Q1 2022 Orion Group Holdings Inc Earnings Call

April 28, 2022

Greetings and welcome to Orion Group Holdings, Inc. First quarter 2022 conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during todays conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Francis Okeanos Ski Vice President of Investor Relations. Thank you Sir you may begin.

Thank you Laura good morning, everyone and welcome to Orion Group Holdings first quarter 2022 earnings conference call and webcast joined.

Joining me today are Austin Shan filter Orion Group Holdings' interim Chief Executive Officer, and Craig Owen currently serving in the capacity of Chief Financial Officer advisor.

Regarding the format of the call we've allocated about 10 minutes for prepared remarks in which Boston and Craig will highlight our results and update our outlook.

We'll then open the call for questions.

During the course of this conference call, we will make projections and other forward looking statements regarding among other things our end markets revenues gross profits gross margin EBITDA EBITDA margin backlog projects in negotiation and <unk>.

Pending awards as well as our estimates and assumptions regarding our future growth.

Administrative expenses capital expenditures.

These statements are predictions that are subject to risks and uncertainty, including those described in our 10-K that may cause actual results to differ materially from those statements.

Rover past performance is not necessarily an indicator of our future results by providing this information we undertake no obligation to update or revise any 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 are non-GAAP financial measures under rules of the Securities and Exchange Commission, including regulation G. Please.

Please refer to the reconciliations and definitions inclusive of the most comparable GAAP measures and reconciliation tables accompanying this earnings call within the press release issued this morning.

The press release can be found on our website at Www 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 refer to our quarterly quarterly annual filings with the SEC, which are also available in the investors section of our website.

And with that I would like to turn the call over to Austin <unk> filter interim Chief Executive Officer, Boston, Good morning, and thank you Fran.

First thing I'd like to do is thank all of the Orion team members business partners and clients with her leadership commitment and support over the past few weeks, it's been quite busy around here.

Path forward is very clear.

Must improve the quality of our backlog enhance our operating margins.

Move our fleet and equipment utilization.

As we take actions to improve our execution, our management team will be operational focus to meet or exceed project budgets.

Our end markets are strong and the opportunities to improve margins in both marine segment and concrete are very clear to me.

We're all under.

Well underway with a search process for a new CEO and CFO . This is proving to be a tremendous opportunity plus the higher season proven successful leaders join them the Orion team.

I look forward to working directly with our management team.

Consistently improved performance, we believe there are opportunities in the second quarter to enhance results.

Our team understands the need to enhance liquidity improve margins sales of properties and cost reductions will impact that goal very soon.

I look forward to our Q&A session I would now like to turn the call over to Craig to discuss our financial results in more detail.

Thank you Austin and thanks, everyone for joining us I will now discuss the financial results for the first quarter in more detail.

Revenues for the quarter were $175 million compared to $153 million in the first quarter of 2021 and $162 million in the fourth quarter.

The increase compared to the first quarter of 2021 was primarily due to the startup of large jobs that were awarded in the second half of 2021 in the marine business.

And increased cubic yard production on light commercial projects in the concrete business.

First quarter gross profit was $12 8 million compared to $15 5 million in the prior year period.

The decrease was primarily driven by decrease project performance in the concrete business as a result of project conditions.

<unk> dredging volume in the current quarter and a change in mix of work in the current period.

First quarter gross profit was up almost 100% compared to the fourth quarter gross profit of $6 6 million.

As a percentage of revenues gross profit margin was seven 3% in the first quarter down from 10, 1% in the prior year period.

And up from four 1% in the fourth quarter.

Turning to the segments.

In the first quarter. The Marine segment had revenues of $84 5 million and an adjusted EBITDA of $7 3 million equating to an adjusted EBITDA margin of eight 6%.

This compares to $72 1 million of revenue adjusted EBITDA of $7 9 million and an adjusted EBITDA margin of 10, 9% in the prior year period.

Marine results were up across the board compared to the fourth quarter of 2021 that had revenues of $73 1 million adjusted EBITDA of $5 2 million and adjusted EBITDA margin of seven 1%.

The decrease in EBITDA and EBITDA margin compared to the first quarter of 2021 was driven by reduced dredging volume in the current quarter and a change in mix of the work in the current period.

The concrete segment had first quarter revenues of $90 5 million adjusted EBITDA of negative $2 million and adjusted EBITDA margin of a negative two 3%.

This compares to $81 2 million of revenue adjusted EBITDA of $1 7 million and adjusted EBITDA margin of two 1% in the first quarter of 2021.

Great results were also up across the board compared to the fourth quarter of 2021 that had revenues of $89 2 million adjusted EBITDA of a negative $4 3 million and adjusted EBITDA margin of negative four 9%.

The concrete segment's first quarter results as compared to the first quarter of 2021 were impacted by decreased project performance due to inefficiencies and executing work, partially offset by increased cubic yard production on commercial light projects.

SG&A expenses in the first quarter was $16 2 million or nine 2% of revenues compared to $14 6 million or nine 5% of revenues in the prior year period.

The increase in SG&A compared to the prior year was primarily due to additional consulting fees related to the management transition and additional property taxes, partially offset by reduced bonus expense.

Net loss for the first quarter was $4 9 million or <unk> 16.

Diluted loss per share.

Adjusted for nonrecurring items and the tax impact from valuation allowances adjusted net loss was $3 2 million or 10 cents loss per share.

First quarter adjusted EBITDA was $5 2 million, representing an adjusted EBITDA margin of 3%.

This compares to adjusted EBITDA of $9 5 million and adjusted EBITDA margin of six 2% in the prior year period.

And adjusted EBITDA of <unk>, 8 million and adjusted EBITDA margin of <unk>, 5% in the fourth quarter.

Turning to bidding metrics in the first quarter. The company bid on approximately $1 3 billion worth of opportunities and was successful on $189 million.

This resulted in a win rate of 14% and a book to bill ratio of one <unk> for the quarter.

At quarter end backlog was $604 million up from $365 million at the end of the prior year period.

Our quarter end backlog $317 million in marine segment, and $287 million and concrete segment.

Approximately 82% or $496 million a quarter in backlog will burn in the next 12 months with the remainder associated with longer term projects burning through 2023 and into 2024.

Additionally, the company is the parents apparent successful bidder or has been awarded a $112 million of new work subsequent to the end of the first quarter.

Of this approximately $30 million is related to marine while $82 million related to concrete.

On our current guidance as we stated earlier. This month, we are reaffirming our expectation of full year adjusted EBITDA in the mid $30 million area.

Always we will provide an update on this as we progress throughout the year.

The company ended the quarter with $28 1 million of outstanding debt $26 9 million of which was related to the revolver at.

At quarter end, the company had approximately $6 7 million of cash and $13 4 million of availability under its revolving credit facility. The company is in compliance with its credit agreement covenants.

With that I'll turn back the call back to Laura for Q&A.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is another question queue. You May Press Star two chair I move your question from the queue.

Using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Molly poll for questions. Our first question comes from the line of Joe Gomes with Noble capital You May proceed with your question.

