Q1 2025 Orion Group Holdings Inc Earnings Call

Yes.

Speaker Change: Good day and welcome to the Orion Group Holdings first quarter 2025 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: Good day and welcome to the Orion Group Holdings first quarter 2025 conference specialists by pressing the star key followed by zero.

Operator: For today's presentation, there will be no audio. to ask questions. If you have a question, you may press star, then 1. To withdraw your question, please press star at the top.

Speaker Change: After today's presentation there'll be an opportunity to ask questions to ask a question Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Speaker Change: Please note this event is being recorded.

Margaret Boyce: I would now like to turn the conference over to Margaret Boyce, Investor Relations. Thank you, Michael. And thanks, everyone, for joining us today to discuss Orion Group Holdings first quarter 2025 financial results. We issued our earnings release after the market last night. It's available in the investor relations section of our website at oriongroupholdingsinc.com.

Margaret Voice: I would now like to turn the conference over to Margaret Voice Investor Relations. Please go ahead.

Speaker Change: Thank you Michael and thanks, everyone for joining us today to discuss Orion Group Holdings third quarter 2025 financial result, we issued our earnings release after the market last night. It is available on the Investor Relations section of our website at Orion Group Holdings, Inc. Dotcom.

Margaret Boyce: I'm here today with Travis Boone, Chief Executive Officer, and Scott Thanisch, Chief Financial Officer.

Speaker Change: I'm here today, with Travis Byrne, Chief Executive Officer, and Scott <unk>, Chief Financial Officer on today's call management will provide prepared remarks, and then we'll open up the call for your questions before we begin I'd like to remind you that today's comments will include forward looking statements under the federal Securities laws forward looking statements.

Margaret Boyce: On today's call, management will provide prepared remarks, and then we'll open up the call for your questions. Before we begin, I'd like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts are forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-K.

Speaker Change: Alright, the enterprise by words, such as will be intend believe expect anticipate or other comparable words and phrases statements that are not historical facts are forward looking statements our actual financial condition and results of operations may vary materially from those contemplated by such forward looking statements.

Scott: That's one of the factors that could cause our results to differ materially from these forward looking statements are contained in our SEC filings, including our reports on Form 10-Q, and 10-K with that I'll turn the call over to Travis Travis. Please go ahead.

Travis Boone: With that, I'll turn the call over to Travis. Travis, please go ahead. Thank you, Margaret, and good morning, everyone, and thank you for joining our first quarter 2025 conference call. I'll start with an overview of our first quarter results and market update.

Travis Byrne: Thank you Margaret and good morning, everyone and thank you for joining our first quarter 2025 conference call.

Travis Byrne: I'll start with an overview of our first quarter results and market update.

Travis Boone: And then I'll turn it over to Scott to cover our financial results. We're off to a strong start in 2025. For the first quarter, we reported revenue of $189 million and adjusted EBITDA of $8 million, which reflects the strength of our operating model and the successful execution of our strategic priorities.

Scott: And then I will turn it over to Scott to cover our financial results.

Travis Byrne: We're off to a strong start in 2025.

Scott: For the first quarter, we reported revenue of $189 million.

Scott: Adjusted EBITDA of $8 million, which reflects the strength of our operating model and the successful execution of our strategic priorities.

Travis Boone: Before I talk about our business, I'd like to address some topics that have been causing market uncertainty over the past few months. Starting with some of the actions of the Trump administration to reduce government spending and to impose tariffs. The recent tariffs and steps taken to reduce the size of the federal government will not have a material impact on our results for 2025. We were proactive in managing tariff risk starting last summer. After recently conducting a thorough evaluation of our business, we haven't identified any material impacts based on what we know today. Additionally, we have not seen reductions in government spending have an impact on the domestic infrastructure projects that we are pursuing or delivering, and there has been no pullback on the U.S.

Scott: Before I talk about our business I'd like to address some topics that have been causing market uncertainty over the past few months.

Scott: Starting with some of the actions of the Trump administration to reduced government spending and to impose tariffs.

Scott: The recent tariffs and steps taken to reduce the size of the federal government will not have any material impact on our results for 2025.

Scott: We were proactive in managing tariff risk starting last summer after.

Scott: After recently conducting a thorough evaluation of our business, we haven't identified any material impacts based on what we know today.

Scott: Additionally, we have not seen reductions in government spending have an impact on the domestic infrastructure projects that we're pursuing we're delivering and there's been no pullback on the U S government, China deterrence policy.

Travis Boone: government's China deterrence policy. Even though macroeconomic conditions remain somewhat fluid, certain policy directives from the Trump administration are clear and unwavering. Chief among them are a renewed focus on domestic industrial policy through reshoring U.S. manufacturing and shipbuilding, and a strategic pivot to defense and economic investment in the Pacific over other geopolitical regions. At the heart of Trump's executive order, restoring America's maritime dominance is the goal of revitalizing U.S. maritime power. to promote national security and economic prosperity. This order will include grant programs for capital improvements to commercial shipyards and vessel repair facilities and dry docks, which are right in our wheelhouse.

Scott: Even though macroeconomic conditions remain somewhat fluid certain policy directives from the Trump administration are clear and unwavering.

Scott: Chief among them are a renewed focus on domestic industrial policy through re shoring U S manufacturing and shipbuilding Andrew.

Scott: And the strategic pivot to defense and economic investment in the Pacific over other geopolitical regions.

Scott: At the heart of Trump's executive order restoring America's Maritime dominance is the goal of revitalizing U S Maritime power.

Scott: To promote national security and economic prosperity.

Scott: This order will include grant programs for capital improvements to commercial shipyards and vessel repair facilities and dry docks, which are right in our wheelhouse.

