'm going back to the concrete business you know really strong quarters. It's been pointed out previously, but you are low bids right now looks like 13 million low bids pending award and it looked like the win rate was little bit below average can you just comment on those two metrics.

Yeah, I think that I'm a the yeah. The 13 million is correct. There. We got we you know we have a lot of a bids outstanding a lot of work that we're pursuing it but in both the divisions and does what said we're still seeing opportunities in both division I think away yeah, we'd look at the when right obviously, a in the book to Bill.

You know were impacted during the quarter. Some of that is just kinda normal timing on when right and.

You know and timing of bids obviously some of it it's been cove, it impacted especially when we when we look at Q2.

And the when right in the flow of work, particularly like in marine at the beginning of the quarter. We were you know some of our efforts were focused on the.

Or areas that wound up being impacted by a co bid and therefore projects sliding to the right.

And so we had a lower win win rate and a book to Bill a if you will it at the beginning as a quarter and as we pivoted to other areas. Other end markets, where projects were coming out we saw that improve as the quarter went on.

So are you know again, it's it's it's kind of.

A little bit of that is doing a 11 flow a little bit of that is seeing the market reset in terms of.

Who who was impacted by co bid and maybe sliding clat projects to the right and then last pivoting to where we see the opportunities and focusing our attention is on that so.

Thats kind of a you know what happened in Q2 as we move forward again, I can't predict what's going to happen in the second half what are you know our our when and when rates at all that what I can say is we have worked out there to bid on we're focused on it we're focused on those things that are moving forward and and we're you know we're targeting work to win.

And we're also potentially yeah, we could see us bidding more work in order to when when the work that we want to that get to a you know to refill our backlog and again. The key is we want to do that we filled with profitable work.

So.

We could see a win rates fluctuate we might see volumes go up.

But we're focused on the.

Ah getting after the work and a that is out there and are performing on it.

Yeah, Yeah, I'm back quite you still north of 200 million. So you know less concerned about the near term win rate just looking at that sort of the second half the year. That's helpful. Thank you Mark on that Robert could you.

Robert could you just I think you mentioned that you had revolver availability about 50 million and then you have been Tim in <unk> million a cash so potentially total liquidity about 60 million can you just sort of expand on why you looked at and you know and even the 20 million up.

Revolver capacity in the context of you <unk> you know you paid down a healthy amount of debt in the quarter.

Yeah. So when co. It kind of first broke out you know there was a lot of uncertainty around you know you know what we see widespread shutdowns that would stop us from working on projects worth customers for cash.

You know as things slowed down a those are things didn't happen.

But I don't know gone into caution we wanted to get ahead of anything like that and it hasn't happened in as you've seen we've been able to continue to generate a solid free cash flow, which in turn we paid down you know debt on the revolver. So we have that availability in their capacity you know available to us steel Oh. So it was out of a blended <unk>.

Of caution or you know at this point you know we you know we feel good about our position in where we are and we have well you know some you know some room you know too soon to be able to whether any any storm that that might come up but whatever we sit here today, you know I don't think though the country has its stomach for.

You know widespread shut downs again, so I think the likelihood of that is lets him, but we do have some reserves cash reserves to be able to whether any any storm. It comes.

Okay, Great. That's helpful and then if you could.

Following up on the real estate question has to Tampa yard to actually been listed.

Or have you engaged a broker on grant potential sale.

Oh, I actually have a a p. I'd say in place, but I think it's too early in the process to get into the we drove that well I I'm pushing you know you know to get that deal closed as soon as possible well, but there you know there's rezoning then.

Things like that due diligence that needs to be completed so we can see that like this year. We can see that next year. Early next year. It's is really going to depend on you know drove it. The city example, and you know how you know how quickly. They can move you know people working from home in the government so as bad as efficient as it.

Usually is so I don't want to lock myself into you know guiding to through to a timetable, but you know we're hopeful and I'm confident that we can get that deal you know completed its just a matter of timing yeah, Oh I wanted just to just to reiterate too that the real estate that we've.

View as a surplus all of it has been listed or so it's it's listed and yeah. We've had various levels of activity on on on all three are the.

Half of property is as Robert said, a little bit further along than the other ones and again, we're confident that that one's going to.

Move it's just a question of timing as Robert said due to do that some of the inefficiencies were seeing right now with the.

With cobot.

Great I really appreciate the detail founded detailing the culinary. Thank you. So much one last one if you wouldn't if one last one if you wouldn't mind you did suspend guidance at the you know when you reported the first quarter just given all the Kobe that uncertainty.

Any thoughts on you know why you Didnt reaffirm reestablish guidance for this quarter you know given the permanent performance in the quarter and then you know what looks like a solid had second half back backlog and outlook.

Why not you know why not re established guidance.

Well I think again you know we're confident in in our ability to perform again as I've said in her remarks, I think we've got the right team we're focused on.

Per executing and performing yeah. The work in our backlog we're focused on securing new work I think right. Now you know, we just again sort of as a.

We're continuing to look at that we'll we'll put guidance back up and we think it's appropriate or that said you know we are focused on performing yeah. We see that we see a pathway to oh good performance in the second half of the year and to a.

It took performed well and at the levels that we were previously talking about but a again, we know what we know today and and again, it's kind of unusual times. So are you know again, we think it at this point at this juncture just prudent not to put that back up but I want to emphasize that doesn't mean that we're not trying to execute.

So cute well and execute according to the plan that we previously laid out.

Great. Thank you Mark Thank you Robert.

Thanks boat.

Thank you Sir our next question comes from line of Gerry Heffernan Walthausen <unk> Company. Please proceed with your question.

Good morning, Robert Good morning, Mark how are you.

Sure.

Yeah good.

Lots of Ah that's a good discussion going on here, perhaps any a couple of things you know.

Okay.

Front way a one in the last quarter Oh concerns in a lack of knowledge of Cold War I would really high.

I believe we spoke at that time of putting stock to be nor P. system project or out of a a an abundance of caution.

I noticed in the adjusted EBITDA a schedule in the press release with their words or expenses for ERP implementation. So are we back on with the.

Implementation and with a very important system that you're looking forward to the.

Improvements of management wounds with it.