Good morning, and thanks for taking the questions.

Good morning, Jeff.

So Austin, you've now been.

Oh from roughly let's call. It three weeks can you kind of give us your first impressions.

What more do you need to see and analyze before you kind of put together a longer term game plan here.

Well.

I think people, who know me I have already started to put my game plan together and I've already started making some changes in dealing with some issues.

You know I'm, an operationally focused type of individual and so literally have the opportunity to meet with all of our key partners to support the business and all of our key leaders.

Two weeks.

We are very clear like I said in my opening comments that we need to improve the quality of backlog. The good news on that subject gives us that.

Concrete industry concrete business that we've been in which is one we've been having most of the trouble with our margins as a business that the projects turn quite quickly.

<unk> taken some action with that group to improve the process of what we've bid things at how much we bid.

Folks we are on.

Certain opportunities.

So I think we can have some impact on that they may even affect us during the second quarter.

Just that enhancing operational margins, we're going to look at things a lot closer from our estimating perspective, the type of project, we have a client quality.

We have some fantastic clients.

We've had for many many years that are very predictable and are awesome to work with our teams really understand their needs and we wanted to really focus on those opportunities and grow those and expand those sometimes when you get into new business opportunities new types of projects those tend to be.

Things that we underestimate the difficulty to rope roll into those projects. So we're going to put some real strong discipline, although the types of things we bid.

The types of customers, we work for going forward.

The last thing that I've been very active in already is the looking at the fleet utilization and equipment utilization.

Try to smooth out the opportunity in that category. So short term I think we're going to make some strong impact over the next literally 30 days.

And we've already started it long term I'll have to get your folks updated as soon as I can towards long term solutions are going to be going forward, but I do think there is opportunities right away to make this an impact and the change some directions on some of the business that we have.

Great that's good to hear.

Is it.

Somewhat touched on it what does the bid environment look like today is it is it getting even more competitive out there or maybe you could just give us little more color on how the bid environment looks well.

Is that as I look at the bid environment, but really strong there's a lot of opportunity out there I just think that it's about a selection process.

It's sometimes people.

Don't look at it in a detail in the sense of <unk>.

Got a bit opportunity you looked a bit opportunity it looks like a nice job, but maybe you don't know the customer that well maybe you have been working with them in the past, maybe we don't have a track record with them and I'm just going to help the team really look at maybe a new way of looking at the opportunities and really focusing on opportunities that would be best for align best with <unk> and I.

That can enhance our our ability to have more wins and have more predictable margins in the business going forward.

Okay, great and maybe if I could sneak one more in any update on the property sales.

Yes, we have to we have both properties are under agreement right now.

What I will tell you is that I'm going to be a little bit stronger on that situation.

They don't close in a very short period of time I'm going to look at other options.

Take for example, the.

East West Jones property.

We are trying to sell it as is.

If we were able to get a partner that needed that Phil and started working on a process to get that so we move from that property.

At a very reasonable rate or maybe even for free for them to get fulfilled for free.

That property would maybe tripling value. So if we don't get some take.

Deals that we currently have and we are getting more delays in the currently always have deals we have im going to look for options I don't want to sit on this any longer and wait for something to happen I think we can make something that would happen.

Sounds great. Thanks for taking the questions I get back in queue.

My pleasure.

Our next question comes from the line, but Julio Romero with Sidoti You May proceed with your question.

Hey, good morning, Thanks for taking my questions.

Hello.

Austin I'd love to get your thoughts on what Youre looking for from a new CEO .

I would tell you the biggest thing I'm looking for both CEO and CFO .

I'm really looking for seasoned professionals folks really understand operations and really understand.

The financial World and they bring together years of history.

Our proven track records.

I think that this company is try to bring people up through the through the structure of the business before.

Nobody knew October it was gonna be nobody has been a rough time.

Here I want you Y two K I don't know if thats something you don't want to brag about.

We've been through a lot and I think that bringing in that season.

Season type of professional will really enhance the company's ability to perform to be more predictable and so youre going to see I believe we will see a very operational a very predictable person will be hired as the CFO or CEO and I really right now Craig is doing a fantastic job.

As the interim CEO , CFO and and I think that will have some great candidates, maybe recruiting handlers going forward on that position. So.

We're going to get some good people here for sure and I'm excited about that.

Okay, that's helpful and I guess.

If you could talk about the the ISG strategy, what do you think maybe with wrong with ISG.

Do you think it's the right strategy and maybe it just needs better execution.

And then secondly, maybe any thoughts to maybe taking a fresh look at what target margins would be for both segments in what timeframe would be to get there.

I think anytime you have the opportunity and what we did was look at this business in a different way that third parties come in it.

Have you understand maybe where the exposures are and where the improvements can be I don't think that's ever wasted time.

You have to look at how much you've spent to get what you what you got out of results but.

We've definitely opened up some eyes and six all things that we have to improve on.

That is do everything we wanted to give them no. There's no way a bit that but it did open up our eyes to a lot of issues that we have.

Fleet and keep working on now on the other side of that is.

This thing is.

If we bid correctly.

We have the right people on the field, we have to bid correctly, then we have to perform to those bids.

I think that when I look at this company I think it's perhaps around 80%.

Those are in that process.

So when people talk about for example, the concrete business and they ask me why are you in that youre, not making money, while we're not making the money because we have issues on some of our work and we're just outperformance on both projects. So we've got to tighten that up we've got to be more aggressive on jobs that are meeting budgets.

Budgeted.

Forecast and then we've got to start looking at all those types of projects. Those are clients are those the type of issues that we want to be looking at going forward. So a lot more discipline and estimating embedding a lot more.

Discipline on how we book teams into projects and new projects and things like that so I think we can make some changes to reduce any losses any shortcomings in the business very quickly. That's my world. That's what I've been involved with my whole life.

It's near and Dear to my heart, So expect change.

Okay very helpful. Thanks, very much for the color.

Our next question comes from the line of Alex Rygiel with B. Riley you May proceed with your question.

Good morning, Austin, a couple of quick questions here.

Kind of dovetails on your last answer but concrete segment.

Backlog $287 million, an all time high record that's fantastic.

But obviously margin profile is kind of lousy.

So I guess my question here is I'm, assuming you've spent a lot of time here really digging into that backlog number and getting comfortable.

With.

Trying to turn that around but can you kind of talk a little bit more about that.

Yes.

First of all good to talk to you.

I look at the whole country initiatives.

We've been we've been we won we won so how do we go ahead and impacts from the tougher jobs and tighter margins. Obviously, we've got we're going to have to elevate the type of person who can get in there. So we can protect those margins. So we may have.

Some crews around move some management around personnel around to really make sure that we really own those those bids and those margins.

At times I don't think we've done that as well as we've shown over the past. So that's number one number two is those are all quick turn projects for the most part you are looking at the division that probably 70% of our work we've turned in between 60 and 90 days. So everything we're building forward, we're going to have a lot more discipline and so theres a business all period of focus on.

