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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Orion Group Holdings Inc | NYSE:ORN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 9.60 | 0 | 12:00:05 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
26-0097459
|
(State of incorporation)
|
(I.R.S. Employer Identification Number)
|
12000 Aerospace Avenue, Suite 300
Houston, Texas
|
|
77034
|
(Address of principal executive offices)
|
|
(Zip Code)
|
PART I
|
FINANCIAL INFORMATION
|
|
|
|
Item 1
|
Financial Statements (Unaudited)
|
Page
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
Item 2
|
||
|
Item 3
|
||
|
Item 4
|
||
PART II
|
OTHER INFORMATION
|
|
|
|
Item1
|
||
|
Item 1A
|
||
|
Item 2
|
||
|
Item 3
|
||
|
Item 4
|
||
|
Item 5
|
||
|
Item 6
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
(Unaudited)
|
|
(Audited)
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,281
|
|
|
$
|
9,086
|
|
Accounts receivable:
|
|
|
|
||||
Trade, net of allowance of $0 and $0, respectively
|
77,015
|
|
|
84,953
|
|
||
Retainage
|
37,909
|
|
|
39,189
|
|
||
Other current
|
3,942
|
|
|
3,706
|
|
||
Income taxes receivable
|
248
|
|
|
339
|
|
||
Inventory
|
3,878
|
|
|
4,386
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
53,287
|
|
|
46,006
|
|
||
Prepaid expenses and other
|
4,677
|
|
|
4,124
|
|
||
Total current assets
|
187,237
|
|
|
191,789
|
|
||
Property and equipment, net
|
147,683
|
|
|
146,278
|
|
||
Inventory, non-current
|
4,835
|
|
|
4,915
|
|
||
Goodwill
|
69,483
|
|
|
69,483
|
|
||
Intangible assets, net of amortization
|
16,481
|
|
|
18,175
|
|
||
Other non-current
|
6,550
|
|
|
2,645
|
|
||
Total assets
|
$
|
432,269
|
|
|
$
|
433,285
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current debt, net of debt issuance costs
|
$
|
30,743
|
|
|
$
|
22,756
|
|
Accounts payable:
|
|
|
|
|
|
||
Trade
|
37,500
|
|
|
45,194
|
|
||
Retainage
|
2,826
|
|
|
1,990
|
|
||
Accrued liabilities
|
18,218
|
|
|
17,873
|
|
||
Taxes payable
|
705
|
|
|
256
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
25,069
|
|
|
33,923
|
|
||
Total current liabilities
|
115,061
|
|
|
121,992
|
|
||
Long-term debt, net of debt issuance costs
|
57,094
|
|
|
63,185
|
|
||
Other long-term liabilities
|
4,904
|
|
|
3,573
|
|
||
Deferred income taxes
|
15,084
|
|
|
13,243
|
|
||
Interest rate swap liability
|
—
|
|
|
26
|
|
||
Total liabilities
|
192,143
|
|
|
202,019
|
|
||
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock -- $0.01 par value, 50,000,000 authorized, 29,422,432 and 28,860,961 issued; 28,711,208 and 28,149,737 outstanding at June 30, 2018 and December 31, 2017, respectively
|
293
|
|
|
288
|
|
||
Treasury stock, 711,231 shares, at cost, as of June 30, 2018 and December 31, 2017, respectively
|
(6,540
|
)
|
|
(6,540
|
)
|
||
Other comprehensive income (loss)
|
320
|
|
|
(26
|
)
|
||
Additional paid-in capital
|
177,142
|
|
|
174,697
|
|
||
Retained earnings
|
68,911
|
|
|
62,847
|
|
||
Total stockholders’ equity
|
240,126
|
|
|
231,266
|
|
||
Total liabilities and stockholders’ equity
|
$
|
432,269
|
|
|
$
|
433,285
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||
|
2018
|
2017
|
|
2018
|
|
2017
|
||||||||
Contract revenues
|
$
|
159,767
|
|
$
|
137,420
|
|
|
$
|
296,610
|
|
|
$
|
276,177
|
|
Costs of contract revenues
|
138,998
|
|
122,023
|
|
|
260,019
|
|
|
247,795
|
|
||||
Gross profit
|
20,769
|
|
15,397
|
|
|
36,591
|
|
|
28,382
|
|
||||
Selling, general and administrative expenses
|
16,864
|
|
17,528
|
|
|
31,878
|
|
|
32,507
|
|
||||
(Gain) loss on sale of assets, net
|
(686
|
)
|
335
|
|
|
(1,499
|
)
|
|
(177
|
)
|
||||
Other gain from continuing operations
|
—
|
|
—
|
|
|
(5,448
|
)
|
|
—
|
|
||||
Operating income (loss) from operations
|
4,591
|
|
(2,466
|
)
|
|
11,660
|
|
|
(3,948
|
)
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
|
||||||
Other income
|
476
|
|
11
|
|
|
474
|
|
|
21
|
|
||||
Interest income