So the way I would have to of course is yes, it's back on or off the got underway that we're approaching this is kind of toll gates system. So we really engage the project.

We're going through a detailed planning phase or you know over the last month, so or so well and we're really you know evaluating our schedule. Our timetables are cost and once we kind of get through that phrase, but we'll put together a new plan under the new World Order and then we will make a decision on you know you know what the.

A scope looks like how far do we go what Sam worked out well what we do next year, what what we do this year and we'll have a a solid plan. So you're correct. We did start that process back up into through it will have a a lot more to talk about this though you know on the next fall.

Okay. Okay. Thanks.

You indicated that there is a 1.3 billion of backlog did an outstanding or could you.

Frame that number in regards to is that a normal level for bids outstanding were.

I'm wondering if you.

And speaking with a lot of other construction companies. They have indicated nook digital work, we're still out there. However, the process of completing its has been greatly expanded so that 1.32, saying Wow, there's a whole lot more business wasn't saying you know what.

One of the reasons, why our or a backlog number move the way they didnt.

Yes, good just are not completing their books extending out before we get the answers.

Well, it's a little bit about south is the answer the first part of your question is that normal yes. It's it's you know we've we've had over <unk> billion dollars' worth of a work outstanding that's been quoted outstanding in previous quarters and as I mentioned in my remarks.

The 1.3 is slightly up from the 1.3 that was outstanding.

At the same period a year ago.

It is safe to say, though that some of that is driven by a again civil work that we quoted during the quarter, particularly at the beginning of the quarter.

In areas that have or in the end markets that have been more impacted.

If you that is a good way of looking at it that there are some decisions that are being deferred or slow walked or whatever but other other end markets and the other projects are moving ahead. So yeah. There is a piece of that that probably it fits into that category, but I think the majority of the work in.

Yeah that we have in that number is work that is end markets that are moving forward and so again, the it's not it's not a typical to have that about a workout outstanding core work quoted outstanding.

Okay, Okay Green.

With regard to be <unk> on on the dredges.

Martin Robert that's been a very good particularly in over the last year when I think about it as a really kind of preparing less for.

What is going on in the upcoming three six months with your business I don't recall, you talking about and I step up in maintenance expense for the Trojans for the marine business.

Last quarter, so I'm wondering.

And needs these pick a maintenance projects, yes, there are they occur every so often but the actual.

Implementation of the maintenance can can be in between you know a couple of months, depending on how you see windows.

It's something change as far as the ones solve work.

Climbing wall.

Yes, it has and what we've been to get things done now so we can really be you know.

Hitting these upcoming projects.

With all cylinders not sparking.

Ah, yes, so I I can't wait you are correct that we didn't call that out on the last call on that but scheduling of our that's scheduled.

Capital repairs and repairs I can be very dynamic in terms of when we do that work also it can be depended on the type of work that we yeah. So we may have work in hand that we know that that we're planning for a and we may have other work that that that's coming.

Not that we win in a in a given period I'm that given the type of that work. There is additional things that we need to do.

To the dredges, particularly if were going up you know for Ah Ah you know deeper type dredging project, sometimes that can alter the set up of the dredge and sometimes you know again, we yeah. We dealt with it we know when we get that work and we don't sometimes they know that work comes along and.

It changes our thought on either a the timing of when we're going to schedule that work or be the work that that the actual work if we're going to do on the on the physically on the dredges, So a little bit a combination of both of that is that that was the case of being very dynamic when we spoke or at the end of April we had a little.

The different thought about what that schedule was going to look like.

And did not comment on it but the circumstances changed in terms of what we saw and then what work we had Warren and we're gonna be executing on in the back half of the year, so that altered our our thought process on no.

Getting some maintenance done in the second quarter.

It sounds like you have some pretty positive thoughts regarding the margins marine business in the second half your.

Robert in his remarks made a comment that the adjusted EBITDA was over a 50 million last 12 months I seem to 50.2 for that matter, even just the Mont adjusted EBITDA being real 45.6, and pull asked a question about cadence <unk>.

Stylish nice I kind of chuckled because.

Unless my memory is really awful neural already ahead of your guidance, where you will around six months ago.

Which does beg the question of.

You know what's.

Why why not go out there anything anymore. The previous guidance, we don't know.

Well, we're comfortable with that or no somewhat interesting and geismar.

Are you doing better than a I think most had expected in a your even doing better than Oh, the where you were originally able to put flagging brown.

Yeah sure Yeah, I I hear you and I agree with you know things are progressing well Oh, there's still some uncertainties out there what else woodmark characterize it as the way that said I would characterize it through is that yes, we feel pathway back into that range that we talked about but at this particular pointing Tom you know you know, we don't think it's prudent to bring back God.

But our level of confidence that we have the right people in place. We are the right team in place we have the marketplace in place we have the right assets employees to be able to deliver in that range, but we were you know our conference level is increasing is rising and we feel good what we are well you know there's still work we've done there's a you know challenges.

To overcome but yeah, we feel good about where we are and you know we think the futures bright for for the company in both segments.

That's that's screen and one last thing on the.

The bonus accrual that are that you spoke of in Washington, <unk> did you accrue for bonuses in the first quarter.

Yes, so the bonus expense Oh, yeah, we recruit for a you know our quarterly amount. So we're turning to reason I called that out is when you look at it year over year, you know our bonus expenses no S. DNA is up primarily driven by the bonus expense. So if you look that's good.

Performance of the past few years or you haven't seen a fool accrual of bonus expense and you know, obviously, where we perform well we've been able to you know to be in that range through you know to meet our incentive plan halfway through the year you know so we need to call.

Throughout the year over year increase because we are in that range or to be able to superficially payout bonuses. This year.

Sounds good sounds good I just want to make sure I understood is whether that was a year over year comparison or sequential comparison.

Yeah, it's a year from your huh.

Yes.

Right your.

This is coming along well multisite expected Ah.

We just need the on market to recognize influence. Please thank you for keeping up the good work in Ah hopefully, we continue and everybody is to help thank you exterran fixture.

Thank you I next question comes on line of Greg Weiss with Boston Partners. Please proceed with your question.

