Orion Group Holdings, Inc. Q2 FY2025 earnings call

• Introduced new CFO Alison Vasquez, who joined last month with finance, M&A, and construction experience.
• Second quarter revenue increased 7% to $205 million, adjusted EBITDA doubled to $11 million. Sequentially, revenue grew 9% and adjusted EBITDA increased 34%.
• Backlog grew with $111 million in new awards and change orders, and backlog reached almost $750 million. Opportunity pipeline grew to $18 billion from $16 billion.
• Marine segment had projects like an export dock replacement in the Pacific Northwest, maintenance dredging contract with Port of Tampa Bay, and port infrastructure improvement. Concrete segment had contracts in energy, consumer goods, and transportation, and expanded into Florida with successful results, recently opening an office in Phoenix.
• Benefited from the One Big Beautiful Bill Act and executive orders, which provide infrastructure funding, permit expediting, tax benefits, and support for data center investments.

In the second quarter, the Marine segment had revenues of $135 million, which was a 3% increase from the second quarter of 2024 and a 6% sequential increase. Marine adjusted EBITDA grew to $12.7 million for the quarter, with a 9.4% margin. The Concrete segment had revenues of $70 million, a 14% increase from 2Q 2024 and a 14% sequential increase. However, Concrete adjusted EBITDA was a $1.7 million loss compared to a $4 million profit in 2024. Marine revenue contributed approximately 65.85% to the total revenue ($135M / $205M), while Concrete contributed approximately 34.15% ($70M / $205M).

• Reaffirmed full-year 2025 guidance: revenue in the range of $800 million to $850 million, adjusted EBITDA in the range of $42 million to $46 million, adjusted EPS in the range of $0.11 to $0.17, and CapEx of $25 million to $35 million.

• Private sector clients may be hesitant due to economic uncertainty and tariff situations, potentially delaying project awards.
• Increased competition in the Concrete segment, especially in data centers, from new market entrants.
• Weather impact on the Concrete segment in the first half of the year, affecting revenue.
• Potential delays in Navy contract awards, with timing sliding to the right.

Q: Maybe first for me, good to see the pipeline grow to $18 billion. Can you just kind of talk about some of the key drivers of the expansion there? And then just thoughts on converting some of that to orders in the back half. Are you seeing any slowing or extending of kind of quote to orders?

A: Travis J. Boone said part of the driver was a lighter booking quarter in Q2 from Q1, with private sector clients possibly tapping the brakes due to economic uncertainty. He mentioned confidence may return as interest rates drop and uncertainty slows.

Q: Last quarter, I think you had mentioned 4 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?

A: Travis J. Boone said the 4 pursuits slid out of Q2, one submitted and expected in the next month, others later in Q3.

Q: I guess I wanted to pick a bit more on what the major drivers were to the strong bottom line performance at Marine this quarter. What sort of carries forward for you in terms of projects into the second half? How much do you still have to go out and get, I guess, ultimately to drive this kind of the reaffirmed guidance here for that business group?

A: Travis J. Boone said multiple good-sized projects are ongoing, not just a few major ones, and there are still opportunities to build backlog in the private and public sectors.

Q: 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?

A: Travis J. Boone said yes, leveraging relationships with general contractors in data centers to work on medical, higher ed, and commercial industrial projects.

Q: Are your order wins coming from market growth or more taking share from competitors? And how sustainable is this competitive advantage?

A: Travis J. Boone said it's a mix of taking share from competitors and having a better approach to bidding, leveraging strong relationships and track record of quality work.