Travis Boone: These key policy directives represent meaningful tailwinds for our business, and we expect the full benefit will begin to materialize over the next couple of years. We have seen no pullback in our market opportunities. On the contrary, so far this year, we have secured almost $350 million in new winds, $161 million in marine and $188 million in concrete, which have started or are scheduled to start within the next few months. These wins include projects across the full spectrum of Orion's specialized capabilities, including marine facilities, dredging, bridges, large buildings, and data centers. Our solid start to the year of Project WINS brings our backlog plus awarded work to $890 million.

Scott: These key policy directives represent meaningful tailwind for our business and we expect the full benefit will begin to materialize over the next couple of years.

Scott: We have seen no pullback in our market opportunities on the contrary so far this year, we have secured almost $350 million of new wins $161 million in marine and $188 million in concrete.

Scott: Which have started or are scheduled to start within the next few months. These.

Scott: These waves include projects across the full spectrum of Orion specialized capabilities, including marine facilities dredging bridges large buildings and data centers.

Scott: Our solid start to the year and project wins brings our backlog plus awarded work $890 million.

Travis Boone: We will continue to focus. on Building Profitable Backlog from our Strong Pipeline of Opportunity. Most of our marine wins in the first quarter were detailed in our press release in February. Marine projects are typically larger in size and take longer to close. We currently have four large pursuits in the pipeline, with decisions expected in the next couple of months, along with many more modest-sized pursuits. I especially want to congratulate our concrete team for their strong start to the year with building backlog. in the last several months. We've seen increased demand across our markets and continue to win repeat business with our with our world class partners.

Scott: We will continue to focus.

Scott: On building profitable backlog from our strong pipeline of opportunities.

Scott: Most of our marine weighted in the first quarter were detailed in our press release in February.

Scott: Marine projects are typically larger in size and take longer to close. We currently have four large pursuits in the pipeline with decisions expected in the next couple of months along with many more modest sized pursuits.

Scott: I, especially want to congratulate our concrete team for their strong start to the year with building backlog.

Scott: In the last several months.

Scott: We've seen increased demand across our markets and continue to win repeat business with our world class partners.

Travis Boone: This quarter, we have won five data centers with our trusted partners that total $47 million, bringing our total number of data centers to 35 and more than $235 million that we have delivered. Demand in the data center market remains strong. And so far, we haven't seen any signs of a slowdown. In fact, several hyperscalers have reaffirmed their commitment to investing in the AI revolution. Any pullback that we have seen is related to inability to obtain the power needed in certain locations. The new administration's goal to reshort manufacturing should also support the growth of our concrete business over time.

Scott: This quarter, we had one five data centers with our trusted partners that totaled $47 million, bringing our total number of data centers to 35 and more than $235 million that we have delivered.

Scott: Demand in the data center market remains strong.

Scott: And so far we haven't seen any signs of a slowdown in fact, several hyperscale hyperscale or have reaffirmed their commitment to investing in AI Revolution.

Scott: Any pullback that we've seen is related to inability to obtain the power in certain locations.

Scott: The new administration's goal to resort manufacturing should also support the growth of our coffee business overtime and.

Travis Boone: In addition to data centers, other concrete wins included $17 million projects with our partner O-Line Construction for a multi-story mixed-use project, a $10 million project with Durotech for a Houston school, and a $24 million award for Phase II of the Costo Distribution Center in South Florida.

Scott: In addition to data centers other concrete wins included $17 million projects with our partner <unk> construction for a multi storey mixed use project at $10 million project with Darrow check for Houston School, and a $24 million award for Phase two of the costs are just <unk> center in South Florida.

Travis Boone: In summary, everyone at Orion is extremely excited about our future and our markets. Our morale has never been higher and our business and operating model are well positioned to benefit from the current administration's agenda. With a talented, energized, and collaborative team focused on delivering projects safely with predictable excellence, we are on a strong path for continued success.

Scott: In summary, everyone in Orion is extremely excited about our future and our markets.

Scott: Morale has never been higher and our business and operating model are well positioned to benefit from the current administration's agenda.

Scott: With a talented energized and collaborative team focused on delivering projects safely with predictable excellence. We are on a strong path for continued success.

Travis Boone: Before I turn the call over to Scott, I want to encourage stockholders to cast your votes and participate in our virtual annual meeting coming up on May 15th. You can find the details in your proxy materials and on our website.

Scott: Before I turn the call over to Scott I wanted to encourage stockholders to cast your vote and participate in our virtual annual meeting coming up on May 15, you can find the detailed in your proxy materials and on our website.

Scott Thanisch: Scott, your turn is back. Thanks, Travis.

Speaker Change: You're talking about.

Scott: Thanks, Jeff and good morning, everyone.

Scott Thanisch: And good morning, everyone. We're pleased with our first quarter results and the progress made in growing our business. As Travis highlighted, consolidated revenue increased over 17% to $189 million and adjusted EBITDA doubled to $8.2 million. In the first quarter, marine revenue was up over 19% and concrete revenue increased 13%. Our disciplined bidding standards and refined approach to business development contributed to the strong growth in both segments. Consolidated gross profit margin increased to $23 million, or 12.2% of revenue, up from $15.5 million, or 9.7% of revenue, in the same period last year. The 250 basis point increase in consolidated gross margin was driven by improvements in marine profitability, partially offset by lower concrete margins.

Speaker Change: We're pleased with our first quarter results and the progress made in growing our business as.

Speaker Change: As Trevor highlighted consolidated revenue increased over 17% to $189 million and adjusted EBITDA doubled to $8 $2 million.

Speaker Change: In the first quarter Marine revenue was up over 19% and concrete revenue increased 13%.

Speaker Change: Our disciplined bidding standards and refined approach to business development.

Speaker Change: <unk> to the strong growth in both segments.

Speaker Change: Consolidated gross profit margin increased to $23 million or 12, 2% of revenue.