I'd say $100 million that work, we need to put teams on those projects that are truly capable truly predictable outperformance and try to improve our outcome of those and so we're meeting on those type of issues constantly I'm talking to the management team there and we might bring in some people that I've worked with in the past to really help us assist.

And making sure that that's what we accomplish.

Excellent and then turn it over to the heavy civil Marine segment.

Backlog, there 317 isn't all that shabby over the last handful of years solid number.

Can you talk a little bit about mix there because mixes.

Big driver to the margin profile of that business and again.

I mean by mix there is how much exposure in that backlog do you have right now.

For future dredging projects and how should we think about that coming through the P&L over the next couple of quarters.

Great Great question.

End of the day.

The vision has done really well with Rajiv hot in the market and what when it's down a little bit it's a little tougher margins for the business. So we're going to work with our clients a lot next year, which we're setting up meetings right now to start working with the core and working with other groups about trying to smooth.

The flow of the work in flow the opportunity, which is really assist us in many many ways as the business. So I think we gotta get candid about what the utilization is how we can improve utilization in dredging.

And I hope to get that done in the next 30 to 45 days.

And then let us look at the rest of the yogurt and a lot more functional way.

So the question is do we have our equipment in the right locations for the right opportunities.

Would it be better for us to move something into two another market that we're not utilizing here at the strong as long as we possibly can and break into new areas. So I'll be really dive into that.

I do like about what's happening in marine is Theres a lot more discipline in that group right now about what they are bidding how they are doing the work we are bringing in some quality people. So.

I am excited about adding some quality backlog does that division because I think we can handle it now maybe better than we put a six nine months ago or whatever.

And I want to really encourage the team to <unk>.

We're going to go out there looking for where we have good people.

People back.

People will.

My competitors.

We've started to build this business.

And driving it forward with positive people.

And one last question Capex has been running a little high here over the last couple of quarters can you address that and sort of your views of capex spending throughout the remainder of 2022.

You know I don't have that but just to be really candid with you. It's not been area of my focus on my first 40 days.

Something that we'll look at very carefully.

And we'll get we'll get some guidance out there to fill the hole.

All of our shareholders and things as soon as possible.

Definitely no we got to look at that really hard and.

We'll get back to you soon.

Excellent. Thank you very much good luck. Thank.

Hey, guys.

Our next question comes from the line of Marco Rodriguez with Stonegate capital markets. You May proceed with your question.

Good morning, everybody. Thank you for taking my questions.

I kind of wanted to follow up a little bit on some of the prior questioning specific I guess towards towards the backlog Austin.

Around the concrete.

I heard you say that obviously youre looking to improve that get better discipline better bidding can you maybe talk a little bit about what you sort of found.

We review period as to where maybe that segment kind of went.

In terms of their bidding against the ISG strategy was supposed to have implemented a little bit better of a disappointing I believe that the ERP was supposed to kind of help out with that as well can you maybe just talk a little bit about that.

I'm going to tell you what I think happened.

Because I got enough.

Knowledge to be dangerous, there, but but but I think what happened is we all this opportunity was coming in here very quickly through a lot of different clients and are estimating probably got overwhelmed and I think that maybe at the end of that in our in our process to supply the people to do the work got a little overwhelmed but at a time when so.

The lag of Covid. So you still have the opportunities coming in supply chain effect of new Covid, having you were taking on more work at that time guess what happens you don't perform at the level you are supposed to perform at the adult you Miss things.

You think you have the right amount of people and other projects that delays on it.

It was supposed to show up now you've got delays on it. So I think it's part of an interesting thing we're in the middle of a tough environment.

We are growing our backlog jobs are turning very quickly and you can't react to so right now in that division.

To be more.

Focus on quality of bid or not.

The backlog I want good projects I don't want price, it's a weird.

We are aware that we can get them down people that don't have supply chain issues.

Issues as much so.

And maybe that our margins are a little bit higher than we can negotiate we tend to negotiate more than we said that a little bit on that.

These are the things I'm going to really focus on those opportunities take our best escalators put them on the best jobs with the best operators and looking for improved margins across the board.

Got it very helpful and then on the marine side in the backlog, obviously I heard your comments in terms of your focus on trying to improve utilization, helping with the mix in terms of getting some more dredging work and having a quality individuals in there to kind of help you with the bidding aspect, but just wondering if you can maybe talk a little bit.

The backlog for marine is that margin profile.

Where it should be did perhaps maybe some of the disc.

Disciplined nature, if you will that impact the concrete segment also kind of hit a little bit in the marine any color there yes.

Like the first quarter.

Historically, the first quarter has been a little tough quarter for Murray over the last three or four years and so if you look at that first quarter.

Over the past compared to now we actually we had a really strong first quarter Emory and so that tells me that the discipline has gotten in there and then it is affecting that.

<unk> for the division to perform and I look forward to that.

Getting better quarter after quarter here. This year. So I think you've got something you can really relate to it when you look at the past couple of years first quarter Marine compared now that I think things are kicking in and I'm pretty excited about the backlog we have.

I'm very positive about the backlog that we're looking at right now to lock in at a beta.

Got it and last quick question for me kind of a housekeeping item I believe you guys mentioned some.

Some write downs in the concrete segment I'm, assuming that gross margin can you kind of quantify that.

Our numbers our numbers when we report.

The second one.

Okay.

Got back on the details of that.

There's jobs that we just didn't perform at the level that we need to go format a bit so that they're in our numbers right now I can't tell you exactly where they.

I can't give you the details of the question you've asked at this point.

It will say a word on the horizon.

Got it. Thank you again for your time.

I'm going to get busy on my first point.

Right.

I understand thank you guys for your time I really appreciate it.

Appreciate the thoughts.

Our next question comes from the line of Paul Frat with Alliance Global Partners. You May proceed with your question.

Yes, good morning.

Austin it.

It seems like a little bit of a groundhog day here you came in in 2019.

You improved.

CLO the improvement was pretty apparent pretty quickly can you just talk about the environment now versus.

Your tenure as COO.

Three years ago.

And maybe help us understand why the changes that you've made or the turnaround that happened it wasn't durable.

Yes.

I got to say that.

Almost 65 year old guys better business for an awful long time.

Operator, I have always been an operator no matter what has been.

Done things with it.

And I'd say, probably a little different a little quicker than a lot of folks to whether that's whatever it is.

I bet it would feel my whole life I understand what's going on out there.

I think I have the ability to impact people in the field and teams in the field very quickly.

And maybe what I'm not doing it every day it changed some things.

I don't look for blame there I just look for it.

Frustrating issue I can.

I believe we can make change your long term this time.

Don't know, what what's going to be the keys.

Driving sustainable change.

The last way past me, making a change at CEO .

Going forward and I think by buildup here once again bring a new seasoned professionals the CFO position, bringing the season operational professional at the CEO position I think theyre going to help us really grow the business really reach its potential.

And now we'll look back to what happened.

We've got to drive things as we see them here today, the fact that I'm going to stay on after the V. Ceos name for about another anywhere.

For the rest of the year whatever it takes as the executive Chair I think tells the market. Those are investors that we're committed to having the next change to be smooth.

