Q2 2025 Orion Group Holdings Inc Earnings Call
To the Orion group Holdings, second quarter, 2025 Financial results conference call.
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Please note this event is being recorded. I would like now to turn the conference over to Margaret Boyce, Investor Relations for Orion. Please go ahead.
Thank you, operator. And thank you all for joining us today to discuss Orion group Holdings. Second quarter, 2025 Financial results. We issued our earnings release after market last night, it's available in the investor relations section of our website at Orion group Holdings. Inc.com, I'm here today, with Travis bone, chief executive officer and Allison, Vasquez Chief Financial Officer. On today's call management will provide prepared remarks and then we'll open up the call for your questions.
Before we begin, I'd like to remind you that today's comments will include forward-looking statements under the federal Securities Law or is looking statements are identified by words. Such as will be intended. Believe expect anticipate or other comparable words and phrases statements that are not historical facts are full
Looking statement.
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 10K.
I'd also like to let you know that a Reconciliation of unburdened, Eva death. For our segments is available on the investor section of our website at Orion group holdings.com.
With that. I'll now turn the call over to Travis Travis. Please go ahead.
Thank you Margaret and good morning everyone and thank you for joining our second quarter 2025 conference call.
Before we cover the financial results, I'd like to introduce our new CFO, Callison bosquez who joined us last month.
Allison has deep leadership, experience across finance m&a and the construction industry with several Fortune, 500 public companies.
With the first phase of our transformation largely complete.
Allison brings the right blend of financial discipline and strategic insights to help guide us through the next phase of our growth strategy.
After my market overview, I'll turn it over to Allison to discuss our financial results.
Onto the quarter.
We've delivered another strong performance in the second quarter, with revenue increasing 7% to $205 million and adjusted EBITDA doubling to $11 million from the second quarter last year.
On a sequential basis, Revenue grew 9% and adjusted Eva increased 34%.
Our results were primarily driven by new contract Awards in both segments and reflect our commitment to discipline profitable growth.
we continue to see strong demand across the markets, we serve as evidenced by our backlog for both operating segments growing over the first 6 months of the year,
our opportunity applies fine also Grew From 16 billion dollars last quarter to 18 billion dollars today.
Fueled by diverse growth drivers with multiple sources of public and private funding.
Which gives us continued confidence in our plans for growth.
We remain focused on our business development strategy, that prioritizes mission critical projects with good margins for high-quality clients.
In our marine segment, we see robust opportunities resulting from the US Navy strategy in the Pacific.
Port expansions and maintenance and Costa, Rehabilitation and energy infrastructure.
Our pipeline remains robust with several large scale opportunities under active Pursuit. That represent potential work over the next couple of years and align well, with our strategic growth objectives.
Overall, we are encouraged by the breadth and quality of the prospects ahead and momentum remains strong.
In the quarter, our marine business was awarded the contract for an export dock replacement project in the Pacific Northwest to remove and replace an existing timber berth structure and replace it with a new concrete structure supported by large diameter steel pipe piles.
This project is expected to be completed in the third quarter of next year.
Estimated to begin later. This quarter and continues our long history of providing maintenance strategy for the Port of Tampa Bay,
The second award is for a critical Port, infrastructure Improvement project to support the rapid population growth, in the Tampa region and increasing demand for construction in both material, both materials.
In our concrete business, we have strong opportunities with an expanding base of clients.
Data. Center investment from hyperscalers and AI rates remains, exceptionally strong.
While we're experiencing increased competition on data centers from New Market entrance. In the concrete business, we continue to win a healthy share of opportunities coming to Market by consistently exceeding client expectations.
Particularly in schedule quality and safety performance.
Our pipeline is diverse and in the quarter we were awarded contracts for new projects spending energy consumer goods and transportation.
These projects are expected to commence in the third quarter of 2025 with an estimated duration of about a year.
Last year, we expanded into Florida with minimal upfront of investment, and the results have been very encouraging.
Both of our operating segments are now actively executing projects across the state of Florida.
Building on that momentum. We recently opened an office in Phoenix to capitalize on continued data center Investments and other commercial growth in Arizona.
As we look ahead, we are enthusiastic about our long-term growth opportunities, which are driven by multiple concurrent sources of public and private funding.