Speaker Change: Up from $15 5 million or nine 7% of revenue in the same period last year.

Speaker Change: The 250 basis point increase in consolidated gross margin was driven by improvements in marine profitability, partially offset by lower concrete margins.

Scott Thanisch: SG&A expenses were $22.5 million from $19 million in the comparable period. As a percentage of total contract revenues, SG&A expenses increased to 12% from $11.8 billion. incentive compensation, legal, IT, and operating lease expenses largely accounted for the increase in SG&A. While SG&A expenses have increased as we have invested in our growth, we expect to benefit from operating leverage as we continue to expand our top line. As a result, we expect SG&A as a percentage of revenue to improve in the near future.

Speaker Change: SG&A expenses were $22 5 million up from $19 million in the comparable period.

Speaker Change: As a percentage of total contract revenues SG&A expenses increased to 12% from 11, 8%.

Speaker Change: Incentive compensation legal and operating lease expenses largely accounted for the increase in SG&A.

Speaker Change: While SG&A expenses have increased as we have invested in our growth we expect to benefit from operating leverage as we continue to expand our top line.

Speaker Change: As a result, we expect SG&A as a percentage of revenue.

Speaker Change: In the near future.

Speaker Change: Turning to profitability.

Scott Thanisch: Turning to profitability. Adjusted net income was $300,000 or $0.01 per diluted share in the first quarter, compared to an adjusted net loss of $3.6 million or $0.11 per diluted share in the prior year period. First quarter net income included $1.7 million, or $0.05 per diluted share, of adjusted items. gap net loss for the first quarter of 2025 was $1.4 million or four cents per diluted share. EBITDA for the first quarter increased to $6.3 million while adjusted EBITDA grew to $8.2 million. adjusted even the margin improved 180 basis points to 4.3% up from 2.5% last year.

Speaker Change: Adjusted net income was $300000 or one cent per diluted share in the first quarter.

Compared to an adjusted net loss of $3 6 million or 11 cents per diluted share in the prior year period.

Speaker Change: First quarter net income included $1 $7 million or five cents per diluted share of adjusted items.

Speaker Change: GAAP net loss for the first quarter of 2025 was $1 4 million or four cents per diluted share.

Speaker Change: EBITDA for the first quarter increased to $6 $3 million, while adjusted EBITDA grew to $8 2 million.

Speaker Change: Adjusted EBITDA margin improved 180 basis points to 423% up from 2.5% last year.

Scott Thanisch: During the first quarter, adjusted EBITDA margin in the marine segment was 8.6% compared to 0.9% last year. adjusted EBITDA margin in our concrete segment was negative 4.4% compared with positive 5.7% in the prior year period.

Speaker Change: During the first quarter adjusted EBITDA margin in the Marine segment was eight 6% compared to 9% last year.

Speaker Change: Adjusted EBITDA margin in our concrete segment was negative four 4% compared with positive five 7% in the prior year period.

Scott Thanisch: Last year's first quarter exhibited unusually low marine margins due to project delays, and unusually high concrete margins due to project write-outs. This year's first quarter is more typical and in line with our expectations. Concrete experiences seasonally lower productivity in the first quarter. And we expect over the remainder of the year to see better margins in that business.

Speaker Change: Last year's first quarter exhibited unusually low marine margins due to project delays and unusually high concrete margins due to the project write ups.

Speaker Change: This year's first quarter is more typical and in line with our expectations.

Speaker Change: Concrete experiences seasonally lower productivity in the first quarter.

Speaker Change: And we expect over the remainder of the year to see better margins in that business.

Scott Thanisch: As a reminder, as we continue to build scale in our business, our medium-term goal is to generate adjusted EBITDA margins in the low double digits for marine and high single digits for concrete.

Speaker Change: As a reminder, as we continue to build scale in our business. Our medium term goal is to generate adjusted EBITDA margins in the low double digits for marine and high single digits for concrete.

Scott Thanisch: Moving on to bidding metrics. In the first quarter, we bid on projects worth approximately $761 million, winning $299 million. This equated to a contract-evaluated win rate of 39% and a book-to-bill ratio of 1.59 times for the first quarter.

Speaker Change: Moving onto bidding metrics in the first quarter, we bid on projects worth approximately $761 million winning $299 million.

Speaker Change: This equated to a contract valued weighted win rate of 39% and a book to Bill ratio of one five times 159 times for the first quarter.

Scott Thanisch: We expect to see continued progress capturing our opportunities and growing our backlog, but given the timing of Project WIN, there may be some variability in our win rate from quarter to quarter. As of March 31st, our backlog was $840 million compared to $729 million at the end of the prior quarter and $757 million at the end of the first quarter last year. Breaking out our first quarter backlog by segment, $607 million was related to our marine segment and $232 million was related to our concrete segment.

Speaker Change: We expect to see continued progress capturing our opportunities and growing our backlog, but getting the given the timing of project win there may be some variability in our win rate from quarter to quarter.

Speaker Change: Yeah.

Speaker Change: As of March 31, our backlog was $840 million compared to 729 million at the end of the prior quarter and $757 million at the end of the first quarter last year.

Speaker Change: Breaking out our first quarter backlog by segment 607 million was related to our marine segment.

Speaker Change: $232 million was related to our concrete segment.

Scott Thanisch: As Travis mentioned, we are off to a strong start in 2025 and our end of quarter backlog plus awards to subsequent quarter end is $891 million.

Speaker Change: As Travis mentioned, we are off to a strong start in 2025, and our end of quarter backlog plus awards subsequent to quarter end is $891 million.

Scott Thanisch: Turning to cash flow, in the March quarter, we reported negative $3.4 million of cash from operations compared to negative $22.8 million in the prior year quarter. Cash flow can vary from quarter to quarter due to the timing of project mobilizations and completion. We ended the March quarter with $13 million in cash.