|
47
|
|
—
|
|
|
47
|
|
|
—
|
|
||||
Interest expense
|
(1,205
|
)
|
(1,462
|
)
|
|
(2,682
|
)
|
|
(2,817
|
)
|
||||
Other expense, net
|
(682
|
)
|
(1,451
|
)
|
|
(2,161
|
)
|
|
(2,796
|
)
|
||||
Income (loss) before income taxes
|
3,909
|
|
(3,917
|
)
|
|
9,499
|
|
|
(6,744
|
)
|
||||
Income tax expense (benefit)
|
1,660
|
|
(1,624
|
)
|
|
3,149
|
|
|
(2,643
|
)
|
||||
Net income (loss)
|
$
|
2,249
|
|
$
|
(2,293
|
)
|
|
$
|
6,350
|
|
|
$
|
(4,101
|
)
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per share
|
$
|
0.08
|
|
$
|
(0.08
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.15
|
)
|
Diluted income (loss) per share
|
$
|
0.08
|
|
$
|
(0.08
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.15
|
)
|
Shares used to compute income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||
Basic
|
28,309,004
|
|
27,941,814
|
|
|
28,243,400
|
|
|
27,867,090
|
|
||||
Diluted
|
28,544,010
|
|
27,941,814
|
|
|
28,474,432
|
|
|
27,867,090
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Net income (loss)
|
$
|
2,249
|
|
$
|
(2,293
|
)
|
$
|
6,350
|
|
$
|
(4,101
|
)
|
Change in fair value of cash flow hedge, net of tax expense of $31 and $124 for the three and six months ended June 30, 2018, respectively and net of tax benefit of $59 and $99 for the three and six months ended June 30, 2017, respectively
|
77
|
|
(86
|
)
|
346
|
|
110
|
|
||||
Total comprehensive income (loss)
|
$
|
2,326
|
|
$
|
(2,379
|
)
|
$
|
6,696
|
|
$
|
(3,991
|
)
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Other Comprehensive Income (Loss)
|
Additional
Paid-In Capital
|
Retained Earnings
|
|
||||||||||||||||
|
Shares
|
Amount
|
|
Shares
|
Amount
|
|
Total
|
|||||||||||||||||
Balance, December 31, 2017
|
28,860,961
|
|
$
|
288
|
|
|
(711,231
|
)
|
$
|
(6,540
|
)
|
|
$
|
(26
|
)
|
$
|
174,697
|
|
$
|
62,847
|
|
$
|
231,266
|
|
Adoption of ASC 606 (
Note 2
)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(286
|
)
|
(286
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
1,151
|
|
—
|
|
1,151
|
|
||||||
Exercise of stock options
|
231,470
|
|
2
|
|
|
—
|
|
—
|
|
|
—
|
|
1,297
|
|
—
|
|
1,299
|
|
||||||
Issuance of restricted stock
|
331,095
|
|
3
|
|
|
—
|
|
—
|
|
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
||||||
Forfeiture of restricted stock
|
(1,094
|
)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Cash flow hedge (net of tax)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
346
|
|
—
|
|
—
|
|
346
|
|
||||||
Net income
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
6,350
|
|
6,350
|
|
||||||
Balance, June 30, 2018
|
29,422,432
|
|
$
|
293
|
|
|
(711,231
|
)
|
$
|
(6,540
|
)
|
|
$
|
320
|
|
$
|
177,142
|
|
$
|
68,911
|
|
$
|
240,126
|
|
|
Six months ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
6,350
|
|
|
$
|
(4,101
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in):
|
|
|
|
|
|
||
Operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
14,211
|
|
|
15,119
|
|
||
Deferred financing cost amortization
|
646
|
|
|
631
|
|
||
Deferred income taxes
|
1,841
|
|
|
(760
|
)
|
||
Stock-based compensation
|
1,151
|
|
|
1,207
|
|
||
Gain on sale of property and equipment
|
(1,499
|
)
|
|
(177
|
)
|
||
Other gain from continuing operations
|
(5,448
|
)
|
|
—
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
8,983
|
|
|
17,742
|
|
||
Income tax receivable
|
91
|
|
|
(2,202
|
)
|
||
Inventory
|
588
|
|
|
(5
|
)
|
||
Prepaid expenses and other
|
1,482
|
|
|
720
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(7,282
|
)
|
|
(1,853
|
)
|
||
Accounts payable
|
(6,952
|
)
|
|
(3,774
|
)
|
||
Accrued liabilities
|
(962
|
)
|
|
(1,989
|
)
|
||
Income tax payable
|
449
|
|
|
(689
|
)
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(8,854
|
)
|
|
252
|
|
||
Other
|
(286
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
4,509
|
|
|
20,121
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Proceeds from sale of property and equipment