The recent move to our new headquarters in Central, Houston has brought our teams across Houston together, under 1 roof, fostering stronger, collaboration, and a unified culture.
With the best operations teams in the industry and outstanding safety record and high barriers to entry that limit competition. We are well, positioned to capitalize on a significant demand for marine infrastructure and concrete construction projects.
The political winds are blowing in our favor with President Trump and the federal government focused domestically on reshoring. Manufacturing and ship building in the US and internationally on investing in military infrastructure. In the Pacific, over other geopolitical regions.
In addition, we believe that the recently passed Big Beautiful Bill will have several notable positive impacts for our marine and concrete businesses.
Specifically, the bill appropriates 4.4 billion for shoreside infrastructure, including ports, maintenance facilities, and training centers.
It also includes wide. Ranging benefits for our energy and Industrial clients to make their projects more financially compelling.
For example, the bill includes Provisions to lower operating costs expedite permitting and minimize taxes.
Also, last week's executive orders were intended to further American AI dominance by incentivizing fresh investments, in new data centers and related infrastructure.
Combined, these tailwinds are expected to benefit the bookings environment over the next several years and will serve as a significant catalyst for our long-term growth.
I'll now turn it over to Allison to discuss the second quarter financials Allison.
Thanks, Travis. I'm delighted to be here. There's a real sense of momentum throughout the organization. And I've been thoroughly impressed by the caliber and the commitment of the team top to bottom. The people of Orion are aligned and energized around our strategy to be the premier specialty construction partner delivering with predictable excellence.
It's clear that a great deal of work has gone into professionalizing, both front and back offices, and the team is built a solid foundation. Maturing the organization such that today, we are well positioned to pursue disciplined growth in attractive, expanding markets.
Broadly, I see tremendous potential for Orion to capitalize on favorable ta Tailwind across multiple Mission critical themes.
Infrastructure modernization, AI investment defense, and energy security, great people, differentiated capabilities. Happy clients and healthy in markets. What's not to love.
And I definitely know that I made the right choice enjoying Orion.
I now will turn to the second quarter results.
As Travis highlighted, we delivered an excellent second quarter with consistent executions that translated to topline growth, improved margins, and meaningful earnings growth on both a GAAP and adjusted basis.
I'll start with the Consolidated results where revenues increased 7% over 2q 2024 and 9% sequentially to 2005 million in the quarter.
My new bookings and increased volumes across both of our business segments.
Gaap net income for the second quarter was 800,000 or 2 cents per share and adjusted. Net income was 2.7 million or 7 cents per share.
Adjusted even doubled to 11 million in the quarter compared to 2q, 24 with margins, improving 240 basis points to 5.3%.
The overall increase in profitability is primarily attributable to strong performance across both segments that I’ll touch on momentarily, as well as moderation of G&A, reduced borrowing costs, and some benefits from taxes coming through the quarter.
In this quarter, we used about 5.6 million dollars of cash for operations. Primarily attributable to working capital timing on a couple of large projects and we used about 6 million of cash for investing activities.
We ended the quarter with approximately 31 million of net debt.
From a backlog perspective, we added approximately 111 million in new Awards and change orders in the quarter as Travis mentioned earlier.
And combined with a particularly strong first quarter, we've reported backlog of almost $750 million, which is up modestly for the first half of 2025.
From a segment perspective Marine revenues, increased 3% over 224 and 6%, sequentially to 135 million in the quarter and Marine adjusted ebit. Dog grew to 12.7 million for the quarter and 9.4% margin for the Marine operations.
The Marine EBA dollar and margin growth from last year are primarily attributable to efficiently closing out, projects in 2025 and project delays in 2024 that did not recur in 2025.
For the concrete segments, revenues increased 4 14% over, 2q 24 or 14%, sequentially to 70 million in the quarter and concrete adjusted. Ebit da was a 1.7 million loss compared to 4 million dollars of profit in 2024.
The Evita reduction year-over-year is primarily attributable to favorable project. Closeout benefits in 2024 that did not reoccur in 2025.
It's worth noting that our reported segment. Evita margins are fully burdened with both segments, sgna and corporate sgna.
If we exclude corporate SG&A from the operating segments, Concrete, Standalone Contribution, and EBITDA margin would have been right at 5%, and Marine would have been 13%, both generally in line with management expectations.