Speaker Change: Turning to cash flow in the March quarter, we recorded negative $3 $4 million of cash from operations compared to negative $22 $8 million in the prior year quarter.

Cash flow can vary from quarter to quarter due to the timing of project mobilizations and completions.

Speaker Change: We ended the March quarter with $13 million in cash total debt outstanding was $23 three.

Scott Thanisch: Total debt outstanding was $23.3 million and we had no outstanding borrowings under our revolving credit facility at the end of the quarter.

Speaker Change: $3 million and we had no outstanding borrowings under our revolving credit facility at the end of the court.

Scott Thanisch: Beginning this year, we made the cutover from our legacy systems to our new IT systems and processes for our operations and back office. With the heavy lifting behind us, we are now working to fine-tune these systems. This project was a key initiative to position the company for greater growth. By having our business segments on the same financial platform, we will have clear line of sight across the entire business. These tools will facilitate information sharing and offer valuable insights into the status of our projects, significantly enhancing our ability to monitor and manage operations in the field.

Speaker Change: Beginning this year, we made the cut over from our legacy systems to our new it systems and processes for our operations and back office.

Speaker Change: With the heavy lifting behind US we are now working to fine tune these systems.

Speaker Change: This project was a key initiatives positioning the company for greater breadth.

Speaker Change: By having our business segments on the same financial platform, we will have clear line of sight across the entire business.

Speaker Change: These tools will facilitate information sharing and offer valuable insights into the status of our projects significantly enhancing our ability to monitor and manage operations in the field.

Scott Thanisch: As our operational enhancements take hold, we anticipate achieving greater efficiency, supporting ongoing business expansion while capitalizing on the benefits of fixed cost leverage.

Speaker Change: As our operational enhancements take hold we anticipate achieving greater efficiency supporting ongoing business expansion, while capitalizing on the benefits of fixed cost leverage.

Scott Thanisch: We are also investing in our people and facilities. We are currently in the process of consolidating our Houston area offices from three down to one. In late June, we will co-locate our marine, concrete, and shared services teams in an office building that was constructed by our concrete segment in the East River Mixed-Use Development near downtown Houston. During the first quarter, we incurred about $400,000 of incremental lease expense during our finish out of this facility. The leases of our vacated facilities will end during the third quarter, resulting in the elimination of this bubble cost and lower ongoing facility costs.

Speaker Change: We are also investing in our people and facilities.

Speaker Change: We are currently in the process of consolidating our Houston area offices from three down to one.

Speaker Change: In late June we will co locate our marine concrete and shared services teams and an office building that was constructed by our concrete segment in the East River mixed use development near downtown Houston.

Speaker Change: During the first quarter, we incurred about $400000 of incremental lease expense during our finish out of this facility.

Speaker Change: The leases are vacated facilities will end during the third quarter, resulting in the elimination of this bubble cost and lower ongoing facility costs.

Scott Thanisch: Looking forward, we are excited by our improving performance and expanding pipeline. As Travis mentioned, a key indicator of the continued execution of our strategic plan will be our backlog growth in 2025, which will include winning projects for delivery in 2025 and beyond. Our first quarter performance was aligned to our expectations, and we are reiterating our guidance for the full year 2025. We expect revenue to be in the range of $800 to $850 million with adjusted EBITDA in the range of $42 to $46 million. This translates to a range of $0.11 to $0.17 for adjusted EPS.

Speaker Change: Looking forward, we are excited by our improving performance and expanding pipeline.

Speaker Change: As Travis mentioned, a key indicator of the continued execution of our strategic plan will be our backlog growth in 2025.

Speaker Change: Which will include winning projects for delivery in 2025 and beyond.

Speaker Change: Our first quarter performance was aligned to our expectations and we are reiterating our guidance for the full year 2025.

Speaker Change: We expect revenue to be in the range of $800 million to $850 million with adjusted EBITDA in the range of $42 million to $46 million.

Speaker Change: This translates to a range of 11 to 17 core adjusted EPS.

Scott Thanisch: We are also maintaining our 2025 CAFX guidance in the range of $25 million to $35 million as we invest for the opportunities ahead.

Speaker Change: We are also maintaining our 2025 capex guidance in the range of 25 million to $35 million as we invest for the opportunities ahead.

Scott Thanisch: In closing, our first quarter performance reflects the strength of our business model, the discipline of our execution, and the dedication of our team. With a solid foundation in place and a clear strategy for growth, we are well positioned to capitalize on the exciting opportunities ahead. We remain heads down on execution to drive sustainable value for our shareholders, and we look forward to sharing our progress.

Speaker Change: In closing our first quarter performance reflects the strength of our business model the discipline of our execution and the dedication of our team.

Speaker Change: With a solid foundation in place and a clear strategy for growth, we are well positioned to capitalize on the exciting opportunities ahead.

Speaker Change: We remain heads down on execution to drive sustainable value for our shareholders and we look forward to sharing our progress next quarter.

Operator: We'll open up the call for your questions. Go ahead, Michael.

Speaker Change: We will open up the call for your questions.

Speaker Change: Right Michael.

Speaker Change: Okay.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Operator: At this time, your question has been addressed and you would like to withdraw your question. We ask that you limit yourselves to one question and one follow-up.

Speaker Change: Anytime your question has been addressed and you would like to withdraw your question. Please press Star then two we ask that you limit yourselves to one question and one follow up at.

Operator: At this time, we will pause momentarily to assemble our rocket.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: And the first question comes from Aaron's Mahalla with Craig Hallum. Please go ahead.