|
1,070
|
|
|
5,547
|
|
||
Purchase of property and equipment
|
(11,911
|
)
|
|
(3,689
|
)
|
||
Contributions to CSV life insurance
|
(266
|
)
|
|
(241
|
)
|
||
Acquisition of TBC
|
—
|
|
|
(6,000
|
)
|
||
Proceeds from return of investment
|
94
|
|
|
—
|
|
||
Insurance claim proceeds related to property and equipment
|
1,150
|
|
|
—
|
|
||
Net cash used in investing activities
|
(9,863
|
)
|
|
(4,383
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Borrowings from Credit Facility
|
13,000
|
|
|
37,000
|
|
||
Payments made on borrowings from Credit Facility
|
(11,750
|
)
|
|
(53,063
|
)
|
||
Exercise of stock options
|
1,299
|
|
|
940
|
|
||
Net cash provided by (used in) financing activities
|
2,549
|
|
|
(15,123
|
)
|
||
Net change in cash and cash equivalents
|
(2,805
|
)
|
|
615
|
|
||
Cash and cash equivalents at beginning of period
|
9,086
|
|
|
305
|
|
||
Cash and cash equivalents at end of period
|
$
|
6,281
|
|
|
$
|
920
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||
Cash paid during the period for:
|
|
|
|
|
|
||
Interest
|
$
|
2,055
|
|
|
$
|
2,193
|
|
Taxes, net of refunds
|
$
|
404
|
|
|
$
|
1,067
|
|
•
|
Revenue recognition from construction contracts;
|
•
|
Accounts receivable and allowance for doubtful accounts;
|
•
|
Goodwill and other long-lived assets, testing for indicators of impairment;
|
•
|
Income taxes;
|
•
|
Self-insurance; and
|
•
|
Stock-based compensation.
|
•
|
Accounts Receivable: Trade, net of allowance
- Represent amounts billed and currently due from customers and are stated at their net estimated realizable value.
|
•
|
Accounts Receivable: Retainage
- Represent amounts which have not been billed to customers or paid pursuant to retainage provisions in construction contracts, which generally become payable upon contract completion and acceptance by the customer.
|
•
|
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
- Represent revenues recognized in excess of amounts billed, which management believes will be billed and collected within one year of the completion of the contract (i.e. Contract Assets) and are recorded as a current asset.
|
•
|
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
- Represent billings in excess of revenues recognized (i.e. Contract Liabilities) and are recorded as a current liability.
|
•
|
Performance Obligations
- Construction contracts with customers, including those related to contract modifications, were reviewed to determine if there were any multiple performance obligations. Based on our review, a limited number of contracts in the marine segment and no contracts in the concrete segment were identified as having multiple performance obligations. The net impact on retained earnings as of January 1, 2018 and gross profit for the six months ended June 30, 2018 were not material.
|
•
|
Upfront Costs
- These costs were required to be capitalized as assets and were recorded as part of "Costs and estimated earnings in excess of billings on uncompleted contracts" in the Company’s Consolidated Balance Sheets and amortized over the expected duration of the contract as part of "Costs of contract revenues" in the Company’s Consolidated Statements of Operations. If the expected completion date of the contract changes, the amortization period will be recalculated and adjusted prospectively. The amortization of such costs for the Company are generally comprised of initial costs incurred to mobilize equipment and labor to a job site or other upfront costs such as bonds or insurance prior to the "notice-to-proceed" date, which had been expensed as incurred in prior periods. Based on our review, certain contracts in the marine segment were identified as having material upfront costs. The Company also reviewed contracts for the concrete segment and while certain contracts within the segment were identified as having upfront costs, they were not considered material.