Moving on to our financial Outlook. We're pleased to reaffirm our full year. 2025 guidance of Revenue, in the range of 800 to 850 million adjusted Eva saw in the range of 42 to 46 million adjusted, EPS in the range of 11 cents to 17 cents and capex of 25 to 35 million.
Now, back to Travis to wrap it up.
Thanks Alison.
Who's delivered with a strong quarter of Revenue, evida and EPS growth, and our tracking nicely with our 2025 guidance.
We have a healthy pipeline of private and public opportunities to support, multiple enduring growth teams.
The recent consolidation of our offices to our new headquarters has brought our teams together under 1 roof, fostering stronger, collaboration, and a unified culture.
And we have the right team to execute on the next phase of our strategy.
Finally, I want to thank all of our employees for continuing to execute safely, and with predictable excellence,
Andor shareholders for continuing to Believe in Us.
Thank you for attending our earnings call and I'll now turn it over to the operator for question and answers.
We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star. Then to at this time we will pause momentarily to assemble our roster.
Our first question comes from Aaron Spocha of Craig Hollow.
Please go ahead.
Quote to orders. Uh, thanks.
Yeah. Good morning, Aaron. Uh, we
I think part of the uh part of the driver on the growth of of the the pipeline we did have uh it was a little bit lighter of a of a quarter for for bookings in uh in the second quarter from from the first quarter. And I think some of some of the the slide of and that's
part mostly attributable to private sector clients that
Maybe, uh, tap, tap in the brakes just a bit with uncertainty, with economic, um, things or or tariff situations, whatever it might be that, um, made some of the private sector. Like I said, sort of tap the brakes, um, on awarding some projects. So I think there was, there was a, a shift, a shift from the second quarter, kind of into the the back half of the year as kind of confidence gets regained. And and uh, people start, uh, maybe you know, whether it's um, interest rates, drop things like that. I think everybody's kind of not everybody. But there are. There are some clients that are
Uh, holding off on making making big decisions on on awarding projects until uh, they see. See some, uh, some of the ups and downs slow down as well as, uh, you know, maybe see interest rate relief and that sort of thing.
All right, I appreciate the call over there and then maybe second on concrete, you know, can you just maybe give a little more color on the data center opportunity? What that pipeline looks like and and growth Outlook there and then just on margins, you know sounds like some kind of close outs and and you know some of the corporate burden but just maybe talk about the confidence and and hitting some of the the targets you've laid out for for high single digit margins there.
Yeah um I guess, first on the on the high single digit uh margins when we talk about that for for concrete, that's, you know, not necessarily immediate term, that's more in the longer term. So keep that in mind. Um, but as far as the data center, kind of Pipeline and and activity there, it's still, uh, still fairly fairly hot. Um, we haven't seen it. We haven't seen it slowed down a lot. What we have seen is a few new entrance into the market, as I mentioned on the call, uh, that, you know, adding adding some additional competition. But we're, uh, we're still, we're still feeling really good about about, uh, our opportunities are our Partnerships with with, uh, General Contractors and, uh, and our ability to continue to to do data center work.
All right, and then just maybe last on, you know, the balance sheet and and cash flow. Um you know how how are you thinking about free cash flow kind of conversion in in the back half? Sounds like there's some working capital in the second quarter. Thanks.
Thanks for the question, Aaron we there definitely was some use of capitals in the first half of 2025, I would say that it's um, a bit modulated or a bit improved over what we saw last year, but we are seeing some good indications, um, just in the month of July. We've seen some good traction from a collections perspective. Um, it says, some reverting back to the norm from a balance sheet and working capital perspective, uh, we also ended July or we're ending July with, um, you know, pay down of the borrowings that we had on the revolver. So that's nice to see in terms of, uh, just strengths of the overall. Um, balance sheet in working capital, Focus cross the organization. Um, and we are seeing some improvement in that area. So we do expect the back half of the year um, to be good.
All right, thanks for taking the questions. I'll turn it over.
Thanks Aaron.
The next question comes from Julio. Romero of Sudi & Company. Please go ahead.
Thanks, good morning, Travis and Allison. Last quarter, I think you mentioned four large pursuits with decisions expected in the next couple of months. I wanted to ask if you had any additional visibility into those specific pursuits and the decision timeline for those particular projects.