Hey, guys. Congratulations on the continue to teach out performance, it's been a nice to see and you can see it in a.

You know the income statement cash flow and balance sheet. So.

Hopefully a there's more to come.

Most of my questions have a were answered by or after the last.

Two callers, but just for a little more granularity.

Can you give anymore, you know insight so how much whether it's the real estate sales or noncore asset sales how much more cash we might be able to harvest from from those kinda measures.

Well I mean, that's a real estate sales could could be significant or you know you know upward one property could be at worst or the $20 million. Another one five to six and then that's a big property that's much farther behind in cross to solve it from a staged you know standpoint.

To be very good who knows but that that that's where are you earlier in the process. So I think the ones that are that are closer you know you know call it $20 million to $25 million or potential or you know cash broke from those cells, but no Greg I want to get into you know exactly when that's going to happen because.

You know there's real estate it is called <unk> and the timing is is really really on though.

No I I understand that and look I mean, its I realized or color stated you know at some point the market will notice, but you know you.

I just you know you ever go over the past year, you brought that down by 30 million catches up by eight or 10 million I'm sure. You've improved the results are you not that liberty anymore.

I understand we are in Togut, but given where your given how the stock is getting Nord. Despite your heavy lifting <unk>.

At what point do you guys reevaluate your your capital allocation.

Thought process.

Well, yeah, we're thinking about that all the time you know as you pointed out you know we're you know were little bit over one Tom one it's a from a leverage ratio standpoint, so yeah, we're always evaluating well and thinking about capital allocations and you know you know where should we you know apply that free cash flow.

So whether the debt, but you know as we go for were everything's on the table and we're going to make sure that you know we put the cash to the passing Hodge uses I will point out, though you know as a part of our police 65 day, you know deal that we entered into a there's risk.

Frictions on stock buybacks, so that that deal in in May of next year, but but you know we're going to continue to monitor that we're going to continue to watch it and you know well have more to say on that you know it if the strategy changes.

Around what we're going to put capital.

Right, but not only are you just have a onetime library, you're now the company has been a knock on wood profitable.

Grizzly profitable and you also just highlighted that at some point in the future you My goals you sell real estate that essentially equates to you're calling that out.

Correct.

That's correct.

All right its a.

He's talking about things that keep it up hopefully they drag as good as well as well as a result.

Thanks Ray Thanks, Craig.

Thank you, ladies and gentlemen that concludes our time allowed for question I'll turn the floor back to Mr., Tom for any final comment.

Thanks for joining us today as they know how I want to everybody know that management is planning on extending the Jefferies Virtual conference next week, well, we have a few available slots enough doping for one of the ones with management, so everybody wants to pick those up well reach out to our our people and well get those schedule. So they say stay healthy well and we look forward to.

Talking to everybody in late October as we report Q3 earnings.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

[music].

Good morning, everyone and welcome to Orion Group Holdings second quarter, 2020, <unk> earnings conference call and webcast.

Joining me today are Mark Stauffer, Orion Group Holdings, President and Chief Executive Officer, and Robert <unk>, Our Vice President and Chief Financial Officer.

Regarding the format of the call we've allocated about 10 minutes for prepared remarks in which Mark and Robert will highlight a result, an update our market outlook.

Well then open the call for questions.

But of course of this conference call will make projections and forward looking statements regarding among other things our end markets revenues gross <unk> gross profit gross margin EBITDA EBITDA margin backlog projects and negotiation and pending awards as well as our estimates and assumptions regarding our future growth.

Administrative expenses and capital expenditures.

But providing this information we undertake no obligation to update or revise any new projections or forward looking statements, whether as a result of new developments or otherwise.

Also please note that adjusted net income adjusted earnings per share EBITDA, and EBITDA margin or non-GAAP financial measures under the rules Securities and Exchange Commission, including regulation G.

Please refer you referred to the reconciliation didn't definitions inclusive to the most comparable GAAP measures reconciliation tables accompanying the earnings call within the press release issued this morning. The press release can be found on our website at Www Dot Orion Group Holdings Inc. Dot com.

Also for additional discussion a risk factors that could cause actual results to differ materially from our current expectations.

<unk> for please refer to our quarterly and annual filings with the FCC, which are also available in the Investor Relations section of our website.

And with that I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Please go ahead Sir.

Thank you and good morning, everyone. Thanks for joining our call.

Today, we will discuss <unk> second quarter results and provide you with an update all the college stable business as we continue to navigate through the Cobra doctoring pandemic.

I'll begin with a few comments on the quarter, then turn the call over to Robert Your review our financial results in more detail and then I'll make some concluding remarks before we turn to people to.

First I'd like to extend our deepest sympathies to those are company and others, who had been affected by where it had family members the French affected by the Koby marching garbage.

I'd also like to sincerely Tyco team members, who continue to safety work at all projects, such construction yards shops and field support offices around the country.

It's to the combined efforts of our entire team we've continued to be able to perform during these unprecedented college.

Our focus has been rolling on ensuring the health and safety of or people.

Even with recent spike in koby likes in cases in some of our markets. We've continued working on projects with only minor disruption.

To ensure that health and safety of our employees all measures we implemented in response to Kobin like team will be kept in place for the foreseeable future.

The second quarter, we continue to post year over year improvements in both revenue and profitability.

Generated solid free cash flow all of which reflects the benefits of the operational improvement initiatives, we've implemented over the last 18 months.

We remain encouraged bar elevated backlog or continued productivity during this period and the variety and resiliency of the end markets that we serve.

A wide array of in markets that we serve enabled us to pursue the most attracted bid opportunities in the end markets that are performing best at any given important Todd.

This strategy has served us well historically.

Service well in this environment and we will continue to focus our efforts on targeting the end markets and projects, we expect to have the best opportunities to be profitable moving forward.

We have also taking the necessary steps to ensure that our liquidity position is solid and enables us to continue executing on projects in backlog and pursue new bid opportunities.

We believe we entered this pandemic from position of strength and let these challenges head on.

I'm confident that we'll be able to navigate the effects of the pandemic has been moved through the year with the safety and health bar employs about foremost priority.

Now I'll turn the call over to Robert to discuss our Q2 results in more detail Robert.