|
|
Balance at December 31,
2017
|
Adjustments Due to Topic
606
|
Balance at January 1,
2018
|
||||||
Assets
|
|
|
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
46,006
|
|
$
|
1,383
|
|
$
|
47,389
|
|
Liabilities
|
|
|
|
||||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
$
|
33,923
|
|
$
|
1,745
|
|
$
|
35,668
|
|
Deferred income taxes
|
13,243
|
|
(76
|
)
|
13,167
|
|
|||
Equity
|
|
|
|
||||||
Retained earnings
|
$
|
62,847
|
|
$
|
(286
|
)
|
$
|
62,561
|
|
|
As Reported
|
Balances Without Adoption of
Topic 606
|
Effect of Change
Higher (Lower)
|
||||||
Assets
|
|
|
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
53,287
|
|
$
|
53,764
|
|
$
|
(477
|
)
|
Liabilities
|
|
|
|
||||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
$
|
25,069
|
|
$
|
25,818
|
|
$
|
(749
|
)
|
Deferred income taxes
|
15,084
|
|
14,974
|
|
110
|
|
|||
Equity
|
|
|
|
||||||
Retained earnings
|
$
|
68,911
|
|
$
|
68,749
|
|
$
|
162
|
|
|
As Reported
|
Balances Without Adoption of
Topic 606
|
Effect of Change
Higher (Lower)
|
||||||
|
|
|
|
||||||
Contract revenues
|
$
|
296,610
|
|
$
|
295,861
|
|
$
|
749
|
|
Cost of contract revenues
|
260,019
|
|
259,542
|
|
477
|
|
|||
Gross profit
|
36,591
|
|
36,319
|
|
272
|
|
|||
Income tax expense
|
3,149
|
|
3,039
|
|
110
|
|
|||
Net income
|
$
|
6,350
|
|
$
|
6,188
|
|
$
|
162
|
|
|
|
|
|
||||||
Basic income per share
|
$
|
0.22
|
|
$
|
0.22
|
|
$
|
—
|
|
Diluted income per share
|
$
|
0.22
|
|
$
|
0.22
|
|
$
|
—
|
|
|
Three Months Ended
June 30, 2018
|
Six Months Ended
June 30, 2018
|
||||
Marine Segment
|
|
|
||||
Construction
|
$
|
52,860
|
|
$
|
95,235
|
|
Dredging
|
23,472
|
|
40,483
|
|
||
Specialty Services
|
4,366
|
|
7,771
|
|
||
Marine segment contract revenues
|
$
|
80,698
|
|
$
|
143,489
|
|
|
|
|
||||
Concrete Segment
|
|
|
||||
Light Commercial
|
$
|
62,189
|
|
$
|
118,682
|
|
Structural
|
16,740
|
|
34,112
|
|
||
Other
|
140
|
|
327
|
|
||
Concrete segment contract revenues
|
$
|
79,069
|
|
$
|
153,121
|
|
|
|
|
||||
Total contract revenues
|
$
|
159,767
|
|
$
|
296,610
|
|
Accounts receivable
|
$
|
3,239
|
|
Retainage
|
1,860
|
|
|
Fixed assets, net
|
2,098
|
|
|
Other
|
9
|
|
|
Goodwill
|
2,562
|
|
|
Other intangible assets
|
878
|
|
|
Accounts payable
|
(2,017
|
)
|
|
Accrued expenses and other current liabilities
|
(1,080
|
)
|
|
Contingent consideration
|
(456
|
)
|
|
Deferred tax liability
|
(1,093
|
)
|
|
Total Acquisition Consideration at April 9, 2017
|
$
|
6,000
|
|
Working capital adjustment (all attributable to Goodwill)
|
557
|
|
|
Total Acquisition Consideration
|
$
|
6,557
|
|
|
For the Six Months Ended
|
||
|
June 30, 2017
|
||
Contract revenues
|
$
|
281,684
|
|
Operating loss from operations
|
$
|
(4,510
|
)
|
Net loss
|
$
|
(4,464
|
)
|
Basic loss per share
|
$
|
(0.16
|
)
|
Diluted loss per share
|
$
|
(0.16
|
)
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||
Federal Government
|
$
|
2,907
|
|
3
|
%
|
|
$
|
3,509
|
|
3
|
%
|
State Governments
|
2,713
|
|
2
|
%
|
|
4,503
|
|
3
|
%
|
||
Local Governments
|
19,910
|
|
17
|
%
|
|
18,256
|
|
15
|
%
|
||
Private Companies
|
89,394
|
|
78
|
%
|
|
97,874
|
|
79
|
%
|
||
Total current receivables
|
$
|
114,924
|
|
100
|
%
|
|
$
|
124,142
|
|
100
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||
|
2018
|
|
|
%
|
|
|
2017
|
|
|
%
|
|
|
2018
|
|
%
|
|
2017
|
|
%
|
||||||||
Federal Government
|
$
|
16,077
|
|
|
10
|
%
|
|
$
|
18,360
|
|
|
13
|
%
|
|
$
|
29,100
|
|
|
10
|
%
|
|
$
|
38,092
|
|
|
14
|
%
|
State Governments
|
9,898
|
|
|
6
|
%
|
|
12,706
|
|
|
9
|
%
|
|
18,274
|
|
|
6
|
%
|
|
24,726
|
|
|
9
|
%
|
||||
Local Governments
|
20,522
|
|
|
13
|
%
|
|
20,731
|
|
|
15
|
%
|
|
43,752
|
|
|
15
|
%
|
|
44,556
|
|
|
16
|
%
|
||||
Private Companies
|
113,270
|
|
|
71
|
%
|
|
85,623
|
|
|
63
|
%
|
|
205,484
|
|
|
69
|
%
|
|
168,803
|
|
|
61
|
%
|
||||
Total contract revenues
|
$
|
159,767
|
|
|
100
|
%
|
|
$
|
137,420
|
|
|
100
|
%
|
|
$
|
296,610
|
|
|
100
|
%
|
|
$
|
276,177
|
|
|
100
|
%
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Costs incurred on uncompleted contracts
|
$
|
739,863
|
|
|
$
|
668,848
|
|
Estimated earnings
|
140,773