Yeah, those uh, those that I referred to were all uh, part of when I in the last question when I was saying there were some uh, some delays on decisions when the private sector All 4 of those uh slid a little out of the second quarter. Uh 1 of those has been submitted and we expect here in the next month or so. And then a couple of them are in will be later in the in the third quarter. So
Okay, great. And just the does the new tax reform guidance passed in July? Does that help at all with regards to customer decision-making? Going forward?
Does that help your customers with regards to kind of yay. Nay on decision-making for some of these projects.
Uh, I think it I think it will. I mean, I think, you know, there's like I said, there's a uncertainty and I think the more certainty that customers get the more likely they are, they are to make the decision to make Capital Investments. So it's, uh, to me, it's all about comfort and, and, uh, Clarity and, and certainty on on the variables that have been kind of presented to everybody over the last 6 months. So, um, the more, the more comfortable people feel with, uh, that they know what, what the future holds then. I think, you know, the pocket books open up and projects start going. Yeah. And I'll add to that by just saying that that the bill absolutely makes permitting easier. Uh just from a deregulation perspective, there are definitely some tax benefits to make some of the Investments, a lot more financially attractive, um, quicker. Uh, so it does help from an Outlook perspective as our clients are thinking through what investments they make and where um it will help them expedite. Some of those decisions by making those Capital decisions um a little more.
More financially feasible in the near term.
Had it very helpful and then 1 more. If I could, just on the concrete segments, um, I know you, you spoke of a little bit about the competitive environment and some new entrance coming in, um, especially on the data center side, can you maybe just talk about Orion and how you're positioning yourself to win as that environment has evolved?
Yeah, I mean, the, the good thing about, you know, the, the relationships we have with the general contractors, that do a lot of data center work, we've got deep Long relationships. We've done a large number of of data center projects. Um, well, over 30 projects that we've that we've either completed or are in the process completing with, you know, very, um, very strong. Um, you know,
Great work on the safety side and the quality side meeting schedules. All the all the things that that owners and general contractors care about on the, on the data centers. Uh, so we've we've we're still in in great shape from the relationship perspective and and proof of proof that we can we can deliver. And so that that
Uh gets us a lot of a lot of uh, credibility and uh, you know, as we see some of these new entrance come in, I think they'll, they'll they'll find their they'll either fail and find their way out or, uh, they, you know, I'm, I'm not concerned about it, I guess. Um, I wanted to point it out because it's, it's, uh, just in the interest of transparency. But we're still, uh, we're still feeling feeling really good about,
data centers and, and the number of opportunities in our in our relationships,
Very helpful. I'll pass it on. Thanks guys. Thanks Julio.
Our next question comes from Brent, Tillman FDA Davidson. Please go ahead.
Hey, great thanks. Uh, good morning.
Morning.
Um,
Yeah, I I got the 1 to pick a bit more on, what the major drivers were to the strong. Uh,
Bottom line performance. That Marine this quarter.
What sort of carries for for you, in terms of projects into the second half? How much do you still have to go out and get, I guess ultimately to drive this? Um,
Yeah, kind of the reaffirmed guidance here for that business group. Sure, sure.
Sure, I think the the biggest drivers we've got multiple good sized projects going at once. Um, kind of the, uh,
Just beyond this Beyond just, you know, kind of last year we we talked about 2 2, major projects that were real contributors on the Marine side that was, you know, the Hawaii project with at Pearl Harbor, as well as the Grand Bahama Shipyard. Well, we've got those 2 going, plus, we've got multiple other fairly large projects that are, that are underway and, uh, contributing a lot to the kind of to the mix here. So it's, it's more than just a a tale of 2, 2 projects. It's multiple projects contributing, um,
Strong delivery by our teams. Uh, good, good discipline and focus on the bids and and bidding bidding at the right numbers. And uh and I think, you know that's going to that's going to continue. As we as we see, all of these opportunities coming coming in front of us in the next, you know, 6 to 12. 18 months.
And and Travis presumably who I am Bahamas.
And into next year but they're they will they will start winding down but we've got, you know, several other.
Good projects that are that are contributing.