Thank you Mark and thanks, everyone for joining us.

Well get into the quarterly details ought to point out over the past <unk> well rod is generated over $50 million with adjusted EBITDA and posted four straight quarters of positive or something that is indicative of the hard work done all of our employees contributed over this past year.

Revenues for the second quarter, <unk> 483.7, the compared to 166 million in the second quarter 29 to.

The gross revenue was driven by increased production at our concrete segment.

Second quarter Toy 20 reported gross profit was 20.7 billion or 11.3% as compared to 15 billion or not we're set in the second quarter of last year.

The year over year increase in margin was driven by 300 basis point improvement to indirect projects support calls.

Now moving to the segments.

Excluding the gross up impacts of accounting for uninstalled materials. The marine segment margins increased by 95 basis points year over year of which 240 basis points came from indirect expenses, such as labor and equipment utilization, partially offset by 50 basis point decrease in project level Mark.

Which is attributable to changes in the mix of projects executed from period to period.

Now I'll turn to the concrete segment.

The concrete segment year over year margins improve <unk> hundred 30 basis points of which 60 basis points came from indirect product support costs and 70 basis points came from project level margins. This improvement in our concrete segments project related margins was driven by an increase in labor efficiency.

Moving to ask Tonight for the second quarter 20, Twond SDN expenses were 16 point Bob.

Up from 15.1 billion in the second quarter 20 Ninee team.

The increase was driven primarily by the full ratable accrual of the annual incentive compensation plans.

During the current year period as a percentage of revenues second quarter 2020, as DNA was not for six down slightly from that 0.1% in the prior year quarter.

We remain focused on SDN, a being at or below 8.5% of revenues for the full year, recognizing that we may see quarterly fluctuation.

Second quarter 2020, operating income was 4.1 billion compared to an operating loss of point 4 billion in the second quarter last year.

After the bottom line results for the second quarter 2020 reported net income was $2 million earnings of seven cents per share. These results compared to a net loss of 1.6 million or a loss of six cents per share for the same period a year ago.

After adjusting for approximately $350000 pretax non recurring costs and $1 billion a benefit associated with the reduction of certain tax valuation allowances net income for the second quarter.

Oh 2020 would've been 1.3 billion or earnings of four cents per share.

Second quarter 2020, adjusted EBITDA was 12.6 million, representing an adjusted EBITDA margin of 6.9 per cent compared to adjusted EBITDA up 10 million.

For a margin of 6.1% in the second quarter last year.

In the second quarter choice when we bid on approximately 1.2 billion worth of opportunities and were successful in 121.

This resulted in a win rate of 10% a book to Bill <unk> 0.65 jobs as of June Thirtyth 20, Twond backlog was 528 of which 312 million was associated with the marine segment enjoying troubling for the concrete segment.

Our lead the company has 1.3 billion worth of bids outstanding including 73 million Board.

Which is apparent low bidder for has been awarded contracts subsequent to the end of the second quarter 2020, something that we view is indicative of the strip of our end markets.

In total we currently have over 600 billion of projects between backlog and low bit.

Moving into further discussion I'll provide an update on the proactive measures we continue.

As always we can see robotics, our capex needs and operating costs as a result.

We continue to be selective with certain capital in operational expenditures also we continue to operate controls are no cash management broader risk management and mitigation, we announced on the Q1 earnings call to that end during the quarter, we entered into a new 360 day 20 million dollar revolver that adds to our existing.

And credit facility.

This increase provides us with more than sufficient financial flexibility to container pursued rewards and execute projects in backlog.

Current liquidity position solid which was further enhanced in the second quarters, we generated 16 million as free cash flow.

We are pleased with our free cash flow generation over the last six months.

In the first two quarters of 2020 horizon has generated more free cash flow than in any all year in company history.

At the end of Q2, we had 10.3 million of cash on hand access to almost 50 million under our revolving loan credit which includes 20 <unk> from the new revolver. We ended the quarter with 54 million itself debt of which 80 million was related to the revolver and 36 million relate to the terminal. This translated into a 1.13 jobs leverage.

Michelle any fixed charge ratio of 3.66 stops were comfortable with our cards leverage profile. However, we will continue to evaluate opportunities to enhance our liquidity position, including continuing with the processes selling noncore assets I want to reiterate my comfort level with the current liquidity situation, which will enable us to execute on our strategy pursue new away.

And perform work in backlog now I'll turn the call back over to Mark to wrap up.

Thanks, Robert turning to our markets, we continue to see bidding activity in both our segments, while some bid opportunities and impacted end markets have shifted to the right that opportunities in other end markets continue to move forward due to our diversified customer base and end markets.

Our focus is on profitably bidding these opportunities.

We have strong track record of adjusting between end market bid opportunities and we will also continue our pursuit of select larger and longer duration projects.

We continue to interface with our customers a lot at your their spending plans and we continue to target government bid opportunities across <unk> federal state and local agencies.

One of these announced project as it is as a result of Hurricane Harvey relief funding and we expect additional significant bid opportunities.

Related to Harvey really funding in the coming quarters.

We also continue to track any movement on the federal infrastructure Bill either as a replacement for the fast act or that baby part of future stimulus spending plans in response to Kelvin 19.

Any action on the infrastructure funding will provide significant bid opportunities that we're well positioned to capitalize on.

And the concrete segment, we continue to execute on our strategy of expanding our structural business as evidenced by the $30 million structural Cocreate project, We recently announced.

The competitive dynamics of structural projects have led to an increase in awards for this type of work and our performance on these projects has significantly contributed to the improved operating performance of our contract business.

We currently have $1.3 billion of bids outstanding slightly higher than we had in the prior year period.

I'm confident that we have the team in place to continue to perform despite the challenges in the current environment. We are and we will always be focused on safely meeting our customers' needs.

And we remain confident in a long term drivers and sustainability of our markets.

We will get through this pandemic and we will be well positioned to take advantage of post <unk> post <unk> pandemic market conditions.

Once again, our deepest sympathies go out to those have been affected by the virus and like the again. Thank our team members for all their efforts with that I'll turn the call back to the operator for questions.

You mean first start to if you'd like to remove your question from the Q.

