Orion Group Holdings Inc.
10/29/2025 | Press release | Distributed by Public on 10/29/2025 14:47
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Unless the context otherwise indicates, all references in this Quarterly Report on Form 10-Q to "Orion," "the Company," "we," "our," or "us" are to Orion Group Holdings, Inc. and its subsidiaries as a whole.
Certain information in this Quarterly Report on Form 10-Q, including but not limited to Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), may constitute forward-looking statements as such term is defined within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical facts, including those that express a belief, expectation, or intention are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, our pipeline of opportunities, conversion of backlog, revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "plan," "goal" or other words that convey the uncertainty of future events or outcomes.
We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control, including unforeseen productivity delays and other difficulties encountered in project execution, challenges incurred by virtue of our position as a substantial subcontractor that reports to a significantly larger project contractor, levels of government funding or other governmental budgetary constraints, contract modifications and changes, including change orders and contract cancellation at the discretion of the customer, and the general economic impact of government shutdowns, tariffs and trade wars. These and other important factors, including those described under "Risk Factors" in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 may cause our actual results, performance- or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this report; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly.
MD&A provides a narrative analysis explaining the reasons for material changes in the Company's (i) financial condition since the most recent fiscal year-end, and (ii) results of operations during the current fiscal year-to-date period and current fiscal quarter as compared to the corresponding periods of the preceding fiscal year. In order to better understand such changes, this MD&A should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto included in our 2024 Form 10-K, Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2024 Form 10-K and with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.
Overview
Orion Group Holdings, Inc. and its subsidiaries (hereafter collectively referred to as the "Company"), is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through our marine segment and our concrete segment.
Our marine segment provides construction, dredging and specialty services. Construction services include construction, restoration, maintenance, dredging and repair of marine transportation facilities, marine pipelines, bridges and causeways and marine environmental structures. Dredging services generally enhance or preserve the navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. Specialty services include design, salvage, demolition, surveying, towing, diving and underwater inspection, excavation and repair.
Our concrete segment provides turnkey concrete construction services, including concrete surface place and finish, site preparation, layout, forming, and rebar placement for large commercial, structural and other associated business areas.
Our contracts are obtained primarily through competitive bidding in response to "requests for proposals" by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors. Our bidding activity and strategies are affected by factors such as our backlog, current utilization of equipment and other resources, job location, our ability to obtain necessary surety bonds and competitive considerations. The timing and location of awarded contracts may result in unpredictable fluctuations in the results of our operations.
Most of our revenue is derived from fixed-price contracts. We record revenue on construction contracts over time, measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. There are a number of factors that can create variability in contract performance and therefore impact the results of our operations. The most significant of these include the following:
| ● | completeness and accuracy of the original bid; |
| ● | increases in commodity prices such as concrete, steel and fuel; |
| ● | customer delays, work stoppages, and other costs due to weather and environmental restrictions; |
| ● | subcontractor performance; |
| ● | unforeseen site conditions; |
| ● | availability and skill level of workers; and |
| ● | a change in availability and proximity of equipment and materials. |
All of these factors can have a negative impact on our contract performance, which can adversely affect the timing of revenue recognition and ultimate contract profitability. We plan our operations and bidding activity
with these factors in mind and they generally have not had a material adverse impact on the results of our operations in the past.
Consolidated Results of Operations
Backlog Information
Our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed. Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve-month period. We have not been adversely affected by contract cancellations or modifications in the past, however we may be in the future, especially in periods of economic uncertainty.
Backlog as of the periods ended below are as follows (in millions):
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September 30, 2025 |
December 31, 2024 |
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Marine segment |
|
$ |
477 |
|
$ |
583 |
|
Concrete segment |
|
202 |
|
146 |
||
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Consolidated |
|
$ |
679 |
|
$ |
729 |
Backlog is not necessarily indicative of future results. In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending award at any given time.
Income Statement Comparisons
Three months ended September 30, 2025 compared with three months ended September 30, 2024.