|
|
|
120,751
|
|
||
|
880,636
|
|
|
789,599
|
|
||
Less: Billings to date
|
(852,418
|
)
|
|
(777,516
|
)
|
||
|
$
|
28,218
|
|
|
$
|
12,083
|
|
Included in the accompanying Consolidated Balance Sheet under the following captions:
|
|
|
|
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
53,287
|
|
|
$
|
46,006
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(25,069
|
)
|
|
(33,923
|
)
|
||
|
$
|
28,218
|
|
|
$
|
12,083
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Automobiles and trucks
|
$
|
1,802
|
|
|
$
|
1,940
|
|
Building and improvements
|
42,555
|
|
|
38,062
|
|
||
Construction equipment
|
156,695
|
|
|
166,203
|
|
||
Vessels and other equipment
|
95,736
|
|
|
85,113
|
|
||
Office equipment
|
7,416
|
|
|
8,039
|
|
||
|
304,204
|
|
|
299,357
|
|
||
Less: Accumulated depreciation
|
(195,843
|
)
|
|
(191,407
|
)
|
||
Net book value of depreciable assets
|
108,361
|
|
|
107,950
|
|
||
Construction in progress
|
3,459
|
|
|
245
|
|
||
Land
|
35,863
|
|
|
38,083
|
|
||
|
$
|
147,683
|
|
|
$
|
146,278
|
|
•
|
Level 1- fair values are based on observable inputs such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 - fair values are based on pricing inputs other than quoted prices in active markets for identical assets and liabilities and are either directly or indirectly observable as of the measurement date; and
|
•
|
Level 3- fair values are based on unobservable inputs in which little or no market data exists.
|
|
|
Fair Value Measurements
|
||||||||||
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||
June 30, 2018
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash surrender value of life insurance policy
|
$
|
2,000
|
|
$
|
—
|
|
$
|
2,000
|
|
$
|
—
|
|
Derivatives
|
$
|
432
|
|
$
|
—
|
|
$
|
432
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Cash surrender value of life insurance policy
|
$
|
1,712
|
|
$
|
—
|
|
$
|
1,712
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
||||||||
Derivatives
|
$
|
38
|
|
$
|
—
|
|
$
|
38
|
|
$
|
—
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Beginning balance, January 1
|
$
|
69,483
|
|
|
$
|
66,351
|
|
Additions
|
—
|
|
|
3,132
|
|
||
Ending balance
|
$
|
69,483
|
|
|
$
|
69,483
|
|
|
Six months ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Intangible assets, January 1
|
$
|
35,240
|
|
|
$
|
34,362
|
|
Additions
|
—
|
|
|
878
|
|
||
Total intangible assets, end of period
|
35,240
|
|
|
35,240
|
|
||
|
|
|
|
|
|||
Accumulated amortization, January 1
|
$
|
(23,955
|
)
|
|
$
|
(19,220
|
)
|
Current year amortization
|
(1,694
|
)
|
|
(2,613
|
)
|
||
Total accumulated amortization
|
(25,649
|
)
|
|
(21,833
|
)
|
||
|
|
|
|
|
|||
Net intangible assets, end of period
|
$
|
9,591
|
|
|
$
|
13,407
|
|
2018
|
1,694
|
|
|
2019
|
2,642
|
|
|
2020
|
2,071
|
|
|
2021
|
1,520
|
|
|
Thereafter
|
1,664
|
|
|
|
$
|
9,591
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accrued salaries, wages and benefits
|
$
|
8,683
|
|
|
$
|
9,632
|
|
Accrual for insurance liabilities
|
5,128
|
|
|
5,233
|
|
||
Property taxes
|
1,121
|
|
|
513
|
|
||
Capital lease liability
|
996
|
|
|
—
|
|
||
Sales taxes
|
1,865
|
|
|
1,836
|
|
||
Interest
|
28
|
|
|
46
|
|
||
Other accrued expenses
|
397
|
|
|
613
|
|
||
Total accrued liabilities
|
$
|
18,218
|
|
|
$
|
17,873
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||
|
Principal
|
Debt Issuance Costs
(1)
|
Total
|
|
Principal
|
Debt Issuance Costs
(1)
|
Total
|
||||||||||||
Revolving line of credit
|
$
|
18,000
|
|
$
|
(433
|
)
|
$
|
17,567
|
|
|
$
|
10,000
|
|
$
|
(317
|
)
|
$
|
9,683
|
|
Term loan - current
|
13,500
|
|
(324
|
)
|
13,176
|
|
|
13,500
|
|
(427
|
)
|
13,073
|
|
||||||
Total current debt
|
31,500
|
|
(757
|
)
|
30,743
|
|
|
23,500
|
|
(744
|
)
|
22,756
|
|
||||||
Term loan - long-term
|
58,500
|
|
(1,406
|
)
|
57,094
|
|
|
65,250
|
|
(2,065
|
)
|
63,185
|
|
||||||
Total debt
|
$
|
90,000
|
|
$
|
(2,163
|
)
|
$
|
87,837
|
|
|
$
|
88,750
|
|
$
|
(2,809
|
)
|
$
|
85,941
|
|
2018
|
6,750
|
|
|
2019
|
15,188
|
|
|
2020
|
50,062
|
|
|
|
$
|
72,000
|
|
•
|
A consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to not be less than
1.25
to 1.00.