Aaron Spychalla: This question comes from Aaron Spychalla with Craig Hallam. Yeah, good morning, Travis and Scott. Thanks for taking the questions. First for me, you know, on the on the on the defense side of things, you know, seeing some good movement on defense spending, you know, shipbuilding, some of these RFPs do seem like they're starting to see some traction. Are you still thinking, you know, late this year and into 2026 for awards there, you know, curious if it could be, you know, sooner than that. And then if you could just frame, you know, the opportunity what that could look like for you in the coming year.

Speaker Change: Yeah, Good morning, Travis and Scott Thanks for taking the questions first for me you know on the on the on the defense side of things you are seeing some good movement on defense spending shipbuilding. Some of these rfps do seem like they're starting to see some traction are you still thinking you know late this year and into 2026 for awards there.

Speaker Change: I'm curious if it could be.

Speaker Change: You know, what maybe sooner than that and then if you could just frame the opportunity what that could look like for you in the coming years.

Travis Boone: Yeah, there's usually quite a bit of visibility, especially in some of these big federal contracts.

Speaker Change: Yeah, there's usually quite a bit of visibility, especially in some of these big federal contracts.

Aaron Spychalla: Aaron, so I don't I don't expect that it will get sped up too much more than what we're what we were thinking probably late this year early next for to be anything anything concrete there unless something changes with the administration or something like that it's probably going to be probably going to be in that time frame. All right, and then just, you know, maybe kind of, can you talk about the just kind of the size of that opportunity that you're seeing, you know, potential, you know, multiple RFPs, just any other color you could provide there on how that maybe looks for you in the coming years?

Speaker Change: Erin so it will I don't expect that it will get split up too much more than what were what we were thinking Oh, probably late this year early next or.

Speaker Change: To be anything anything concrete there.

Speaker Change: Unless something changes.

Speaker Change: With the administration or something like that it's probably going to be probably going to be in that band.

Speaker Change: Right.

Speaker Change: Alright, and then just you know maybe Kevin can you talk about the just kind of the size of that opportunity that youre seeing you know put potential multiple rfps just any other color you can provide there on how that maybe looks for you in the coming years.

Travis Boone: Sure, there's a there's a couple a couple of project pursuits that we are working on for for later this year, coming into early next year. the let's call it $500 million dollar range. There's a couple of them kind of in the hopper now with expectations that a few more will get hot in the next couple of months.

Speaker Change: Sure. There's a there's a couple a couple of.

Speaker Change: Pursuits that we are working on.

Speaker Change: For later this year.

Speaker Change: And early next year.

Speaker Change: Size.

Speaker Change: In the.

Speaker Change: But let's call it 500 million dollar range.

Speaker Change: There's a couple of them kind of in the <unk>.

Speaker Change: In the Hopper now with the expectation that a few more rule will get hot in the next couple of months.

Aaron Spychalla: All right. Thank you for that.

Speaker Change: Alright. Thank you for that and then maybe just on concrete you know good good to see strong order activity in the quarter can.

Aaron Spychalla: And then, you know, just on concrete, you know, good to see strong order activity in the quarter.

Travis Boone: Can you just talk about the outlook for that business for the rest of this year? You know, it doesn't sound like you're seeing a slowdown there since early April or anything.

Speaker Change: Can you just talk about the outlook for that business for the rest of this year you know it doesn't sound like you're seeing a slowdown there.

Speaker Change: Early April or anything so if you could elaborate on that and then just speak to kind of confidence in the margin expansion goals that you've kind of laid out there.

Travis Boone: So if you could elaborate on that and then just speak to kind of confidence in the margin expansion goals that you've kind of laid out there. Sure. With our bidding activity and award activity, we haven't seen much slowdown. That's not to say that continued uncertainty with what's going on might slow things down a little, but we're not seeing it yet. So I guess, knock on wood, we're hopeful that there's not going to be a change in the activity we've been seeing over the first quarter. And on the margin question, you know, as we've had some pretty strong wins at the beginning of the year, we're going to see nice volume coming out of that business.

Speaker Change: Sure, we haven't with our with our bidding activity and award activity, we haven't seen we haven't seen much slowdown.

Speaker Change: Not to say that continued uncertainty with with what's going on my might've slowed things down a little but we're not seeing it yet so.

Speaker Change: Sure.

Speaker Change: I guess knock on wood, we don't we don't.

Speaker Change: We're hopeful that theres not going to be a change in the activity we've been seeing over the first the first quarter.

Speaker Change: And on the margin question.

Speaker Change: As we've had some pretty strong wins at the beginning of the year, we're going to see nice volume coming out of that business and again, the operating leverage that we've kind of gone.

Aaron Spychalla: And, you know, again, the operating leverage that we've kind of got built up into the business, I think, is going to help those margins improve considerably. All right, thanks.

Speaker Change: <unk> built up into the business I think is going to help with those margins.

Speaker Change: Okay.

Speaker Change: Alright, Thanks, and then maybe one last for me just on the private downstream energy markets, Yes. It seems like we're starting to see some.

Aaron Spychalla: And then maybe one last for me just on, you know, the private downstream energy markets, you know, it seems like we're starting to see some traction there to activities starting to pick up. Just curious, you know, if you're seeing that and kind of the outlook there. Yeah, I think what we've seen is kind of increased bullishness by by some of the you know, Petrochem. clients that have been maybe a little more reserved over the past administration, just being a little more bullish about their plans to move forward with projects. So we're optimistic that that's a.

Speaker Change: Traction there to activity starting to pick up just curious if you're seeing that in kind of the outlook there.

Speaker Change: Yeah, I think what we've seen is kind of the.

Speaker Change: Increased bullishness by by some of the.

Speaker Change: Petro Chem.

Speaker Change: Clients that have been maybe a little more reserved over the past the past administration.

Speaker Change: Just being a little more bullish about about their plans to move forward with projects.

Speaker Change: So we're optimistic.

Speaker Change: The.

Travis Boone: fair amount of activity is going to happen. I think everybody's watching the global oil prices and things like that, that could impact some of those projects moving forward. But I do think that we're going to see more activity happening here in the near future.