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Three Months Ended September 30, |
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2025 |
2024 |
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Amount |
Amount |
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|
|
|
(dollar amounts in thousands) |
||||
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Contract revenues |
|
$ |
225,097 |
$ |
226,675 |
|
|
Cost of contract revenues |
|
195,345 |
199,611 |
|||
|
Gross profit |
|
29,752 |
27,064 |
|||
|
Selling, general and administrative expenses |
|
25,059 |
20,846 |
|||
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Gain on disposal of assets, net |
|
|
(628) |
|
|
(1,563) |
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Operating income from operations |
|
5,321 |
7,781 |
|||
|
Other (expense) income: |
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|||||
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Interest expense |
|
(2,120) |
(3,617) |
|||
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Other income |
|
417 |
180 |
|||
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Other expense, net |
|
(1,703) |
(3,437) |
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Income before income taxes |
|
3,618 |
4,344 |
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Income tax expense |
|
317 |
82 |
|||
|
Net income |
|
$ |
3,301 |
$ |
4,262 |
|
Contract Revenues.Contract revenues for the three months ended September 30, 2025 of $225.1 million decreased $1.6 million, or 1%, as compared to $226.7 million in the prior year period.
Gross Profit. Gross profit was $29.8 million for the three months ended September 30, 2025 compared to $27.1 million in the prior year period, an increase of $2.7 million, or 10%. The increase in gross profit was primarily driven by strong project execution and favorable utilization.
Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses were $25.1 million for the three months ended September 30, 2025 compared to $20.8 million in the prior year period, an increase of $4.3 million or 20.2%. The increase in SG&A was primarily due to increased spending to support business growth.
Gain on Disposal of Assets, net.During the three months ended September 30, 2025 and 2024 we realized $0.6 million and $1.6 million, respectively, of net gains on disposal of assets.
Other Income, net of Expense. Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses.
Income Tax Expense. We recorded a tax expense of $0.3 million in the three months ended September 30, 2025, compared to $0.1 million in the prior year period.
Nine months ended September 30, 2025 compared with nine months ended September 30, 2024.
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Nine Months Ended September 30, |
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2025 |
2024 |
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|
Amount |
Amount |
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|
|
|
(dollar amounts in thousands) |
||||
|
Contract revenues |
|
$ |
619,037 |
$ |
579,514 |
|
|
Cost of contract revenues |
|
540,473 |
518,631 |
|||
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Gross profit |
|
78,564 |
60,883 |
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|
Selling, general and administrative expenses |
|
70,378 |
60,980 |
|||
|
Gain on disposal of assets, net |
|
|
(1,400) |
|
|
(1,986) |
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Operating income from operations |
|
9,586 |
1,889 |
|||
|
Other (expense) income: |
|
|||||
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Interest expense |
|
(7,373) |
(10,336) |
|||
|
Other income |
|
761 |
396 |
|||
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Other expense, net |
|
(6,612) |
(9,940) |
|||
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Income (loss) before income taxes |
|
2,974 |
(8,051) |
|||
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Income tax expense |
|
246 |
347 |
|||
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Net income (loss) |
|
$ |
2,728 |
$ |
(8,398) |
|
Contract Revenues.Contract revenues for the nine months ended September 30, 2025 of $619 million increased $39.5 million or 7% as compared to $579.5 million in the prior year period. The increase was primarily due to new awards and higher volume across the business.
Gross Profit. Gross profit was $78.6 million for the nine months ended September 30, 2025 compared to $60.9 million in the prior year period, an increase of $17.7 million, or 29%. The increase in gross profit was primarily driven by strong project execution and favorable utilization.
Selling, General and Administrative Expense. SG&A expenses were $70.4 million for the nine months ended September 30, 2025 compared to $61.0 million in the prior year period, an increase of $9.4 million, or 15%. The increase in SG&A was primarily due to increased spending to support business growth.
Gain on Disposal of Assets, net.During the nine months ended September 30, 2025 and 2024 we realized $1.4 million and $2.0 million, respectively, of net gains on disposal of assets.
Other Income, net of Expense. Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses.
Income Tax Expense. We recorded a tax expense of $0.2 million in the nine months ended September 30, 2025, compared to $0.3 million in the prior year period.