Participants you think speaker equipment, it may be necessary to pick up your handset before passing the starkey.

Our first question comes from the line of Alex Reidel with B. Riley FBR. Please proceed with your question.

Yes, good morning, and very nice quarter gentlemen.

Thanks, Alex Thanks.

Can you give us a little bit of an update.

Some of your real estate Upsells are listings and how that's proceeding and then or any other update on any other.

Dispute resolutions or claims that could be settled up sort of in the next six months.

Yeah, I'll take the real estate update the market talk little about the claims well the real estate update is pretty much where it was before we're continue to.

Of course, the move those properties or you know that covert going on or the timing could could be a little shacey, but I'm confident that we will be able to move on from the pieces.

We deem as non core assets.

Yeah and on on the Uh Huh.

On the other pace or remind me Alex World I'm, sorry, what was the other over the other part of that claims.

Claims.

So I apologize err on the claims side, we continue to focus on that we're making progress on odd and some of these I think it's probable that we'll have a.

Some of these resolved a this year I think on on others are probably a little bit longer duration. So.

Not not prepared to quantify what we think the impact of that might be but I think again. They are part of that will get jet resolve this year and depending on how the other one guy because it could push off into next year.

And secondly, the commercial concrete margins were fantastic congratulations on that how sustainable is that and how this business up kind of changed over the last kind of year or two as you pursue this structural business.

Well I think you know again a lot of the things that we did a that we've kind of focused on an operational improvements over the last year are bearing fruit for us that we are focused on is on keeping that sustainable or the team and the concrete group has done a fantastic job.

We again, we think we have the right right people in place and right spot and up again part of the part of the strategy. There too has been to expand our structural business, we're seeing that saying that pay off and we continue to be focused on.

Improving from wherever we are today were very pleased I'm very pleased with the progress we've made in the last year, but we think theres more progress that we can make and again, we're focused on bringing or you know, bringing her out projects then at or above.

What we bid a Matt and a and controlling our indirects than we've done a good job in that division, making that making progress on that and we think we've got more progress that we can make going forward.

And then just up circling back to your comments about as gene a and the incentive comp accrual SDN and the second quarter was a little bit higher than where I was looking at I suspect that was due to the insurance top accrual excuse me. They beat the bonus topical up did did you recognize sort of up of six months worth of that bonus.

This accrual in the second quarter is that while looks a little or.

No. So the bonuses being so you know a crew are equally every quarter.

Yesterday was what was up a little bit just by you know the nature of the timing of.

Corporate expenses and worthy ball, but you know as I mentioned in my my note Oh, we do expect it to the taper off a it'd be close it or even have presented below by yearend.

Perfect.

During this quarter congratulations thanks. Thanks.

Thank you. Our next question comes from the line of Marco Rodriguez with Stonegate capital markets. Please proceed with your question.

Good morning, guys. Thank you for taking my question.

Hey, Mark.

Hey, I'll give you got to spend a little bit more time on the gross margins in the segments you did push out or rather you called out the improvements from a basis point standpoint, the softer the indirect cost and then the the project level margin I was wondering maybe you could talk a little bit more about those indirect cost what's your kind of.

Selling their per group to make those improvements go forward.

Well I guess kind of goes back to what I said a minute ago. You know again as we are the process improvements that Oh, we addressed over the last 18 months a lot of those if you'll recall were directed around labor efficiency and equipment efficiency. So that's been a big focus of a of of our effort of arts.

James and Ah and again I was just as we're kind of a reminder, about that one of the things. We did last generally we did our review was just a will improve or enhance.

Some of the tools that that we're providing a information back to our.

Back to our managers I'm, so that they can try to make better decisions on faster and quicker decision. So again I think that that's been a.

The huge focus of ours, it's going to continue to be a focus vars and Ah you know, we're saying they the a benefit to that.

Reflected in the the margins.

Hi, there and I believe you mentioned I mean, you had some pretty good improvements year over year on the marine side from the great and the margin side.

But I thought that I read in your prepared remarks that that dredging equipment was was offline for a little Walter you just some some maintenance.

Can you maybe kind of quantify the drive you saw there and the utilization levels on the marine dredging equipment.

Yeah, I mean, we don't get too specific on on dredge utilization just for competitive reasons, but Ah you know again, if we kind of think about the first quarter, we were sort of in the zone above a well above that 80, 85%.

Utilization that we like to see we did dip below that in Q2 and again.

Around scheduled maintenance and just on that point of scheduled maintenance.

Yeah, we scheduled maintenance, but sometimes you know again that that can fluctuate and flow depending on.

What are a project schedules are so that's very well, we're very adaptable to that.

So we saw.

You know during the quarter based off the schedule of work that we either were anticipating getting or that we were getting and Ah. You know took it took some time in the second quarter to go ahead that and and addressed some of the scheduled maintenance on some dredges and that's really what what what pullback.

Back again, as we talked about in my remarks earlier.

We've we've.

Recently announced several projects and a that are going to contribute to that utilization and so that's that's why we weren't going out and get some of the main its knocked out.

During the second quarter.

I think one as we said, it's our focus on Oh, our indirects and controlling knows and you know I've spoken to that but to a structural work I think we're good at what we were good at all at what we do but our structural group.

Performs well we have different competitive dynamics in that business, mainly I mean in that and those type of projects meeting you know it where were usually going up against a a different type of competitors are less of the smaller competitors, so the bidding dynamics or or a little bit better.

In that workforce, but our light commercial group a again, our guys are performing well and really you know kind of a big change. There is we're performing better on projects across all of our market and and we've had and we have you know in the in the quarter. We had good weather as well so we had good production.

So and that's really been true for the first the first half of the year I think again you know what.

Senator changes we've made in the focus we've made in that business.

Around you are performing better on our light commercial work is starting to pay off said, we're getting a little bit more of a consistency on that and add and not having a you know projects that you know we're not performing on a pull pulled out that margin. So I think its combination of all three of those things.

Right right very helpful. And then last question just again on a concrete segment I know in the past.