Speaker Change: Fair amount of activity is going to it's going to happen I think I think everybody's watching the global oil prices and things like that that that could.

Speaker Change: Packed.

Speaker Change: Some of those projects moving forward, but.

Speaker Change: I do think that well are we going to see more and more activity happening.

Speaker Change: Happening here in the near future.

Aaron Spychalla: All right. Thanks for taking the questions.

Speaker Change: Alright.

Speaker Change: Thanks for taking the questions. So I'll turn it over.

Operator: I'll turn it over.

Speaker Change: Okay.

Speaker Change: And your next question comes from Julio Romero with Sidoti <unk> Company. Please go ahead.

Julio Romero: Julio Romero Thanks.

Travis Scott: Thanks, Hey, good morning, Travis Scott Hope all is well good morning Julien.

Travis Boone: Hey, good morning, Travis and Scott. Hope all is well. Morning, Julio.

Julio Romero: Hey, so can you maybe speak to the margins posted in the Marine segment? I know, Scott, you mentioned that this quarter's margins for both segments are more typical of a first quarter, but nonetheless, in Marine, just really strong segment margins. Can you speak to the drivers there and can the margin strength continue in the quarters ahead, even as we have kind of lumpier quarter-to-quarter segments?

Speaker Change: Hey, So can you maybe speak to the margins posted in the Marine segment I know.

Speaker Change: Scott you mentioned that this quarter's margins for both segments are more typical of a first quarter, but nonetheless in marine just really strong segment margins can you speak to the drivers there and kinda margin strength continue in the quarters ahead, even as we have kind of lumpier quarter to quarter sales.

Scott Thanisch: Yeah, thanks, Julio. And you're right, you know, we do have varying performance quarter to quarter as, you know, the project mix changes as you roll through the quarters. And this was a particularly strong quarter on a number of projects in the marine business. And so that's why you see somewhat elevated margins there. We do think that these are margins that the marine business can on a regular basis, but probably is a high point for the kind of current year. But we will see, you know, continued growth in that business. And similar to the concrete business, the growth will drive some further margin improvement.

Speaker Change: Yes. Thanks.

Speaker Change: You're right we do.

Speaker Change: Do have varying performance quarter to quarter as the project mix changes.

Speaker Change: As you roll through the quarters.

Speaker Change: And this was a particularly strong quarter on a number of projects in the marine business.

Speaker Change: And so that's why you see somewhat elevated margins there would.

Speaker Change: Do you think that these are these are margins that the marine business can achieve on a regular basis, but.

Speaker Change: Probably it is a high point for the current year, but we will see.

Speaker Change: Continued growth in that business and similar to the concrete business.

Speaker Change: The growth will drive some further margin improvement.

Scott Thanisch: Within this quarter, we had, we had, you know, really good performance on Hawaii on Grand Bahamas shipyard, which are two of our larger projects. And so those are more impactful to the result.

Speaker Change: This quarter, we had we had.

Speaker Change: Really good performance on Hawaii on Grand Bahama Shipyard, which are two of our larger projects and so those are more impactful to the results.

Julio Romero: Got it, that's that's very helpful. And then, you know, it sounds like you've been very proactive in tariff mitigation strategies.

Speaker Change: Got it that's that's very helpful. And then you know.

Speaker Change: It sounds like you've been very proactive in tariff mitigation strategies, you know just given your exposure to public work due to government contracts can you talk a bit about how your contracts are structured.

Travis Boone: You know, just given your exposure to public work to government contracts, can you talk a bit about how your contracts are structured? You know, how you're you're differentiated as a specialty contractor, especially on the marine side, and if that allows you any competitive advantages in this uncertain operation? On the tariff front, you know, we do a fair amount of work with the federal government as well as other government agencies that require either Buy America or Buy American that is either U.S. steel or our allies. So that helps a lot with the tariff question. On other projects where we're more free to buy steel from other locations, as I said in my comments, we've been pretty careful starting last summer when we started thinking Trump might win this thing and everybody knows Trump equals tariffs.

Speaker Change: Do you know, how you're differentiated as a specialty contractor, especially on the marine side and if that allows you any competitive advantages in this uncertain operating environment.

Speaker Change: Okay.

Speaker Change: On the on the tariff front, we do do a fair amount of work with the federal government as well as other.

Speaker Change: Government agencies that they require.

Either buy America or buy American that that there's either.

Speaker Change: Your or our allies.

Speaker Change: That helps a lot with the tariff the tariff question.

Speaker Change: On other projects, where we're <unk>.

Speaker Change: More more free to buy buy steel from other locations.

Speaker Change: As I've said in my comments, we've been pretty careful starting last summer when.

Speaker Change: Started thinking Trump Trump might when this thing and everybody everybody knows Trump equals tariff. So we were preparing for that and we had contingency in place or projects that we were bidding that.

Travis Boone: So we were preparing for that and we had contingency in place for projects that we were bidding that had foreign steel and things like that. We were making sure we were prepared for the scenario that we're seeing in front of us now.

Speaker Change: Had foreign steel and things like that so we were.

Speaker Change:

Speaker Change: We were making sure we were prepared for the scenario that we're seeing in front of us now.

Travis Boone: What was the second part of your question, Julio? Just thinking about you guys on, you know, a competitive basis, how you're a little you know, any factors that might have some differentiation versus competitors and competitive behavior. Well, I think probably our most significant competitive advantage in this particular arena is our strong supplier relationships. And we are a key customer of a number of steel suppliers who we have strong relationships with, and an important part of their business. So we're in constant dialogue with them. And we have, you know, in the past gotten our best pricing from our best partner.

Speaker Change: What was the second part of your question Julio.

Speaker Change: Okay.