That change to be accountable. The next change to be realistic of what you expect and I'm not going to.

We're not going to let off until we got that right.

Great that's helpful.

And would you categorize sort of.

The slipping back in the old ways, its more of a people issue than an or.

Or a systems issue.

Well here again I would tell you that it's probably speak with you.

You can have the best.

Our it platform in the World at your company, but if you don't have people out there doing the things they need to do in the field every single day day in day out that don't have all that assistance of information every day menu you slip.

And here again, I think the point that I want to make is you've got a lot of successful managers a lot of successful.

Estimated a lot of successful projects that the company has performed on.

Travel business that slipped on some what it slipped it really split part and it really went backwards hard so.

This is not a total rebuild a total fix this is attacking the issues that we've had and in fact he may be at the vision.

Certain opportunities that we went over our skis on this is about looking at certain areas.

Resolving and one of the things I've.

Talking to the whole team about is that if you have a project that's not in a positive mode.

And it goes to negative you'll be on my list not just on your managers list.

And I think we just have to raise that level of awareness in a ways that level.

Focus that work back that allow that to happen.

Okay, and then on East West Challenge can you just confirm that the.

Preliminary sales agreement for the sale in the mid <unk> is still in.

Intact and on track to potentially close around the middle of the year.

Well it's on track.

At the end of this month I believe.

They have to be under this month to put hard money and and so in a few days.

That answer.

And then you seem to imply that with a little bit of improvement, where they're talking about the fill that that property Mike triple.

Is that are you.

Can you give us sooner, but timeframe on how much work and how much time, it would take to get that.

That property value over $100 million.

Let's say, we doubled but for different for discussion sake, let's say, we could double the value of that property.

I don't know how fast we get that.

So a lot of there, but that property's value is and it was for us it wouldn't be for anybody else that would be the only places Houston ship channel, where you can instantly start dumping materials.

The ship channel right at that location again, so so it just drives the value up.

The only place that it would be the most convenient place it takes the value up substantially.

So.

It's just something that if we can't get the sold in a short period of time I want to look at other options I don't want to be talking about six months talking about hey, we got a new offer.

About the same number well right now we got to get focused on running our business.

Happen and this is a liquidity event that would be awesome.

And fantastic for the firm.

It doesn't move quickly I'm not going to be patient I'm not going to wait for the next person and maybe the fact, we start moving it out move somebody up on the food chain, a little bit faster themselves and maybe by getting that.

Matilda remove somebody else might look at it that way.

That becomes more attractive as well so I just don't want to sit in the same format as well.

I want to move forward with something positive functional it may cause something to happen is really positive.

Great and then and now it's a lot smaller, but you sort of alluded to it.

Sale that slipped pretty much consistently consistently for the last several quarters.

Can you just update us on Portland backer.

Be clear with it's a financing issue.

Lots of properties.

They want it they want it bad they totally communicate with us.

Constantly and so it's just.

Give me the money and you'd be able to close the product closely.

Great. Thanks.

Thanks for your time.

You're quite welcome I'm sorry.

As a reminder, if he would like to ask a question. Please press star one on your telephone keypad.

Our next question comes from the line of Daniel Albano with Albano Capital You May proceed with your question.

Yeah, Hey, Austin can you hear me.

Sure Daniel.

Do you look great ourself.

We're speaking to you on itself.

We have a little problem with that.

Maybe to clear them.

No worries.

So two questions. One is if I look at the if I look at the concrete segment.

From 2018, it at minus EBITDA margin adjusted EBIT margin of minus one, 5% 19, 3% 22, 1% and 21 minus one 2%.

It is clearly in my opinion.

Destroyed.

A decent chunk of the value of the equity why would you not Shelley I mean, you've been even for low price they book value.

Yeah.

Four years into it.

East you see where the stock is at.

I just honestly I mean, if you look at the last four years is a bad business why why why would you not.

How do you justify keeping it given.

Not one not two not three but four years of pretty abysmal returns and then I've got a second part question. Thanks, Okay.

I want to I want to find the value in our business and I'm going to look at every single thing that you need to look at I believe going to seem like I know them.

I believe that we can impact that business in a way that is positive.

And the way that it's going to drive value to the shareholders of this company.

If you want to ask me that question two quarters.

It can be a whole different answer, but right now I would ask you to.

Done this before in my life.

I'm in a different position right now too.

Right.

<unk> to drive decisions to drive process to drive procedures and this business can be fixed once again I'm going to go back and I'm going to save you Youre looking at the full results what I have the benefit do is look at the at the parks and I'm, telling you that there's a lot of this business has performed.

Me quite well now that might go right into your argument.

<unk>. If you have that why are you still hold that doing well if you were seeing that performance.

Let's say on 70% of that business you may not feel the same way about what you're asking me, okay. So I'm going to work at getting that business.

Having the right direction with getting the right people in it so the entire business is performing well we see those numbers then I think we should make the decision.

And I'm not going to take a lot of time on that going to progress.

That button in my life.

I have a sense of urgency so I'm going to go through that process I'm going to trust my instinct.

We need to do but I think I can bring this table like teams ability to step up where they need to step up.

Coupled with the leadership there are good people to strong people.

But it takes a few things that we need to do to to make a couple of changes when it gets the more discipline in the results.

Got it.

<unk>.

Well said I'll come back and ask a couple of quarters on the concrete segment hopefully we see.

Well, yes.

Sure.

I'm, a big shareholder so I got that vested interest here second question is on the East West Challenge property.

What I mean, given you've got a market cap somewhere around seven email yet today.

Could go from in your words $30 million to $60 million in East West Jones.

I mean do you have the ability to.

Go do that.

You have a contractual commit where you got to sell it for 30, I mean to me.

If I'm sitting with an asset like a double.

If I'm sitting over a company that's got a $70 $70 million market cap and I got an asset market cap go from 30 to 60 day.

<unk>.

That seems like a no brainer did do we see.

So you have the ability to to get out of the $30 million contract and kind of double your money I tried a doubling of the sales price on east West Jones or now or.

Or you're.

You've got a controller Kermit.

I'm clearly Sam Daniel is that I'm not going to sit on.

Snowball offers that are happening a lot of conditions to close the property.

I'm not going to do that so I'm going to call as many people in Houston as I can to see if I can find partners to possibly start taking that fell out of that property.

I think the fact that if we start doing that.

Either we either make go through the full process to get it all the way done or if we start doing it partially somebody may look at this property a lot differently than they are looking at for that so.

I just believe that sitting here waiting for an offer maybe not be the best.

Also if I could sell that they were maybe a little bit less than we have in the market right now and somebody can command close and fund in a very short period of time I'm not going to ignore that.

You know because I don't want to.

That's not what the property is not what we do however, the liquidity it would make a big change in the in the company. So I'm going to be more aggressive on making a decision, but I believe and the board believes will add value to this company for the shareholders in a very short period of time.

Tell you exactly what's going to happen today, but I'll tell you it wont be thanked me that long.

Perfect and then just a close follow on and then promised I'm done.