Segment Results
The following table sets forth, for the periods indicated, statements of operations data by segment, segment revenues as a percentage of consolidated revenues and segment operating income (loss) as a percentage of segment revenues.
Three months ended September 30, 2025 compared with three months ended September 30, 2024.
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Three Months Ended September 30, |
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2025 |
2024 |
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Amount |
Amount |
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|
|
(dollar amounts in thousands) |
||||
|
Contract revenues |
|
|
|
|
|
|
|
Marine segment |
|
|
|
|
|
|
|
Public sector |
|
$ |
98,134 |
|
$ |
94,719 |
|
Private sector |
|
|
44,808 |
|
|
45,294 |
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Marine segment total |
|
$ |
142,942 |
|
$ |
140,013 |
|
Concrete segment |
|
|
|
|
|
|
|
Public sector |
|
$ |
13,768 |
|
$ |
10,782 |
|
Private sector |
|
|
68,387 |
|
|
75,880 |
|
Concrete segment total |
|
$ |
82,155 |
|
$ |
86,662 |
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Total |
|
$ |
225,097 |
$ |
226,675 |
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|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|||||
|
Marine segment |
|
$ |
10,985 |
$ |
5,485 |
|
|
Concrete segment |
|
(5,664) |
2,296 |
|||
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Total |
|
$ |
5,321 |
|
$ |
7,781 |
Marine Segment
Revenues for our marine segment for the three months ended September 30, 2025 were $142.9 million compared to $140.0 million for the three months ended September 30, 2024.
Operating income for our marine segment for the three months ended September 30, 2025 was $11.0 million, compared to $5.5 million for the three months ended September 30, 2024, an increase of $5.5 million. The increase in gross profit was primarily driven by strong project execution and favorable utilization.
Concrete Segment
Revenues for our concrete segment for the three months ended September 30, 2025 were $82.2 million compared to $86.7 million for the three months ended September 30, 2024.
Operating loss for our concrete segment for the three months ended September 30, 2025 was $5.7 million, compared to operating income of $2.3 million for the three months ended September 30, 2024, a decrease of $8.0 million. This decrease was primarily driven by seasonal weather delays and favorable concrete project close-outs in 2024 that did not reoccur in 2025.
Nine months ended September 30, 2025 compared with nine months ended September 30, 2024.
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Nine Months Ended September 30, |
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2025 |
2024 |
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Amount |
Amount |
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|
|
(dollar amounts in thousands) |
||||
|
Contract revenues |
|
|
|
|
|
|
|
Marine segment |
|
|
|
|
|
|
|
Public sector |
|
$ |
305,600 |
|
$ |
290,995 |
|
Private sector |
|
|
99,809 |
|
|
86,296 |
|
Marine segment total |
|
$ |
405,409 |
|
$ |
377,291 |
|
Concrete segment |
|
|
|
|
|
|
|
Public sector |
|
$ |
33,064 |
|
$ |
20,211 |
|
Private sector |
|
|
180,564 |
|
|
182,012 |
|
Concrete segment total |
|
$ |
213,628 |
|
$ |
202,223 |
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Total |
|
$ |
619,037 |
$ |
579,514 |
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|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|||||
|
Marine segment |
|
$ |
21,993 |
$ |
(4,848) |
|
|
Concrete segment |
|
(12,407) |
6,737 |
|||
|
Total |
|
$ |
9,586 |
|
$ |
1,889 |
Marine Segment
Revenues for our marine segment for the nine months ended September 30, 2025 were $405.4 million compared to $377.3 million for the nine months ended September 30, 2024, an increase of $28.1 million, or 7%. The increase was primarily due to new awards and higher volume on our marine construction contracts.
Operating income for our marine segment for the nine months ended September 30, 2025 was $22.0 million, compared to an operating loss of $4.8 million for the nine months ended September 30, 2024, an increase of $26.8 million. The increase was primarily driven by increased revenue, strong project execution and favorable utilization.
Concrete Segment
Revenues for our concrete segment for the nine months ended September 30, 2025 were $213.6 million compared to $202.2 million for the nine months ended September 30, 2024, an increase of $11.4 million, or 6%. This increase was primarily due to new awards and higher volume on our concrete contracts.
