Orion Group Holdings, Inc. Q4 FY2025 earnings call

2025 was a year of strong operational execution and strategic advancement. In December, closed a new $120 million senior credit facility, purchased a derrick barge, and completed the acquisition of JE McCamus. Integration of McCamus is well underway. Booked just over $763 million in new contracts and change orders in 2025 with a 0.9 times book to bill. Pipeline at $23 billion, including $1.4 billion from McCamus. Marine opportunity pipeline increased to over $19.4 billion, concrete opportunity pipeline to over $2.4 billion. Data center work in concrete is a highlight with 46 projects completed or in progress.

In 2025, Marine segment generated revenue of $545 million, a 4.5% annual growth, and more than doubled its adjusted EBITDA to $56 million for the year, representing a 10% adjusted EBITDA margin. Concrete segment's revenue increased 12% annually to $307 million, and it reported an $11 million loss in adjusted EBITDA. The contribution-adjusted EBITDA margin for concrete, excluding corporate, was 4.5% for the year.

2026 revenue expected in the range of $900 million to $950 million, a 9% increase from 2025 at the midpoint. Adjusted EBITDA in the range of $54 million to $58 million, a 24% increase from 2025 at the midpoint. Adjusted EPS in the range of 36 cents to 42 cents, a 56% increase from 2025 at the midpoint. Capital expenditures in the range of $25 to $35 million consistent with last year.

Ongoing conflict involving Iran and the Middle East, which remains very fluid and could impact business and markets; potential delays in customer decisions due to factors like tariff-related uncertainty and government shutdowns which may affect backlog and operations.

Q: In Q4, you talk about some of the delay of the revenue recognitions for awarded projects. And could you talk about the impact your reported sales and margins in Q4? And could you specify which segments or projects, experiences that delays and quantify the revenue and margins impact in 2026, please?

A: From a 2024 perspective or from a Q4 perspective, the fourth quarter came in generally in line with what we expected. We didn't see a lot of softness in the quarter coming generally kind of in line with what we were targeting and in line with the guidance that we had set out for the full year. I'll say that things do typically in construction, they will move around a bit in terms of just timing and cadence. And you probably saw some of that in terms of just margin profiles for the individual segments. But from an overall perspective, things came in in line, including from a corporate perspective. There were a few, there were some opportunities that slid out of Q4 that we were pursuing. But that's not on the, that's more on the kind of pipeline side of things.

Q: Could I double click on your commentary about the margins, Alison, if you could talk about the 2026 outlook by segment in terms of the margins expansions from 2025 to 2026?

A: We are continuing to expect that we will have modest margin expansion across the business, both from the favorable impacts of blending McCamus into the marine business. As you probably well recall, McCamus operates at a meaningfully higher margin than the rest of Orion. So we are expecting to see some favorable blend associated with that acquisition and incorporation of their results. And then from a concrete perspective, we do expect that concrete will deliver margins in the mid-single digits. For the year in 2025, concrete delivered margins of right around 4.5%. And we do expect to nudge that up in 2026, just as a function of some favorable demand signals that we're seeing in terms of the work that we're bidding on, the work that we are winning and bringing into backlogs. as well as just continued growth and scale, which benefits our concrete business pretty meaningfully.

Q: If I may squeeze one more on a data center, Travis, you talk about data centers. Could you quantify the impact in 2026 in terms of the revenue compositions as well as some competitive advantages in data center projects for Orion, please?

A: I'm not sure if I'm ready to point to the fence yet on where we're going to land with data centers. As Allison just mentioned, we're seeing a large amount of opportunities that are lining up well with our capabilities and relationships and all of that. We've got We did start, as I mentioned, we've started doing site civil work on some of these data centers, which has been very well received, and we're doing well with that work. So I think that'll expand and continue. And I think we're going to keep seeing just a large amount of data center work happening. I mean, right now it's 40% of our concrete business is data centers. I expect that to probably go up a little in the next year.

Q: Yeah, good morning, Travis and Allison. Thanks for taking the questions. Maybe first for me, just on the pipeline, you know, can you talk a little bit more about that? Sounds like, you know, the expansion pretty broad-based. You know, any thoughts on kind of timeline, you know, conversion to orders? I know you've had a slide that kind of has laid out, you know, timing potential there. And then just, you know, maybe talk about the kind of market and margins you're seeing, you know, quotes and then kind of backlog wise.