The proceeds on the on the land sales.

Given.

The challenging margins in that business.

Yes, I would advocate for either.

Unless it's just working capital you absolutely need but its working capital for a total of four particularly on the concrete side that are flattish yes.

Challenging returns.

To either reduce debt or or buy back shares. So what are you going to use.

No.

That reduced that.

Got it.

Okay.

<unk>.

That's all I had thanks for taking all my questions Austin.

Very much look forward bucket.

Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Francis for closing remarks.

Thanks, Laura and thanks, everyone for joining our Q1 2022 earnings conference call. We look forward to updating you on our Q2 results in July have a great day.

This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation during the rest of your day.

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As a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Francis <unk>.

He is president of Investor Relations. Thank you Sir you may begin.

Thank you Laura good morning, everyone and welcome to Orion Group Holdings first quarter 2022 earnings conference call and webcast.

Joining me today are Austin Shan filter Orion group Holdings' interim Chief Executive Officer.

Craig Owen currently serving in the capacity of Chief Financial Officer advisor rigor.

Regarding the format of the call we've allocated about 10 minutes for prepared remarks in which Boston and Craig will highlight our results and update our outlook.

We'll then open the call for questions.

During the course of this conference call, we will make projections and other forward looking statements regarding among other things our end markets revenues gross profits gross.

Margin EBITDA EBITDA margin backlog projects in negotiation and <unk>.

Pending awards as well as our estimates and assumptions regarding our future growth administrative expenses capital expenditures.

These statements are predictions that are subject to risks and uncertainty, 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 our future results by providing this information we undertake no obligation to update or revise any projections or forward looking statements.

Whether as a result of new developments or otherwise.

Press release can be found on our web site at Www Orion Group Holdings, Inc. Dot com.

And with that I would like to turn the call over to Austin <unk> filter interim Chief Executive Officer, Boston, Good morning, and thank you Fran.

First thing I'd like to do is thank all of the Orion team members business partners and clients for their leadership commitment and support over the past few weeks, it's been quite busy around here.

Path forward is very clear, we must improve the quality of our backlog.

Hence our operating margins.

Prove our fleet and equipment utilization.

As we take action to improve our execution, our management team will be operational focus to meet or exceed project budgets.

Our end markets are strong and the opportunities to improve margins in both marine segment.

A very clear to me.

We're all under.

Well underway with a search process for a new CEO and CFO . This is proving to be a tremendous opportunity. That's the higher season proven successful leaders join them the Orion team.

I look forward to working directly with our management team.

Consistently improved performance, we believe there are opportunities in the second quarter to enhance results.

Our team understands the need to enhance liquidity improve margins sales of properties and cost reductions will impact that goal very soon.

I look forward to our Q&A session.

I'd now like to turn the call over to Craig to discuss our financial results in more detail.

Thank you Austin and thanks, everyone for joining us I will now discuss the financial results for the first quarter in more detail.

Revenues for the quarter were $175 million compared to $153 million in the first quarter of 2021 and $162 million in the fourth quarter.

The increase compared to the first quarter of 2021 was primarily due to the startup of large jobs that were awarded in the second half of 2021 in the marine business.

And increased cubic yard production on light commercial projects in the concrete business.

First quarter gross profit was $12 8 million compared to $15 5 million in the prior year period the.

The decrease was primarily driven by decrease project performance in the concrete business as a result of project conditions.

<unk> dredging volume in the current quarter and a change in mix of work in the current period.

First quarter gross profit was up almost 100% compared to the fourth quarter gross profit of $6 6 million.

As a percentage of revenues gross profit margin was seven 3% in the first quarter down from 10, 1% in the prior year period.

And up from four 1% in the fourth quarter.

Turning to the segments.

In the first quarter. The Marine segment had revenues of $84 5 million and an adjusted EBITDA of $7 3 million equating to an adjusted EBITDA margin of eight 6%.

This compares to $72 1 billion of revenue adjusted EBITDA of $7 9 million and an adjusted EBITDA margin of 10, 9% in the prior year period.

Marine results were up across the board compared to the fourth quarter of 2021 that had revenues of $73 1 million adjusted EBITDA of $5 2 million and adjusted EBITDA margin of seven 1%.

The decrease in EBITDA and EBITDA margin compared to the first quarter of 2021 was driven by reduced dredging volume in the current quarter and a change in mix of the work in the current period.

The concrete segment had first quarter revenues of $90 5 million adjusted EBITDA of negative two 2 million and adjusted EBITDA margin of a negative two 3%.

This compares to $81 2 million of revenue adjusted EBITDA of $1 7 million and adjusted EBITDA margin of two 1% in the first quarter of 2021.

SG&A expenses in the first quarter was $16 2 million or nine 2% of revenues compared to $14 6 million or nine 5% of revenues in the prior year period.

Net loss for the first quarter was $4 9 million or <unk> 16.

Diluted loss per share.

Adjusted for nonrecurring items and the tax impact from valuation allowances adjusted net loss was $3 2 million or 10 cents loss per share.

First quarter adjusted EBITDA was $5 2 million, representing an adjusted EBITDA margin of 3%.

This compares to adjusted EBITDA of $9 5 million and adjusted EBITDA margin of six 2% in the prior year period.

Adjusted EBITDA of <unk> 8 million and adjusted EBITDA margin up <unk>, 5% in the fourth quarter.

Turning to bidding metrics in the first quarter. The company bid on approximately $1 3 billion worth of opportunities and was successful on $189 million.

This resulted in a win rate of 14% and a book to bill ratio of one <unk> for the quarter.

At quarter end backlog was $604 million up from $365 million at the end of the prior year period.

Our quarter end backlog $317 million in marine segment, and $287 million and concrete segment.

Approximately 82% or $496 million in the quarter and backlog will burn in the next 12 months with the remainder associated with longer term projects burning through 2023 and into 2024.

Additionally, the company is the parents apparent successful bidder or has been awarded a $112 million of new work subsequent to the end of the first quarter.

Of this approximately $30 million is related to marine while $82 million related to concrete.

On our current guidance as we stated earlier. This month, we are reaffirming our expectation of full year adjusted EBITDA in the mid $30 million area.

Always we will provide an update on this as we progress throughout the year.

The company ended the quarter with $28 1 million of outstanding debt $26 9 million of which was related to the revolver.

With that I'll turn back the call back to Laura for Q&A.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

<unk>.

Your line is in the question queue.

Press Star two chair I move your question from the queue.

Vince using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, while I pull for questions.

First question comes from the line of Joe Gomes of Noble Capital You May proceed with your question.

Good morning, and thanks for taking the questions.

Good morning, Joe.

So Boston, you've now been CEO for roughly call. It three weeks can you kind of give us your first impressions.

What more do you need to see and analyze before you kind of put together a longer term game plan here.

Well.

I think people that know me I've already started put my game plan together and I've already started making some changes in dealing with some issues.

I'm, an operationally focused type of individual and so literally I've had the opportunity to meet with all of our key partners.

Fourth the business and all of our key leaders the last two weeks.