Operating loss for our concrete segment for the nine months ended September 30, 2025 was $12.4 million, compared to operating income of $6.7 million for the nine months ended September 30, 2024, a decrease of $19.1 million. This decrease was primarily driven by seasonal weather delays and favorable concrete project close-outs in 2024 that did not reoccur in 2025.
Liquidity and Capital Resources
Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects. At September 30, 2025, our working capital was $71.9 million, as compared to $78.2 million at December 31, 2024. As of September 30, 2025, we had unrestricted cash on hand of $4.9 million. Our borrowing availability under the revolving portion of our Credit Agreement at September 30, 2025 was approximately $41.2 million.
Our primary liquidity needs are to finance our working capital and fund capital expenditures. Historically, our sources of liquidity have been cash provided by our operating activities, sale of underutilized assets, borrowings under our credit facilities, and equity issuances. The assessment of our liquidity requires us to make estimates of future activity and judgments about whether we are compliant with financial covenant calculations under our debt and other agreements and have adequate liquidity to operate. Significant assumptions used in our forecasted model of liquidity include forecasted sales, costs, and capital expenditures, as well as expected timing and proceeds of planned asset sale transactions. As of September 30, 2025, management believes the Company will have adequate liquidity for its operations for at least the next 12 months.
Cash Flow
The following table provides information regarding our cash flows and our capital expenditures for the nine months ended September 30, 2025 and 2024:
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Nine months ended |
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September 30, |
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2025 |
2024 |
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Net income (loss) |
|
$ |
2,728 |
|
$ |
(8,398) |
|
Adjustments to remove non-cash and non-operating items |
|
|
29,249 |
|
|
27,874 |
|
Cash flow from net income after adjusting for non-cash and non-operating items |
|
|
31,977 |
|
|
19,476 |
|
Change in operating assets and liabilities (working capital) |
|
|
(17,717) |
|
|
(20,163) |
|
Cash flows provided by (used in) operating activities |
|
$ |
14,260 |
|
$ |
(687) |
|
Cash flows used in investing activities |
|
$ |
(23,778) |
|
$ |
(8,722) |
|
Cash flows (used in) provided by financing activities |
|
$ |
(13,881) |
|
$ |
6,725 |
|
|
|
|
|
|
|
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Capital expenditures (included in investing activities above) |
|
$ |
(25,510) |
|
$ |
(10,644) |
Operating Activities.During the nine months ended September 30, 2025 we generated approximately $14.3 million of cash in our operating activities. The net cash inflow was comprised of $32.0 million of cash inflows
from net income, after adjusting for non-cash items, partially offset by $17.7 million of outflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $57.5 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period and a $4.6 million decrease in operating lease liabilities, partially offset by $40.4 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period and a $4.0 million cash inflow related to a decrease in prepaid expenses.
Investing Activities.During the nine months ended September 30, 2025, we used approximately $23.8 million of cash in our investing activities. Capital asset additions and betterments to our fleet were $25.5 million and $10.6 million in the nine months ended September 30, 2025 and 2024, respectively.
Financing Activities. During the nine months ended September 30, 2025, we used approximately $13.9 million of cash in our financing activities. During the nine months ended September 30, 2025, we had borrowings and repayments of $138.1 million on the White Oak revolving credit line, payments on finance lease liabilities of $7.8 million, and payments made on failed sale-leaseback arrangements of $7.5 million.
Sources of Capital
On May 15, 2023, we entered into a $103.0 million Credit Agreement with White Oak, which included a $65 million asset based revolving credit line and a $38 million fixed asset term loan.Please see "Note 9 - Debt" in our unaudited condensed consolidated financial statements for a more detailed description of the Credit Facility.
We were in compliance with all financial covenants under the amended agreement as of September 30, 2025.
Effect of Inflation
We are subject to the effects of inflation through increases in the cost of raw materials, and other items such as fuel, concrete and steel. Due to the relative short-term duration of our projects, we are generally able to include anticipated cost increases in the pricing of our bids.
Orion Group Holdings Inc. published this content on October 29, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 29, 2025 at 20:47 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]