We've discussed pricing pressures in the bid market that you've seen down on the Houston area, specifically I'm, so kind of sounds like you're movement toward the structural work has kind of alleviating that somewhat but I was I was wondering if you can maybe comment a little bit more on the pricing environment for bidding contracts and Houston, Dallas, and Austin, where you.

Your your concrete works are now.

Well of course, it you know it it is competitive business. It remains competitive it I want to be careful to say that you know we're still focused on pursuing like commercial work. It makes that a significant part of the business of the business opportunities.

In concrete.

It's still competitive again like I said, there earlier, we do look like the favorability of the the competition or.

Dynamics in the structural business, but also on the other light commercial side again, depending on the project.

You know it couldn't be more or less competitive.

As we as I kinda talk about our overall it out at our in my comments earlier, our overall strategy in both businesses, including concrete as.

You know target the work that's coming out a target those sectors, where that are moving forward with with things, obviously and focus on those opportunities that we think give us the best opportunity to ER to perform to win the work and then perform it so.

We are trying we're being very disciplined at our approach. We are as we've said this work and so you know again.

It's always going to be competitive out there, but again, we're trying to the be very strategic about what we go after so that we can achieve our objectives.

Understood. Thanks, a lot guys I really appreciate your time.

Yeah.

Thank you. Our next question comes from the line of Poe Fratt with Noble capital markets. Please proceed with your question.

Good morning, I'm Mad follow up on the claims can you just quantify just I know you didn't want to quantify the potential impact, but can you quantify the amount of claims outstanding you have.

I think.

Oh <unk>, we won't quantify the total amount I do think a that you'll see in the queue that Oh, we have booked about in the quarter, we booked some claims about a million.

A woman 1.7 and claims outstanding that are actually booked and again, that's a fraction of the overall claims, but I don't want to get into the total amount of our claims just for a.

Just for for reasons of you know not not negotiating and public.

Okay, great, but they'll be details in the queue.

Yes.

Great. Thanks, and then can we focus on you know your free cash flow generation operating rep work's been pretty consistent over the first two quarters of the year, but then part of that is because your capex been room running below average below 3 million a quarter can you give us an idea how.

Capex looks over the second half of the year and then also on the working capital front you know when you look at the net cash flow or net free cash flow that's been positive because of positive working capital changes and can you just highlight sooner of expectations for the second half of the year there.

Yes, well I'll take this capex for the first half of your roughly 5 million I do expect up for the rest of the year somewhere between five and 7 million, so bringing us tend to physical a million full year, but we'll continue to monitor that and watch it and we'll see you know what we need to get done this year, obviously want to do what.

What's right for the business and continue to keep our assets and good working a condition, but you're absolutely right a working capital liquidation has been good in the first half a year I know last year the back into the year, we thought it really build up so when I think about the second half a year I do expect a little bit of a buildup.

In Q3.

And they see that you know liquidate into Q4 Q1, but next year, but you know we talked about some of the high end controls that we put in place around cash management and working capital management. So we're going to really really try to you know so to minimize that uptick but it's just the time of year where are we.

Any more costs burn we see more you know ATP runs. So you tend to see you know working capital build up.

Great. That's helpful. And then you know it looks like Marine you know well backlog with scam quarter, you do have 60 million of low bids pending awards. It in that 32 million I assume is that already has been awarded as part of that number.

I believe it is yes it is.

Okay.

In the context of second quarter maintenance <unk> is to have any maintenance scheduled for the second half for the year Mark.

Oh.

We do I mean, the you know kind of that less left in duration today that could change, but right now its its kind of the normal quick hit stuff. The stuff. We did in the second quarter was kind of a little bit more involved.

Just to get ready for for some of the upcoming work.

Okay, Great and I'm not sure people done this in the past been to quantify would you be able to quantify how much of terminals fibest left in your backlog.

We might have to get back I think we're probably about 40% complete on that project right now plus or minus.

<unk> hundred million level way, yeah, we still we still have Ah you know a a ways to go on that.

Okay, Great and then I'm going back to the concrete business you know really strong quarters. It's been pointed out previously, but you are low bids right now look like 13 million low bids pending award and it looked like the the win rate was little bit below average can you just comment on those two metrics.

Yeah, I think that the yeah. The 13 million is correct. There we have we yeah. We have a lot of Ah bids outstanding a lot of work that we're pursuing in both the divisions and does what said, we're still seeing opportunities about division.

I think it when we look at the win rate obviously, a in the book to Bill.

Well were impacted during the quarter. Some of that is just kinda normal timing on when right and Oh and timing of bids obviously some of it it's been covered a impacted especially when we when we look at Q2.

And the win rate in the flow at work, particularly like in marine at the beginning of the quarter. We were some of our efforts were focused on.

Areas that wound up being impacted by a co bid and therefore projects sliding to the right.

And so we had a lower win win rate and a book to Bill a if you will it at the beginning of the quarter and as we pivoted to other areas other end markets where projects for kill it out we saw that improve as the quarter went on.

So are you know again, it's it's it's kind of.

A little bit of that is normal ebb and flow a little bit of that is you know thing the market reset in terms of.

Who who was impacted by co bid and may be sliding clat projects to the right and then pivoting to where we see the opportunities and focusing our attention is on that so.

Thats kind of.

What happened in Q2, as we move forward again, I can't predict what's going to happen in the second half with you know our our when and when rates at all that what I can say is we have worked out there to bid on we're focused on it we're focused on those things that are moving forward and would you know we're targeting work to win and were.

Also potentially yeah, we could see us bidding more work in order to when when the work that we want to that get to a you know to resell our backlog and again. The key is we want to do that we filled with profitable work. So we could see a win rates.

Fluctuate we might see volumes go up.

But we're focused on.

Getting after the work and a that is out there and performing on it.

Robert could you just I think you mentioned that you had revolver availability about 50 million and then he has been Tim in <unk> million a cash so potentially total liquidity about 60 million can you just sort of expand on why you looked good and you know, adding the 20 million up to.

Revolver capacity in the context of your wrist you know you paid down a healthy amount of debt in the quarter.

Yeah. So when you go it kind of first broke out you know there was a lot of uncertainty around or you know you know what we see widespread shutdowns that would stop us from working on projects would customer for cash.

You know as things slowed down a those are things didnt happen.