We are it's very clear like I said in my opening comments that we need to improve the quality of backlog. The good news on that subject is is that.

Concrete industry concrete business that we've been in which is one we've been having most of our trouble with our margins is the business that the projects turn quite quickly.

<unk> taken some action with that group to improve the process of what we bid things at how much we bid.

Folks, we arent certain opportunities.

So I think we can have missed them impact the macro may even affect us during the second quarter.

Just enhancing operational margins, we're going to look at things a lot closer from our estimating perspective, the type of project, we have a clue.

Quality.

We have some fantastic clients.

We've had for many many years that are very predictable and are awesome to work with our teams really understand their needs and we want to really focus on those opportunities and grow those and expand those sometimes when you get into new business opportunities new types of projects those are tend to be.

Things that we underestimate the difficulty of rope well into those projects. So we're going to put some real strong discipline what are the types of things we bid.

The types of customers, we work for going forward.

The last thing that I have been very active in already is looking at the fleet utilization and equipment utilization.

One of the things that has hurt the company over the years is that we go through dredging, where it's very strong and then it drops off on us and we're going to really work with our clients with our customers and try to smooth out the opportunity in that category. So short term I think we're going to make some strong impact in the next literally 30 days.

And we've already started it long term I'll have to get your folks updated as soon as I can towards the long term solutions are going to be going forward, but I do think there is opportunities right away to make this an impact and it changed some directions on some of the business that we have.

Great that's good to hear.

It does.

Is that as I look at the bid environment has been really strong there's a lot of opportunity out there I just think that it's about a selection process.

It's sometimes people.

Don't look at it in a detail in the sense of <unk>.

Get a bid opportunity you've looked a bit activity it looks like a nice job.

I don't know the customer that while maybe you have been working with them in the past, maybe we don't have a track record with them.

Going to help the team really look at maybe a new way of looking at the opportunities and really focusing on opportunities that would be best for Orion.

Yes, and I think that can enhance our ability to have more wins and have more predictable margins in the business going forward.

Okay, great and maybe if I could sneak one more in any update on the property sales.

Yes, we have to we have both properties are under agreement right now.

What I will tell you is that I'm going to be a little bit stronger on the situation though.

They don't close in a very short period of time I'm going to look at other options.

Take for example.

East West Jones property.

We're trying to sell it as is.

We were able to get a partner that needed that Phil.

It started working on a process to get that so we moved to that property.

At a very reasonable rate or maybe even for free for them to get fulfilled for free.

That property would maybe tripling value. So if we don't get some take on the deals that we currently have a we have really more delays in the current you always have deals we have I'm going to look for options I don't want to sit on this any longer and wait for something to happen I think we can make something that would happen.

It sounds great. Thanks for taking the questions I get back in queue.

Yeah.

Our next question comes from the line of.

Romero with Sidoti you May proceed with your question.

Hey, good morning, guys for taking my questions.

Hello.

Austin I'd love to get your thoughts on what Youre looking for from a new CEO .

I would tell you the biggest thing I'm looking for both CEO and CFO .

Really looking for seasoned professionals.

That really understand operations and really understand.

Finally, after the world and they are running together.

Years of history.

That our proven track records.

I think that.

Company is try to bring people up through the through the structure of the business before.

Nobody knew what Sogou is gonna be nobody has been a rough time I mean I sit here I want you Y two K I don't know if thats something you don't want to brag about.

We've been through a lot and I think that bringing in that.

Season type of professional really enhanced the company's ability to perform to be more predictable and so youre going to see I believe we will see a very operational a very predictable person be hired as the CFO or CEO and I really right now Craig is doing a fantastic job.

As the interim CEO CFO and I think that will have some break candidates maybe recruiting him going forward on that position. So.

We're going to get some good people here for sure and I'm excited about that.

Okay, that's helpful and I guess.

If you could talk about the the ISG strategy, what do you think maybe wrong with ISG.

Do you think it's the right strategy and maybe it just needs better execution.

And then secondly, maybe any thoughts to maybe taking a fresh look at what target margins would be for both segments in what timeframe would be to get there.

I think any time you have the opportunity and what we did was look at this business in a different way that third parties come in it.

Have you understand maybe where the exposures are and what are the improvements can be I don't think that's ever waste of time.

Have to look at how much you spent to get what you what you got out of results, but we've definitely opened up some eyes and since all things that we have to improve on.

Do everything we wanted to give them no there's no way a bit that but it did open up our eyes to a lot of issues that we have to complete and keep working on now on the other side of that is this.

This thing is.

If we bid correctly.

We have the right people on the field, we have to bid correctly, then we have to perform to those bids.

I think that when I look at this company I think it's that's around 80%.

Those are in that process.

So when people talk about for example, the concrete business and they ask me why are you in that youre, not making money, while we're not making the money because we have issues on some of our work, but we're just outperformance on both projects. So we've got to tighten that up we've got to be more aggressive on jobs at our meeting.

Budgets and forecast and then we've got to start looking at all those types of projects. Those are clients most effectively issues that we want to be looking at going forward. So a lot more discipline and escalating embedding a lot more.

Discipline on how we book teams into projects and new projects things like that so I think we can make some changes to reduce any losses any shortcomings in the business very quickly.

My World, that's what I've been involved with my whole life.

So near and Dear to my heart, So expect change.

Okay very helpful. Thanks, very much for the color.

Our next question comes from the line of Alex Rygiel with B. Riley you May proceed with your question.

Good morning, Austin, a couple of quick questions here, and then kind of dovetails on your last answer but concrete segment.

Backlog $287 million, an all time high record that's fantastic.

But obviously margin profile is kind of lousy. So I guess my question here is I'm, assuming you've spent a lot of time here really digging into that backlog number and getting comfortable.

With.

Trying to turn that around but can you kind of talk a little bit more about that.

Yes.

First of all good to talk to you.

The way I look at the whole country initiatives.

We've been we've been we won we won so how do we go ahead and impact from the tougher jobs and tighter margins progress. We've got we're going to have to elevate the fact personally get in there. So we can protect those margins. So we may have we havent beaten some crews around move some management around personnel around to really make sure that we really own those those bids.

Margins and at times I don't think we've done that as well as we've shown over the past. So that's number one number two is those are all quick turn projects for the most part Youre looking at the division that probably 70% of our work we turned in between 60 and 90 days. So everything we're building forward, we're going to have a lot more discipline and so theres a business.

Ill period of focus on let's say a $100 million that work, we need to put teams on those projects that are truly capable truly predictable outperformance and try to improve our outcome of those.

And so we're meeting on those type of issues constantly I'm talking to the management team there and we might bring in some people that I've worked with in the past to really help us assist us in making sure that that's what we accomplish.

Excellent and then turn it over to the heavy civil Marine segment.

Backlog there of 317 isn't all that shabby over the last handful of years solid number.

Can you talk a little bit about mix there because mix is a big driver to the margin profile of that business and again, what I mean by mix. There is how much exposure in that backlog do you have right now for future dredging projects and how should we think about that coming through the P&L over the next couple of quarters.