|
•
|
A consolidated Leverage Ratio to not exceed the following during each noted period:
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Income tax expense (benefit)
|
$
|
1,660
|
|
$
|
(1,624
|
)
|
$
|
3,149
|
|
$
|
(2,643
|
)
|
Effective tax rate
|
42.5
|
%
|
41.5
|
%
|
33.1
|
%
|
39.2
|
%
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
Basic:
|
|
|
|
|
||||
Weighted average shares outstanding
|
28,309,004
|
|
27,941,814
|
|
28,243,400
|
|
27,867,090
|
|
Diluted:
|
|
|
|
|
||||
Total basic weighted average shares outstanding
|
28,309,004
|
|
27,941,814
|
|
28,243,400
|
|
27,867,090
|
|
Effect of dilutive securities:
|
|
|
|
|
||||
Common stock options
|
235,006
|
|
—
|
|
231,032
|
|
—
|
|
Total weighted average shares outstanding assuming dilution
|
28,544,010
|
|
27,941,814
|
|
28,474,432
|
|
27,867,090
|
|
Shares of common stock issued from the exercise of stock options
|
84,705
|
|
55,953
|
|
231,470
|
|
159,808
|
|
Grant-date fair value
|
$
|
2.78
|
|
Risk-free interest rate
|
2.65
|
%
|
|
Expected volatility
|
51.8
|
%
|
|
Expected term of options (in years)
|
3.0
|
|
|
Dividend yield
|
—
|
%
|
|
Three months ended June 30, 2018
|
Three months ended June 30, 2017
|
Six months ended June 30, 2018
|
Six months ended June 30, 2017
|
||||||||
Marine
|
|
|
|
|
||||||||
Contract revenues
|
$
|
80,698
|
|
$
|
62,003
|
|
$
|
143,489
|
|
$
|
129,183
|
|
Operating income (loss)
|
3,642
|
|
(8,617
|
)
|
9,907
|
|
(16,323
|
)
|
||||
Depreciation and amortization expense
|
(5,295
|
)
|
(5,087
|
)
|
(10,026
|
)
|
(10,342
|
)
|
||||
|
|
|
|
|
||||||||
Total Assets
|
$
|
268,642
|
|
$
|
252,348
|
|
$
|
268,642
|
|
$
|
252,348
|
|
Property, Plant and Equipment, net
|
128,047
|
|
135,492
|
|
128,047
|
|
$
|
135,492
|
|
|||
|
|
|
|
|
||||||||
Concrete
|
|
|
|
|
||||||||
Contract revenues
|
$
|
79,069
|
|
$
|
75,417
|
|
$
|
153,121
|
|
$
|
146,994
|
|
Operating income
|
949
|
|
6,150
|
|
1,753
|
|
12,375
|
|
||||
Depreciation and amortization expense
|
(2,136
|
)
|
(2,505
|
)
|
(4,185
|
)
|
(4,777
|
)
|
||||
|
|
|
|
|
||||||||
Total Assets
|
$
|
163,627
|
|
$
|
174,124
|
|
$
|
163,627
|
|
$
|
174,124
|
|
Property, Plant and Equipment, net
|
19,636
|
|
16,009
|
|
19,636
|
|
16,009
|
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
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;
|
•
|
availability and skill level of workers; and
|
•
|
a change in availability and proximity of equipment and materials.