Speaker Change: Just thinking about you guys on.

Speaker Change: Our competitive basis, how it how you're a little.

Speaker Change: Any factors that might have some differentiation versus competitors and competitive behavior in this environment.

Speaker Change: Well I think probably our most significant competitive advantages in this particular arena is our strong supplier relationships and we are key.

Speaker Change: Key customer of a number of steel suppliers, who we have strong relationships with.

Speaker Change: And an important part of their business. So we're in constant dialogue with them and we have.

Speaker Change: Yes.

Speaker Change: In the past gotten our best pricing from our best partners.

Speaker Change: Really helpful. Thanks for the color.

Julio Romero: Really helpful.

Julio Romero: Thanks for the call.

Travis Boone: Thanks, Julio.

Speaker Change: Thanks Julia.

Speaker Change: And your next question comes from Brent Thielman with D. A Davidson. Please go ahead.

Brent Thielman: And your next question comes from Brent.

Brent Thielman: This is DEA Davidson, please go ahead. Great, great. Thanks. Good morning.

Speaker Change: Yes.

Brent Thielman: Okay, great. Thanks, good morning.

Scott Thanisch: I guess I just wanted to ask a little more around concrete this quarter and the loss. I know there's Seasonal factors that play into this, but just wanted to understand the moving pieces around that. And then, you know, does the outlook contemplate a return to profitability here going forward? Yeah, so you know, as you said, we have typically lower results in the first quarter of the concrete business. You know, as in Texas, there's less workable days during that timeframe. And so that is, you know, kind of what you see in the results. And so there's just a natural seasonal improvements that you'll see in quarters going forward that that can help concrete margins as their revenue comes up, and their utilization of their of their indirects goes up.

Speaker Change: Good morning, Brent I guess.

Speaker Change: I just wanted to add.

Speaker Change: A little more around concrete this quarter and a loss I know, there's some seasonal factors that play into that but just wanted to understand the moving pieces around that and then.

Speaker Change: Does the Aetna the outlook contemplate it returned to profitability here going forward.

Speaker Change: Yeah. So.

Speaker Change: As you said, we have typically lower results in the first quarter of the concrete business.

Speaker Change: As in Texas, there's less workable days during that timeframe and so that is kind of what you see in our results.

Speaker Change: So there's just a natural seasonal improvements that you'll see in quarters going forward that that can help concrete margins as the revenue comes up.

Speaker Change: And their utilization of their of their indirect goes up.

Scott Thanisch: And so as we kind of progress through the year, you know, we'll we'll see our concrete business get back to profitability over the course of the year. And although we haven't really given segment specific guidance, this is all kind of aligned to our top line guidance of 42 to 46. So we feel comfortable that the concrete business is on track for our expectations for this year. Okay.

Speaker Change: And so as we kind of progress through the year, we'll we'll see.

Speaker Change: Our concrete business get back to profitability over the course of the year and although we havent really given segment specific guidance. This is all kind of aligned to our top line guidance of 40 to 46. So we feel comfortable that the concrete business is on track for our expectations for sure.

Speaker Change: Okay.

Scott Thanisch: Yeah, and I guess the follow-up, at least in the last couple of years, you've been sort of more back half heavy on revenue. and EBITDA is that. Is that the expectation? this year as we're thinking about, you know, ramping execution on. spoke a bit. Yeah, that's right. I mean, if you just kind of take the 42 to 46 and subtract the first quarter, you can see that the remaining three quarters, you're going to have a higher average. And that's a typical pattern for us. And as well, you know, as we continue to grow the business, there's just a natural up into the right movement of our top line over time.

Speaker Change: Yeah, and I guess the follow up.

Speaker Change: I mean at least in the last couple of years, you've been sort of more back half heavy on revenue and <unk>.

Speaker Change: Earnings and EBIT dies that.

Speaker Change: Is that the expectation.

Speaker Change: This year as we're thinking about ramping execution on this this book of business.

Speaker Change: Yeah, that's right I mean, if you just kind of take the 42 to 46 and subtract. The first quarter you can see that the remaining three quarters you can have higher average.

Speaker Change: That's the typical pattern for us.

Speaker Change: And as well as we continue to grow the business, there's just a natural up into the right.

Speaker Change: Of our top line over time, so so as we as we move through the year, you'll see bigger quarters, and more profitable quarters, and and that's all kind of aligned where we see the year, finishing out.

Scott Thanisch: So as we move through the year, you'll see bigger quarters and more profitable quarters. And that's all kind of where we see the year finishing out.

Brent Thielman: Got it.

Speaker Change: Got it maybe just one last one if I could sneak in and you've got some pretty sizable pursuits.

Brent Thielman: Maybe just one last one if I could sneak it in. You've got some pretty sizable pursuits you've talked about on the federal side and what you've already, you know, booked in terms of backlog thus far. Is the balance sheet and capital position in the place you want it to be in order to support getting that sort of work going forward? Yeah, that's a great question. As I mentioned, we had no draws on our revolver at the end of the quarter. Capacity on that, it's an ABL, so it ranges up and down, but $40 to $60 million of capacity generally.

Speaker Change: You talked about in the federal side, and what you've already booked in terms of backlog. Thus far is that is the balance sheet and capital position in a place you want it to be in order to support getting is that sort of work going forward.

Speaker Change: Yes, great question.

Speaker Change: As I mentioned, we had no draws on our revolver at the end of the quarter.

Speaker Change: Capacity on that is it's an ABL, so it ranges up and down but.

Speaker Change: It will lead to $60 million of capacity generally.

Scott Thanisch: So we do feel like we've got the dry powder we need to take on projects, mobilize, and fund project cash flow. As for just further growth of the business, we're in constant dialogue with financing partners, and our lender always stands ready to help, as they say. As we look to acquire equipment, we expect that we could potentially borrow some more money to do that. We think that those will be high ROIC investments.