A: So the pipeline is, um, has expanded some of that then because things have slid, right. Um, so it's kind of, it's building, but there's also some things sliding, which makes it, uh, get, look like it's getting, uh, even more big, but it's, it's, uh, we've got quite a few near-term opportunities is in 2026, um, that are, you know, a hundred million plus projects, uh, more, let's say more than a dozen, uh, very real, uh, opportunities that are, you know, over, over a hundred million in, uh, in size, which are, you know, gives us a lot of confidence, even though our backlog is down. Um, we're, we're one job away. One project went away from, from the backlog being in, being in good shape. So we're, we're not worried. We're, we're, we're, we're nowhere near, uh, getting worried. We're, we're in good shape. Uh, we have, we have all the opportunities in front of us and, uh, Like I said, we're one win away from being just fine on the backlog for our marine business. And our concrete business pipeline is growing and looking really strong. As you may recall, our concrete pipeline is typically fairly small because there's a lot of book and burn activity. and its private sector opportunities, which are not super visible, you know, long in advance. So we're excited to see the concrete pipeline creeping up as well as the marine pipeline continuing to expand. And then, you know, outside of McCamus, are you on margins kind of in the, you know, as you're going to bid projects? Is that still, you know, how's that looking? On the McCamish side of things, nothing has changed as far as, you know, margins, bid margins and things like that. They're going to continue pursuing projects as they have. And on the rest of the business? And the rest of the business. Things are looking good. We're not seeing any, like, downturns or anything like that. In fact, I would say more the opposite in several of our markets.

Q: Good morning, Travis and Allison. Thanks for taking my call. Just a couple of follow-up questions, maybe. But just looking at the marine side, obviously, pipeline is growing. You said some of the projects pushed to the right, per se. But are you hearing anything, or do you have any anecdotal commentary on – maybe once some of these projects may come to fruition, obviously they're quite large, complicated. We've had a government shutdown and then we have, you know, escalating conflict in the middle East, but, uh, all that said and done, I'm just curious as to maybe some of the anecdotal, uh, uh, items that you're hearing on those opportunities.

A: So, uh, I mean, we're bidding one of them. We're bidding a nice project this week. Um, There are things moving forward now. I guess there's not like a theme, if you will, of the different reasons that they've moved. Some of them move for different things, but they are just shifting to the right. It's not a never-ending shift to the right. They are actually coming to roost at some point, like the one I just mentioned. That was originally supposed to be last year, and we're finally bidding it this week. So there are projects that are coming through. We're bidding quite a few jobs in the next six months, pretty nice ones, along with the normal kind of run-of-the-mill projects that we always go after. But I don't know if I answered your question.

Q: Thank you, Travis and Allison. Travis, your historical win rate on bids sort of is in that mid-teens range. Is there any reason to believe that historical win rate will be any different going forward? No, we saw that win rate kind of between from 24 to 25, it tipped up, even though our, you know, even though our backlog was down, our win rate was up. So it tells you that things were sliding. So we have seen it head in the right direction just a little bit, a percent or two. And I don't expect it to change much. I mean, it might continue to go up a little, but I don't expect it to be any large jump up or down on the win rate. We kind of like to be in that let's say 15 to 20% win rate sort of range. And that's where we are and feel pretty good about where we are. And then as it relates to your adjusted EBITDA guidance of 54 to 58 million, can you bridge that delta from the 45 million you just reported and help us to understand sort of what's organic versus inorganic? And as it relates to sort of the organic Kind of how that's broken out by segment.

A: Sure. I'll give some high-level commentary. I would say that we are always gearing the business toward what we view as good organic growth. So that is like first and foremost really what we are doing to position the company is to invest in organic growth. Organic growth in 2026 is good. I would say it's probably, just in terms of stepping back, I'd say it's in the kind of upper single to low double-digit growth rate from an organic perspective, just because of some of the opportunities that we see moving a bit to the right, specifically in the marine business. I do think that concrete will grow very favorably in 2026. We have signals that that is happening and that it's real. But for Marine, those opportunities, they just take time to get through the pipeline, to get through all of the machine associated with bringing those opportunities to market by our client and then ultimately getting those things awarded. So some of those things that we expected we would see in 2026 have moved a bit to the right. That being said, we do expect that our marine business will continue to grow in 2026. Will it be at the dynamic growth rates that we are anticipating with some of the many things that are coming to market in 26 and 27? Probably you'll see that, I would expect, over the midterm, but that is not today built into our 2026 guidance. What I will say is I'll say that also from a McCamus perspective, that we have good line of sight into what we expect McCamus will deliver, which is right in line with kind of what we set out in the call back in February. They come with a very highly qualified, very reputable, very credible group of people. It's a phenomenal team. It's a phenomenal leadership organization there. We're very excited about bringing them into the portfolio. And we're also very excited about some of the projects that they have won just recently. So they continue to perform. They continue to perform well. And we'll look forward to just bringing them into more of our opportunities and our projects to make our pursuit teams even stronger as we look ahead.

Q: Thank you, Travis. This concludes our question and answer session. I would like to turn the conference back over to Travis Boone for any closing remarks. Thank you all for joining us today. We look forward to talking to you again soon. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

A: Thank you all for joining. See you soon.