|
•
|
General demand to repair and improve degrading U.S. marine infrastructure;
|
•
|
Improving economic conditions and increased activity in the petrochemical industry and energy-related companies will necessitate capital expenditures, including larger projects, as well as maintenance call-out work;
|
•
|
Expected increases in cargo volume and future demands from larger ships transiting the Panama Canal that will require ports along the Gulf Coast and Atlantic Seaboard to expand port infrastructure as well as perform additional dredging services;
|
•
|
The Water Resources Reform and Development Act (the "WRRDA Act") authorizing expenditures for the conservation and development of the nation's waterways as well as addressing funding deficiencies within the Harbor Maintenance Trust Fund;
|
•
|
Renewed focus on coastal rehabilitation along the Gulf Coast, particularly through the use of RESTORE Act funds based on fines collected related to the 2010 Gulf of Mexico oil spill;
|
•
|
Funding for highways and transportation under the FAST Act, which provides authority through 2020; and
|
•
|
Nearly $5 billion of federal funding provided by the USACE in connection with disaster recovery in Texas
|
|
Three months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
(dollar amounts in thousands)
|
||||||||||||
Contract revenues
|
$
|
159,767
|
|
|
100.0
|
%
|
|
$
|
137,420
|
|
|
100.0
|
%
|
Cost of contract revenues
|
138,998
|
|
|
87.0
|
%
|
|
122,023
|
|
|
88.8
|
%
|
||
Gross profit
|
20,769
|
|
|
13.0
|
%
|
|
15,397
|
|
|
11.2
|
%
|
||
Selling, general and administrative expenses
|
16,864
|
|
|
10.5
|
%
|
|
17,528
|
|
|
12.8
|
%
|
||
(Gain) loss on sale of assets, net
|
(686
|
)
|
|
(0.4
|
)%
|
|
335
|
|
|
0.2
|
%
|
||
Operating income (loss) from operations
|
4,591
|
|
|
2.9
|
%
|
|
(2,466
|
)
|
|
(1.8
|
)%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
|
|
||||
Other income
|
476
|
|
|
0.3
|
%
|
|
11
|
|
|
—
|
%
|
||
Interest income
|
47
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Interest expense
|
(1,205
|
)
|
|
(0.8
|
)%
|
|
(1,462
|
)
|
|
(1.1
|
)%
|
||
Other expense, net
|
(682
|
)
|
|
(0.5
|
)%
|
|
(1,451
|
)
|
|
(1.1
|
)%
|
||
Income (loss) before income taxes
|
3,909
|
|
|
2.4
|
%
|
|
(3,917
|
)
|
|
(2.9
|
)%
|
||
Income tax expense (benefit)
|
1,660
|
|
|
1.0
|
%
|
|
(1,624
|
)
|
|
(1.2
|
)%
|
||
Net income (loss)
|
$
|
2,249
|
|
|
1.4
|
%
|
|
$
|
(2,293
|
)
|
|
(1.7
|
)%
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
(dollar amounts in thousands)
|
||||||||||||
Contract revenues
|
$
|
296,610
|
|
|
100.0
|
%
|
|
$
|
276,177
|
|
|
100.0
|
%
|
Cost of contract revenues
|
260,019
|
|
|
87.7
|
%
|
|
247,795
|
|
|
89.7
|
%
|
||
Gross profit
|
36,591
|
|
|
12.3
|
%
|
|
28,382
|
|
|
10.3
|
%
|
||
Selling, general and administrative expenses
|
31,878
|
|
|
10.7
|
%
|
|
32,507
|
|
|
11.8
|
%
|
||
Gain on sale of assets, net
|
(1,499
|
)
|
|
(0.5
|
)%
|
|
(177
|
)
|
|
(0.1
|
)%
|
||
Other gain from continuing operations
|
(5,448
|
)
|
|
(1.8
|
)%
|
|
—
|
|
|
—
|
%
|
||
Operating income (loss) from operations
|
11,660
|
|
|
3.9
|
%
|
|
(3,948
|
)
|
|
(1.4
|
)%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
|
|
||||
Other income
|
474
|
|
|
0.2
|
%
|
|
21
|
|
|
—
|
%
|
||
Interest income
|
47
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Interest expense
|
(2,682
|
)
|
|
(0.9
|
)%
|
|
(2,817
|
)
|
|
(1.0
|
)%
|
||
Other expense, net
|
(2,161
|
)
|
|
(0.7
|
)%
|
|
(2,796
|
)
|
|
(1.0
|
)%
|
||
Income (loss) before income taxes
|
9,499
|
|
|
3.2
|
%
|
|
(6,744
|
)
|
|
(2.4
|
)%
|
||
Income tax expense (benefit)
|
3,149
|
|
|
1.1
|
%
|
|
(2,643
|
)
|
|
(1.0
|
)%
|
||
Net income (loss)
|
$
|
6,350
|
|
|
2.1
|
%
|
|
$
|
(4,101
|
)
|
|
(1.4
|
)%
|
|
Three months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
(dollar amounts in thousands)
|
||||||||||||
Contract revenues
|
|
|
|
|
|
|
|
||||||
Marine Segment
|
$
|