Great Great question.

At the end of the day.

<unk> has done really well with Rajiv hot in the market and what it is down a little bit it's a little tougher margin parts of the business. So we're going to work with our clients a lot next few wish what we're setting up meetings right now to start working with the core and working with other groups about trying to smooth the.

The flow of the work in flow the opportunity, which is really assist us in many many ways as a business. So I think we gotta get candid about what the utilization is how we can improve utilization in dredging.

I hope to get that done.

45 days.

Then let us look at the rest of the year hurt a lot more function of what.

So the question is do we have our equipment in the right locations for the right opportunities.

Would it be better for us to move something into two another market that we're not utilizing here.

As long as we possibly can break into new areas, so I'll be really valuable in to that.

I do like about what's happening in marine is Theres a lot more discipline in that group right now about what theyre doing and how they're doing the work we are bringing in some quality people. So.

I'm excited about adding some quality backlog for that division because I think we can handle it now maybe better than we could have six nine months ago or whatever.

And I want to really encourage the team to we're going to go out there looking for where we have good people.

People back.

Well so.

My competitors.

We started to build this business.

Driving forward with positive people.

And one last question Capex has been running a little high here over the last couple of quarters can you address that and sort of your views of capex spending throughout the remainder of 2022.

I don't have that.

It really candid with you it's not been an area of my focus on my first 40 days.

Something that we'll look at very carefully.

And we'll get we'll get some guidance out there to fill the hole.

All of our shareholders things as soon as possible.

Definitely no we got to look at that really hard and.

We'll get back to you soon.

Excellent. Thank you very much good luck. Thank.

Hey, guys.

Our next question comes from the line of Marco Rodriguez with Stonegate capital markets. You May proceed with your question.

Good morning, everybody. Thank you for taking my questions.

I kind of wanted to follow up a little bit on some of the prior questioning specific I guess towards towards the backlog Austin.

Around the concrete.

I heard you say that obviously youre looking to improve that get better discipline better bidding can you maybe talk a little bit about what you sort of found.

We review period as to where maybe that segment kind of went.

In terms of their bidding against the ISG strategy was supposed to have implemented a little bit better than the disappointing I believe that the ERP was supposed to kind of help out with that as well can you maybe just talk a little bit about that.

I'm going to tell you what I think happened.

Because I got enough.

Knowledge to be getting worse, there, but but but I think what happened is we all this opportunity was coming in here very quickly through a lot of different clients and are estimating probably got overwhelmed and I think that maybe at the end of that process.

Our process to supply the people to do the work got a little overwhelmed but at a time or do you still have the lag of Covid. So you still have the.

Opportunities coming in supply chains affect new Covid is having you were taking on more work at that time guess what happens you don't perform at the level you are supposed to perform at an adult you Miss things.

You think you have the right amount of people to other projects got delays on it.

Somehow you got delays on it so.

It's kind of an interesting thing we're in the middle of a tough environment.

We are growing our backlog the jobs are turning very quickly and you can't react to so right now in that division.

<unk>.

Focus on quality of bid not.

The backlog.

I want good projects I don't want to parse it.

We are aware that we can get them down people that don't have supply chain issue.

Use as much so.

Yes.

And maybe that our margins are a little bit higher than we can negotiate we tend to negotiate more than we said it a little bit on those are the things I'm going to really focus on those opportunities take our best estimate or put them on the best jobs with the best operators and looking for improved margins across the board.

Got it very helpful and then on the marine side in the backlog. Obviously you heard your comments in terms of your focus on trying to improve utilization, helping with the mix in terms of getting some more dredging work.

Having a quality individuals in there to kind of help you with the bidding aspect, but just wondering if you can maybe talk a little bit about the backlog for marine.

That margin profile.

Where it should be perhaps maybe some of the disciplined nature. If you will that impact the concrete segment also kind of hit a little bit in the marine and.

Color there yeah.

I Wonder what I was looking at the first quarter.

Historically, the first quarter has been a little tough quarter for Murray over the last three four years and so if you look at that first quarter.

Over the past 30, now we actually we had a really strong first quarter Emory and so that tells me that the discipline has gotten in there and then it is affecting that.

For the division to perform and I look forward to that.

Getting better quarter after quarter here this year.

You've got something you can really relate to what when you look at the past couple of years first quarter Marine competitive things.

Things are kicking in and I'm pretty excited about the backlog we have.

Very.

Positive about the backlog that we're looking at right now to lock in at a beta.

Got it and last quick question from me kind of a housekeeping item I believe you guys mentioned.

Some write downs in our concrete segment I'm assuming those.

Gross margin can you kind of quantify that.

Our numbers are the numbers we report.

The second one.

Okay, well I think what we saw.

Back on the details of that.

There is jobs that we just didn't perform at the level that we need to go format a bit so that they're in our numbers right now I can't tell you exactly where the I can't give you. The details of the question you've asked at this point.

It will say a word on the horizon.

Got it. Thank you again for your time earlier.

Basically my first of all you guys.

Right.

I understand thank you guys for your time I really appreciate it.

Oh.

Our next.

Comes from the line of Paul Frat with Alliance Global Partners. You May proceed with your question.

Yes, good morning.

Austin.

It seems like a little bit of a groundhog day here you came in in 2019.

You improved.

CLO the improvement was pretty apparent.

Pretty quickly can you just talk about the environment now versus.

Your tenure as CEO COO.

Three years ago, and maybe help us understand why the changes that you've made or the turnaround that happened it wasn't durable.

Yes.

I got to say that.

Oh 65 year old guys better business for an awful long time.

Operator, I've always been an operator no matter what.

Done things with an eye.

See things, probably a little different a little quicker than.

Lot of folks to whether that's whatever.

I've been in the field my whole life I understand what slowdown out there.

I think I have the ability to impact people in the field.

It seems the field very quickly.

And maybe what I'm not doing it every day it changed some things.

I don't look for blame there I just look.

Frustrating issue.

No.

I believe we can make change your long term this time.

Don't know, what what's going to be the keys.

Driving sustainable change.

Last way past me, making the change in CEO .

Going forward.

By building here once again, bringing new seasoned professionals, the CFO position, bringing in a seasoned operational professional at the CEO position I think theyre going to help us really grow the business really reached its potential.

And now we'll look back to what happened.

We've got to drive things as we see them here today.

I'm going to stay on after the V. Ceos name for about another anywhere.

For the rest of the year whatever it takes as the executive Chair I think tells the market. Those are investors that we're committed to having the next change to be smooth.

That change to be accountable. The next change to be realistic of what you expect and.

I'm not going to work.

Let off until we got that right.

Great that's helpful.

Would you categorize sort of.

Slipping back in the old ways its more of a people issue.

Our systems issue.

Well here again I would tell you that it's probably speak with you.

You can have the best.

<unk> slipped.

And here again, I think the point that I want to make is you've got a lot of successful managers a lot of successful.

The estimate is a lot of successful projects that the company has performed on the plywood.

Travel business that slipped on some and what slipped it really split apart and it really went backwards hard so.