But out of abundance of caution we wanted to get ahead of anything like that and it hasn't happened and as you've seen we've been able to continue to generate a you know solid free cash flow, which in turn we paid down you know debt on the revolver. So we have that availability and that capacity you know available to us steel, although it was out of a blended.

Oh, a caution or no at this point you know we you know we feel good about our position in where we are and we have a you know some you know some room you know too soon to be able to whether any any storm that that might come up but whatever we sit here today you know I don't think those the country has the stomach for.

Widespread shut down again, so I think the likelihood of that is left him, but we do have some reserves cash reserves.

To be able to whether any any storm that column.

Okay, Great. That's helpful and then if you could.

Follow up on the real estate question has to Tampa yard to actually been listed.

Or have you engaged a broker on that potential sale.

Oh, I actually have a a p. I'd say in place, but I think it's too early in.

And in the process to get into the we'd love that well I I'm pushing you know there because that real close if someone as possible, but there you know there rezoning than and things like that due diligence that needs to be completed so we can see that like this year. We can see that next year early next year.

Sure. It is really going to depend on you know trove is the city example, and you know how you know how quickly. They can move you know people working from home and the government so as not as efficient as it usually is so I don't want to lock myself into you know guiding to through to a timetable but.

We're hopeful and I'm confident that we can get that deal you know completed its just a matter of time, yeah, Oh I wanted just to just to reiterate too that the real estate that we view as a surplus all of it has been listed or so it's it's lifted.

And yeah, we've had various levels of activity on on on all three the Tampa property is as Robert says a little bit further along than the other ones and again, we're confident that that one's going to.

Move it's just a question of timing as Robert said due to do that some of the inefficiencies were seeing right now with a.

With Covance.

Great I really appreciate the detail sounded detail on you and I. Thank you. So much one last one if you wouldn't if one last one if you wouldn't mind you did suspend guidance at the you know when you reported the first quarter just given all the Kobe that uncertainty.

Any thoughts on you know why you didnt reaffirm or re established guidance for this quarter.

Given the permanent performance in the quarter and then you know what looks like a solid second half back on backlog and outlook.

Why not you know why not re established guidance.

Well I think again you know we're confident in in our ability to perform so again as I said in the remarks I think we've got the right team we're focused on.

The <unk> executing and performing yeah. The work at our backlog we're focused on securing new work I think right. Now you know, we just again sort of as a.

We're continuing to look at that we'll we'll put guidance back up when we think it's appropriate that said you know we are focused on performing yeah. We see that we see a pathway to oh good performance in the second half of the year and to a.

To perform well and at the levels that we were previously talking about but a again, we know what we know today and and again, it's kind of unusual times. So you know again, we think it at this point at this juncture just prudent not to put that back up but I want to emphasize that doesn't mean that we're not trying to execute.

So cute well and execute according to the plan that we previously laid out.

Great. Thank you Mark Thank you Robert Expo.

Thank you Sir our next question comes from line of Gerry Heffernan Ms. Walthausen <unk> Company. Please proceed with your question.

Good morning, Robert Good morning, Mark how are you.

Sure.

Good good.

Lots of a lots of good discussion going on here, perhaps only a couple of things you know.

Okay.

Front way a one in the last quarter Oh concerns in a lack of knowledge of Cold War, a was really tight.

I believe we spoke at that time of putting in stock to be a new York piece system project or out of a a an abundance of caution.

I noticed in the adjusted EBITDA a schedule in the press release with their words expenses for ERP implementation.

So are we back on the.

Implementation and with a very important system that you're looking forward to the.

Improvements as a management the boards with it.

So the way out after that of course is yes. It is back on.

Got underway that we're approaching this it's kind of Colgate system. So we really engage the project.

And we're going through a detailed planning phase or you know over the last month, so or so well and we're really you know valuing our schedule. Our timetables are costs and once we kind of get through that phrase, but we'll put together a new plan under the new World Order and then we'll make a decision on you know you know what.

The scope looks like how far do we go what's been worked out well what what we do next year, what we do this year and we'll have a a solid plan. So you're correct. We did start that process back up into through and we'll have a a lot more to talk about this Ah you know on the next call.

Okay. Okay. Thanks.

Indicated that there is a 1.3 billion of backlog building outstanding up could you.

I mean that number in regards to is that a.

One more level for a big outstanding or a I'm wondering if you.

And speaking with a lot of other construction companies. They have indicated nook digital work, we're still out there. However, because the process of completing its has been greatly expanded so that 1.3, just saying Wow, there's a whole lot more business wasn't saying you know what.

One of the reasons, why our or a backlog number move the way they did that.

Yes good.

Just are not completing their books extending walk before we get the answers.

Well, it's a little bit about so the answer the first part of your question as a normal yeah. That's it you know we we've had over 1 billion dollars' worth of a work outstanding that's been quoted outstanding.

In previous quarters, and as I mentioned in my remarks, or the 1.3 is slightly up from the 1.3 that was outstanding.

At the same period, a year ago. It is safe to say, though that some of that is driven by a again some work that we've we quoted during the quarter, particularly at the beginning of the quarter of in areas that are and the end markets that have been more impacted.

Yeah that is a good way of looking at it that there are some decisions that are being.

Deferred or slow walked or whatever but other other end markets and the other projects are moving ahead. So.

Yeah. There is a piece of that that probably fits into that category, but I think the majority of the work in that we have in that number is work that is end markets that are moving forward and so again, it's not it's not a typical to have that amount of workout outstanding <unk> core.

Work quoted outstanding.

Okay, Okay great.

With regard to the movement on <unk> on the dredges.

A month and Robert.

Very good particularly in over the last year, when I think about it as a really kind of preparing less for.

What is going on in the upcoming every six months with your business I don't recall, you talking about and I stopped <unk> well maintenance expense for the Trojans for the marine business.

Last quarter, so I'm wondering.

And needs to be bigger maintenance projects, yes, there are they occur every so often but the actual.

One of the maintenance can can vary between you know a couple of months, depending how you see windows.

It's something change as far as within solve work.

Well I know that said Hey, you know, we better get too far more on so we can really be.

Hitting these upcoming projects.