Speaker Change: So we do feel like we've got the dry powder, we need to take on projects mobilize and and kind of fun.

Speaker Change: Fund project cash flow.

Speaker Change: As for kind of just further growth of the business.

Speaker Change: Constant dialogue with financing partners.

Speaker Change: Our lender has always stands ready to help as they say.

Speaker Change: As we look to acquire equipment.

Speaker Change: We expect that we could potentially.

Speaker Change: Borrow some more money to do that.

Speaker Change: Those will be high <unk> IC investments.

Speaker Change: Yeah.

Speaker Change: Okay, great. Thanks, guys.

Brent Thielman: Great.

Brent Thielman: Thanks, guys.

Speaker Change: Thanks Brent.

Speaker Change: Again, if you have a question. Please press Star then one.

Operator: Again, if you have a Press Start.

Speaker Change: The next question comes from Liam Burke with B Riley FBR. Please go ahead.

Liam Burke: This question comes from Liam Burke with B Reilly FBR, please go ahead. Thank you.

Scott Thanisch: Good morning, Travis. Good morning, Scott. Morning. I guess, Scott, the operating cash flow or negative cash flow was $2.4 million versus $22 last year. Understanding that first quarter is typically a weaker cash flow quarter and there's variability based on project flow, but is this a trend when you're considering you had 17% sales growth and much better operating cash flow? Is this a trend that we could expect as you balance through the four quarters of this year? In terms of increasing cash flow, as our top line increases, absolutely. We, you know, the improvement on a year-over-year basis is probably a little larger this quarter because the first quarter was somewhat adversely affected in cash flow from investment in the Hawaii project.

Liam Burke: Thank you good morning, Travis Good morning, Scott.

Speaker Change: Good morning.

Speaker Change: I guess, Scott the operating cash flow or.

Speaker Change: Negative cash flow was $2 4 million versus 22 last year understanding that first quarter is typically a weaker cash flow quarter and theres variability based on project flow, but.

Speaker Change: Is this a trend when you're considering you had 17% sales growth.

Speaker Change: And much better operating cash flow is this a trend that we could expect as you balanced.

Speaker Change: So in the fourth quarters of this year.

Speaker Change: In terms of increasing cash flow as our as our topline increases absolutely.

Speaker Change: We are.

Speaker Change: The improvement on a year over year basis is probably a little larger this quarter because the first quarter was somewhat adversely affected in cash flow from the investment investment in the Hawaii project.

Scott Thanisch: But yeah, we expect to continue to see improving cash flow, and over the course of this year, we expect our cash flow will turn positive. Okay, great. You talked about tariffs, government regulation, not affecting the revenue or the bidding process. You talked about existing supplier relations being stable.

Speaker Change: But.

Speaker Change: Yeah, we expect to continue to see improving cash flow and.

Speaker Change: Over the course of this year, we expect our cash flow will turn boss.

Speaker Change: Okay great.

Speaker Change: Talked about tariffs government regulation not affecting the revenue where the bidding process you talked about existing supplier relations being stable.

Scott Thanisch: When I look at input costs, and eventually your pre-buying or pre-investment is going to run its course, do you anticipate any kind of pressure on input costs as we go through the year or into next year? I mean, we'll be we'll be as we bid projects, we'll be bidding, you know, we do expect costs to increase on on steel and other and other products that we're buying. And as as prices increase, and as we bid projects, we're bidding the higher costs in there. So there will be, you know, bids will increase across the board. But, you know, as far as our risk goes associated with increasing costs, our approach to mitigating the risk is not going to change.

Speaker Change: When I look at input costs and eventually your pre buying or pre investment has got to run. Its course do you anticipate any kind of pressure on input costs as we go through the year or into next year.

Speaker Change: I mean, we will be will be as we bid projects will be bidding.

Speaker Change: We do expect cost to increase on on steel and other and other.

Speaker Change: Products that we're buying.

As prices increase and as we bid projects, where we're bidding the higher costs in there so there will be.

Speaker Change: This will increase across the board.

Speaker Change: But as far as our risk goes associated with increasing costs.

Speaker Change: Our approach to mitigating the risk is not going to change where they're going to.

Scott Thanisch: We're either going to, you know, have a contingency in place or manage it in other ways to protect ourselves.

Speaker Change: No.

Speaker Change: I have a contingency in place or or managed it in other ways to protect ourselves.

Speaker Change: Great.

Liam Burke: Great. Thank you, Travis. Thank you, Scott.

Speaker Change: Thank you Travis Thank you Scott.

Operator: Thanks, Lee. This concludes our question and answer session.

Speaker Change: Thanks Lee.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Travis been CEO for any closing remarks.

Travis Boone: I would like to turn the conference back over to Travis Boone, CEO, for any closing remarks. I'd like to close the call by thanking our team for working safe every day, working out in the elements, in the mud, in the rain, in the wind, in the dirt, and they work really hard, and without them doing their jobs every day, we couldn't do ours. So really appreciate our teams out in the field working every day.

Speaker Change: Thanks.

Speaker Change: I'd like to close the call by thanking our team for working Safe every day.

Speaker Change: They are working out in the elements.

Speaker Change: The mud in the rain and wind and the <unk>.

Speaker Change: Dirt.

Speaker Change: And they work really hard and without them doing their jobs every day, we couldnt do are so really appreciate our teams out in the field working everyday.

Travis Boone: Really appreciate our partners and clients for great relationships and continued trust, and also thank our investors for their support of our business. Thank you.

Speaker Change: Really appreciate our partners and clients.

Speaker Change: For great relationships and continued trust and also thank our investors for their support of our business.

Speaker Change: Thank you have a good day.

Have a have a good day.

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

Speaker Change: Okay.

Speaker Change: [music].