This is not a total rebuild a total fix this is attacking the issues that we've had and in fact, maybe a division or a.

<unk>.

Certain opportunities that we went over our skis on this is about looking at certain areas.

<unk> resolved within one of the things I've.

Im talking to the whole team about is that if you have a project that's not in a positive.

Mode and it goes to negative you'll be on my list that just on your managers list.

And I think we just have to raise that level of awareness in a ways that level.

Focus that work back would allow that to happen.

Okay, and then on East West Challenge can you just confirm that the.

Preliminary sales agreement for the sale in the mid Thirty's is still.

Intact and on track to potentially close around the middle of the year.

Well it's on track.

At the end of this month I believe.

We ended this month.

By the end and so in a few days, we will know that answer.

And then you seem to imply that with a little bit of improvement whether talking about the fill that that property my triple.

Sure.

Is that.

Can you give us sooner, but timeframe on how much work and how much time it would take to get.

That property value over $100 million.

Let's say, let's say well, let's just before just discussed.

A discussion and say, let's say, we could double the value of that property.

I don't know how fast we get that.

There are a lot of there, but that property's value is and it was for us it would be for anybody else that would be the only places.

Sure Channel, where you can instantly start dumping materials.

Oh, the ship channel right at that location again, so so it just drives the value up.

The only place it.

It would be the most convenient place it takes the value up substantially.

So.

It's just something that if we can't get the sold in a short period of time I want to look at other options, but I don't want to be talking about six months talking about how do we got a new offer and it was about the same number.

Right now we got to get focused on running our business.

Happen and this is a liquidity event that would be awesome.

It's fantastic for the firm.

It doesn't move quickly I'm not going to be patient I'm not going to wait for the next person and maybe in fact, we start moving it out move somebody up on the food chain, a little bit faster themselves and maybe by getting that.

Okay.

Remove somebody else might look at it that way.

He becomes more attractive as well so I just don't want to sit in the same format as well.

I want to move forward with something positive functional it may cause something to happen was really positive.

Great and then and now it's a lot smaller, but you sort of alluded to it.

It sounded slipped pretty much consistently consistently for the last several quarters.

Can you just update us on Port law backer.

Be clear with the finance Minister.

Lots of properties.

They want it they want it bad they totally communicate with us.

Constantly and so its just them.

Give me the money and you'd be able to close the clock closely obsolete.

Great. Thanks.

Thanks for your time.

You're quite welcome Oh I'm sorry.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question comes from the line of Daniel Albano with Albano Capital You May proceed with your question.

Yeah, Hey, Austin can you hear me.

Sure Daniel.

Great.

When you think if you're on a cellphone.

We have a little problem with that.

I can hear you clearly.

No worries.

So two questions. One is if I look at the if I look at the concrete segment.

From 2018, it at minus EBITDA margin adjusted EBIT margin of minus one, 5% 19, 3% 22, 1% and 21 minus one 2%.

It's clearly in my opinion.

Destroyed.

A decent chunk of the value of the equity why would you not sell it I mean <unk> been even for low price they book value.

Yeah.

Four years into it.

East.

See what the stock does that.

I just honestly I mean, if you look at the last four years is a bad business.

We did not.

How do you justify keeping it given.

Not one not two not three but four years of pretty dismal returns and then I've got a second part question. Thanks, Okay well.

I want to I want to find the value in our business and I'm going to look at every single thing that you need to look at I believe going to seem like I know them.

I believe that we can impact that business in a way that is positive.

The way that it's going to drive value to the shareholders in this company.

If you want to ask me that question two quarters.

It can be a whole different answer, but right now I would ask you to.

Done this before in my life.

I'm in a different position right now to Victor.

Dictate decisions to drive decisions to drive process drive procedures and this business can be fixed once again I'm going to go back and I'm going to save you Youre looking at the full results.

I have the benefit do is look at the.

The parks.

I would tell you that there's a lot of this business is performing quite well now that might go right into your argument.

Question. If you have that why are you still hold that well if you were seeing that performance.

Let's say on 70% of that business you may not feel the same way about what you're asking me.

So I'm going to work at getting that business.

Do you have the right direction with getting the right people and it took the entire business is performing well we see those numbers then I think we should make the decision.

And I'm not going to take a lot of time on that going to progress I don't have that in my life.

Our sense of urgency so.

To go through that process I'm going to trust my instincts might my ability to do what I think I can bring this table like teams ability to step up where they need to step up.

Coupled with the leadership there are good people to strong people.

It's going to take a few things that we need to do to to make a couple of changes when it gets the more discipline in the results.

Got it.

Hi.

Well said I'll come back and ask a couple of quarters on.

On the concrete segment, hopefully we see.

Yes.

Sure.

I'm a big shareholder so I got the vested interest here second question is on the east West property.

I mean, given you've got a market cap somewhere around seven email yet today.

If you could go from.

In your words $30 million to $60 million in East West Jones.

Do you have the ability to.

Go do that.

You have a contractual commit where you got to sell it for 30, I mean to me.

If I'm sitting with an asset like a double.

If im sitting over a company that's got a $70 $70 million market cap and I got an asset market cap go from 30 to 60 day.

That seems like a no brainer.

Do we.

Do you have the ability to to get out of the $30 million contract and kind of double your money I tried a doubling of the sales price on east West Jones or now or.

Or you're.

<unk> got a control over commit.

But I would clearly say Daniel is that I'm not going to sit on.

Snowball offers that are happening a lot of conditions to close the property.

I'm not going to do that so I'm going to call as many people in Houston as I can to see if I can find partners to possibly start taking that there are a lot of that property.

I think the fact that if we start doing that.

Either we either make go through the full process to get it all the way done or if we start doing it partially somebody may look at this property a lot differently than they are looking at today. So.

I just believe that sitting here waiting for an offer maybe not be the best.

Also if I could so that they were maybe a little bit less than we have it in the market right now and somebody could come in close and fund in a very short period of time, I'm not going to ignore that either.

Because I don't want it.

The property is not what we do however, the liquidity it would make a big change in the in the company. So I'm going to be more aggressive on making a decision, but I believe and the board believes will add value to this company for the shareholders in a very short period of time.

Tell you exactly what's going to happen today, but I'll tell you it won't be that long.

To make a decision.

Perfect and then just a close follow on and then prompts I'm done.

The proceeds on the on the land sales.

Given.

The challenging margins in that business.

Yes, I would advocate for either.

Unless it is just working capital you absolutely need but its working capital four four and particularly on the concrete side that are yeah that is challenging.

Challenging returns.

To either reduce debt or or buy back shares. So what are you going to use.

No.

Yeah.

Does that.

Got it.

Okay.

<unk>.

That's all I had thanks for taking all my questions Austin.

Very much look forward to bucket.

Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Francis for closing remarks.

Thanks, Laura and thanks, everyone for joining our Q1 2022 earnings conference call. We look forward to updating you on our Q2 results in July have a great day.

This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation during the rest of your day.

Q1 2022 Orion Group Holdings Inc Earnings Call

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