Yeah, and I'll say I'll just add to that by saying that from a work under contract perspective. Uh, as we enter the second, half, the work under contract Outlook is quite good. It's Travis mentioned in his opening remarks. Um, and then also from a margin perspective that the margin performance through the first half of the year has been, you know, right in line with what we expected, um, right in line with the guide. And we expect to see just a continuation of the consistent delivery uh both, you know, Top Line and the bottom line from an overall perspective.
Okay.
Um, I mean, I know there was, um, some pretty atrocious weather and some parts of your concrete business. This. This last quarter, I guess is the, the sunshines again. Um, maybe you could just talk about, maybe, maybe the pick up, you're seeing and, and that business group here this summer,
Definitely, let the record know that you brought up whether or not us.
Uh, all I hear about Travis.
Yeah, it is a, it was definitely a factor in, uh, actually the first half of the year, uh, we've had a had a tough year for concrete. Um, lots of weather in in Texas, and in Florida, um, for, for a concrete guys, which has been challenging to overcome, uh, and it has has impacted, has, has impacted us on the revenue side of things.
You know, we're we're, uh, optimistic that the back half of the year, whether won't and typically the back half of the year. The weather is better in um in uh, these areas generally speaking. Not not to uh, throw out the, you know, the chance of a of a big name storm or whatever. But generally speaking the back half of the year, the weather's better and and uh, we're expecting to kind of recover. Some of the Lost Revenue in the first half in the back, half in the concrete business.
Okay. Um, maybe maybe just 1 more um the the federal military kind of Naval opportunities are are vast. I know. Um,
Is the update. Travis on, on timing. Maybe I I know is is
Normal for these things to move around but you know what? What are the award timing opportunities here? For those things you're tracking and particularly in the Pacific
Yeah. We're we're definitely seeing some uh, some sliding around as some of these these uh Navy opportunities. They they have been, uh, seems like they they they tend to slide to the right and take longer to award than than we would think they should. Um, and we are we are seeing more of that. Um, as far as, you know, expected timing, I don't anticipate that. Well, I'm I'm pretty confident. We won't get awarded anything this year. If there won't be much. Uh, in fact, I as of the, as of last night, the update
so I don't expect there to be projects, awarded um,
This this fiscal year, um, hopefully, uh, by mid next year, we'll see. See a couple of those things come come in. But it'll be, uh, it'll be next year at best.
Okay, and sorry. Oh absent that
Do you feel pretty comfortable? There's a pretty good opportunities, to build the backlog and did the, the end of the year, um, because the private side, hesitation give you a pause on that. Maybe that
if you could just comment on that.
Yeah, there's there's still a ton of opportunities Brent. Uh, it's on. It's on the private side as well as public side. Um, across the business that we feel. We still feel really good about, you know, building building backlog. Um, it might, you know, maybe it's, we're not quite as ambitious as we were early in the year with, with kind of having a quarter of of uh, of slower slower opportunities. But uh, definitely still optimistic about the year and build my backlog this year.
Okay, great, great. Thanks.
As a reminder, if you would like to ask a question, please press star. Then 1 on your telephone keypad. Our next question comes from Laura, Meyer, from B Riley securities.
Please go ahead.
Hi, Travis and Allison, good morning. Um, my first question, is you mentioned, developing relationships with strong Partners in data centers? Are you seeing opportunities to expand these relationships into other verticals?
Um, higher ed, as well as uh, some kind of more commercial commercial type industrial projects. So definitely, we've been able to leverage those relationships and other types of opportunities.
Great. Um and then 1 more um are your order wins coming from market growth or more taking share from competitors. And how sustainable is this competitive advantage?
Are you referring to concrete or marine or all of the above?
Um, I'll see about Travis. Okay. Uh, I would say we're...
um,
It's probably a mix a little, um, where we're? We're, uh,
taking it from taking it from competitors and as well as, uh, having a
A better approach to to win in the work. As far as, you know, putting a lot of effort into upfront development of the uh of of our bids and our proposals and and uh doing the work up front necessary to have a better, have a better mousetrap so to speak to when the when the project.
Great, thanks.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Travis bun for any closing remarks,
Just want to thank everybody for joining, appreciate everybody. Uh uh sitting through our call today as well as uh also want to um
As as always, thank our guys out in the field working in the elements day in and day out to uh, to help us, uh, deliver our business.
Have a good day.
This concludes our presentation. Thank you for attending today's conference. You may now disconnect.