80,698
|
|
|
50.5
|
%
|
|
$
|
62,003
|
|
|
45.1
|
%
|
Concrete Segment
|
79,069
|
|
|
49.5
|
%
|
|
75,417
|
|
|
54.9
|
%
|
||
Total
|
$
|
159,767
|
|
|
100.0
|
%
|
|
$
|
137,420
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||
Marine Segment
|
$
|
3,642
|
|
|
4.5
|
%
|
|
$
|
(8,617
|
)
|
|
(13.9
|
)%
|
Concrete Segment
|
949
|
|
|
1.2
|
%
|
|
6,150
|
|
|
8.2
|
%
|
||
Total
|
$
|
4,591
|
|
|
|
|
$
|
(2,467
|
)
|
|
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
(dollar amounts in thousands)
|
||||||||||||
Contract revenues
|
|
|
|
|
|
|
|
||||||
Marine Segment
|
$
|
143,489
|
|
|
48.4
|
%
|
|
$
|
129,183
|
|
|
46.8
|
%
|
Concrete Segment
|
153,121
|
|
|
51.6
|
%
|
|
146,994
|
|
|
53.2
|
%
|
||
Total
|
$
|
296,610
|
|
|
100.0
|
%
|
|
$
|
276,177
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||
Marine Segment
|
$
|
9,907
|
|
|
6.9
|
%
|
|
$
|
(16,323
|
)
|
|
(12.6
|
)%
|
Concrete Segment
|
1,753
|
|
|
1.1
|
%
|
|
12,375
|
|
|
8.4
|
%
|
||
Total
|
$
|
11,660
|
|
|
|
|
$
|
(3,948
|
)
|
|
|
|
Six months ended June 30,
|
|||||
|
2018
|
2017
|
||||
Cash flows provided by operating activities
|
$
|
4,509
|
|
$
|
20,121
|
|
Cash flows used in investing activities
|
$
|
(9,863
|
)
|
$
|
(4,383
|
)
|
Cash flows provided by (used in) financing activities
|
$
|
2,549
|
|
$
|
(15,123
|
)
|
|
|
|
||||
Capital expenditures (included in investing activities above)
|
$
|
(11,911
|
)
|
$
|
(3,689
|
)
|
•
|
A consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than
1.25
to 1.00.
|
•
|
A consolidated Leverage Ratio to not exceed the following during each noted period:
|
•
|
Evaluation of Disclosure Controls and Procedures.
As required, the Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective as of June 30, 2018.
|
•
|
Changes in Internal Controls.
As of January 1, 2018 , we implemented new controls related to the adoption of Accounting Standards Codification Topic 606,
Revenue from Contracts with Customers,
and the related Accounting Standards
|
Exhibit
|
|
|
Number
|
|
Description
|
|
||
|
Stock Purchase Agreement dated April 9, 2017 by and among Anthony James Bagliore III and Lori Sue Bagliore and T.A.S. Commercial Concrete Construction, LLC (Schedules, exhibits and similar attachments to the Agreement that are not material have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedule, exhibit or similar attachment to the SEC upon request) (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 13, 2017 (File No. 1-33891)).
|
|
|
Amended and Restated Certificate of Incorporation of Orion Group Holdings, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission on August 5, 2016 (File No. 1-33891)).
|
|
|
Amended and Restated Bylaws of Orion Group Holdings, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission on August 5, 2016 (File No. 1-33891)).
|
|
|
Registration Rights Agreement by and between Friedman, Billings, Ramsey & Co., Inc. and Orion Marine Group, Inc. dated May 17, 2007 (incorporated herein by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 20, 2007 (File No. 333-145588)).
|
|
*
10.1
|
|
Fourth Amendment, effective July 31, 2018, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc. as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager
|
|
Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
†
32.1
|
|
Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Title 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*101.INS
|
|
XBRL Instance Document.
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
* filed herewith
|
||
† furnished herewith
|
|
ORION GROUP HOLDINGS, INC.
|
|
|
|
|
By:
|
/s/ Mark R. Stauffer
|
August 3, 2018
|
Mark R. Stauffer
|
|
President and Chief Executive Officer
|
|
|
By:
|
/s/ Christopher J. DeAlmeida
|
August 3, 2018
|
Christopher J. DeAlmeida
|
|
Executive Vice President and Chief Financial Officer
|
1 Year Orion Chart |
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