With all cylinders sparking.

Ah yes. So again, we you are correct that we didn't call that out on the last call on that but scheduling of our August the schedule.

Capital repairs and repairs I can be very dynamic in terms of when we do that work also it can be dependent on the type of work that we yeah. So we may have work in hand that we know that that we're planning for.

And we might have other work that that that's coming up that we win in a in a given period I'm that given the type of that work. There is additional things that we need to do.

To the dredges, particularly if were going up for you know deeper type dredging project, sometimes that can alter the set up of the dredge and sometimes you know again, we yeah. We don't we know when we get that work and we don't sometimes they know that work comes along and.

The changes our thought on either a the timing of when we're going to schedule that work or be the work that that the actual work ever gonna do on the on the physically on the dredges that a little bit a combination of both of that is that as you know cases being very dynamic when we spoke or at the end of April we had a little.

The different thought about what that schedule is going to look like.

And did not comment on it but the circumstances change the terms of what we saw and then what work we had Warren and we're gonna be executing on in the back half a year so that altered our.

Our thought process on no.

Getting some maintenance done in the second quarter.

It sounds like you have some pretty positive thoughts regarding the margins marine business in the second half here.

Robert in his remarks made the comment that the adjusted EBITDA was over a 50 more than the last 12 months I seem to 50.2 and for that matter, even just the non adjusted EBITDA being real 45.6 and poll asked the question about cadence.

Stylish nice I kind of chuckled because.

Unless my memory is is really awful neuro already ahead of your guidance, where you were around six months ago.

Which doesn't play to question, though.

Yeah.

Yes.

Well why not go up anything in warm and what the previous guidance, we don't know.

Well, we're comfortable with that or some other state and guys were.

You're doing better than a I think most had expected and a your even doing better than Oh, the where you were originally able to put like underground.

Yeah sure Yeah, I I hear you and I agree with your you know things are progressing well, there's still some uncertainties out there, but what do mark characterize it as the way that I would characterize it through is that yes, we feel pathway back into that range that we've talked about but at this particular pointing Tom you know you know, we don't think it's prudent to bring back.

God is what our level of confidence that we have the right people in place. We are the right team in place we have the marketplace in place we have the right assets in place to be able to deliver in that range, but we were you know our coffers levels increasing is rising.

We feel good where we are well you know there's still work we've done there's a you know salinger's overcome but yeah. We feel good about where we are and you know we think the futures bright pool for the company in both segments.

That's that's great and one last thing when the.

The bonus accrual that are that you spoke of in Washington, <unk> did you accrue for bonuses in the first quarter.

Yeah, the bonus expense.

Yeah, we recruit for you know our quarterly amount. So we're turning to the reason I called that out is when you look at it year over year, you know our bonus expenses.

DNA is up.

Primarily driven by the bonus expense. So if you looked at the performance of the past few years, you haven't seen a fool accrual of bonus expense and you know, obviously, where we perform well we've been able to you know to be in that range through you know to meet our incentive plan.

Halfway through the year, you know so we need to call out the year over year increase because we are in that range or to be able to so because we pay out bonuses. This year.

Sounds good sounds good I, just want to make sure I understood and whether that was a year over year comparison on a sequential comparison.

It's a history of your hand, you over here.

Your.

Does this is coming along well multisite expected.

We just need be on market to recognize influence. Please. Thank you for keeping up the good working or hopefully we continue and everybody is to help thank you.

Exterran fixture.

Thank you I next question comes on line of Greg.

Partners. Please proceed with your question.

Hey, guys. Congratulations on the continue to <unk> performance, it's been a nice to see and you can see it in a.

The income statement of cash flow and balance sheet. So.

Hopefully a there's more to come.

Most of my questions have answered by or after the last.

Two color, but just for a little more granularity.

Can you give anymore you know insights so how much whether it's the real estate sales or noncore asset sales how much more cash we might be able to harvest from from those kinda measures.

Well I mean, that's a real estate sales could be significant or you know you know upward one property could be at worst or the $20 million. Another one five to six and then a that's a big property that much farther behind in process.

Let's say you know standpoint to be very good who knows but that that that's where you earlier in the process. So I think the ones that are better closer yeah, I'll call it $20 million to $25 million or potential you know cash broke from those cells, but no Greg I want to get into.

You know exactly when that's going to happen because you know there's real estate is called <unk> and the timing is is really really on them.

No I I understand and look I mean, its I realized or color stated you know at some point the market will notice, but you know you.

I just you know you ever go over the past year, you brought that down by 30 million catches up by eight or 10 million I'm. You know you've improved the results are you not that levered anymore.

I understand we are in Togut, but given.

Where you're given how the stock is being Nord. Despite your heavy lifting <unk>.

I wouldn't point you guys reevaluate your your capital allocation <unk>.

Bought process well, yeah, we're thinking about that all the talk you know as you pointed out you know where you know were little bit over one Tom what assets are from a leverage ratio standpoint, so yeah, we're always evaluating well and thinking about capital allocations and you know you know where should we.

Apply that free cash flow or whether the debt, but you know as we go for were everything's on the table and we're going to make sure that you know we put the cash to the best in high juices I will point out, though you know as a part of our 365 day you know deal that we entered into.

Through there's restrictions on stock buybacks, so that that deal in in May of next year, but but you know we're going to continue to monitor that we're going to continue to watch it and you know well, we'll have more to say on that.

If the strategy changes.

Oh around what we're going to put capital.

Last but not only are you just have a onetime leverage that you're now the company has been a knock on wood profitable.

It wasn't profitable and you also just highlighted.

At some point in the future you might be able to sell real estate that essentially equates to you're calling that down.

Correct.

That's correct.

Its a.

Stogner, but things that keep it up hopefully they drag as good as well as well as a result.

Thanks Ray Thanks, Greg.

Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Todd for any final comment.

Thanks for joining us today as they know <unk> I want to everybody know that management is planning on defending the Jefferies' Virtual conference next week well, we have a few available slots left open for one of the ones that management. So everybody wants to pick those up well reach out to our people are not will get those schedule. So they say stay healthy well and we look forward.

The talking to everybody in late October as we report Q3 arms.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

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