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Orion Group Holdings Inc (ORN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid execution: contract revenues rose 7.6% year-over-year to $216.9M, GAAP diluted EPS was $0.17, and Adjusted EBITDA increased 15.3% to $17.1M as gross margin expanded to 14.0% .
  • Backlog improved sequentially to $729.1M, and including awards subsequent to quarter-end reached $977.3M; book-to-bill was 1.18x on $994M of bids with a 25.7% win rate, indicating encouraging demand and disciplined bidding .
  • 2025 guidance was initiated: revenue $800–$850M, Adjusted EBITDA $42–$46M, Adjusted EPS $0.11–$0.17, and CapEx $25–$35M; management emphasized margin improvement and backlog build ahead of a “transformational” 2026 .
  • Strategic wins underpin the narrative: $211.7M of new awards announced in February (Marine $143.5M; Concrete $68.2M), plus additional JV preconstruction work not yet included in the total, strengthening visibility into 2025–2026 .
  • Estimates context: S&P Global consensus could not be retrieved at this time; comparisons to Street estimates are unavailable due to data access limits (will update when available).

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution improved materially: Q4 gross margin reached 14.0% (+260 bps YoY) driven by higher-quality projects and improved execution; Adjusted EBITDA margin rose to 7.9% (+60 bps YoY) .
    • Backlog and awards momentum: year-end backlog was $729.1M (up vs Q3), and backlog plus awards was $977.3M; CEO: “we have built a cohesive organization that is focused on winning high-value, long-term projects with the right pricing” .
    • Concrete turnaround gaining traction: Concrete delivered Q4 operating income of $2.5M and Adjusted EBITDA margin of 5.3%; CEO highlighted data centers (35 projects) and large-scale distribution work: “Orion Concrete is a great turnaround story” .

  • What Went Wrong

    • SG&A elevated: Q4 SG&A rose to $21.6M (9.9% of revenue), reflecting higher compensation, business development, and legal costs .
    • Full-year revenue below Q2-revised guidance: 2024 revenue finished at $796.4M versus the Q2 updated guidance of $850–$900M due to timing shifts (Pearl Harbor and other slippages); management stressed revenues moved “to the right” into 2025 .
    • Cash flow volatility vs prior year’s Q4: CFO noted operating cash flow was $13.4M in Q4 vs $45.7M in Q4 2023, driven by working capital timing; management expects variability by project cadence .

Financial Results

MetricQ4 2023Q3 2024Q4 2024Vs Consensus
Revenue ($USD Millions)$201.6 $226.7 $216.9 N/A (S&P Global data unavailable)
GAAP Diluted EPS ($)$(0.13) $0.12 $0.17 N/A (S&P Global data unavailable)
Gross Margin (%)11.4% 11.9% 14.0% N/A
EBITDA ($USD Millions)$6.5 $13.5 $14.9 N/A
EBITDA Margin (%)3.2% 5.9% 6.9% N/A
Adjusted EBITDA ($USD Millions)$14.8 $15.2 $17.1 N/A
Adjusted EBITDA Margin (%)7.3% 6.7% 7.9% N/A
Segment Breakdown (Revenue)Q4 2023Q3 2024Q4 2024
Marine – Public ($M)$98.3 $61.1 $112.4
Marine – Private ($M)$36.9 $45.3 $31.5
Marine – Total ($M)$135.2 $140.0 $144.0
Concrete – Public ($M)$2.6 $10.8 $8.0
Concrete – Private ($M)$63.8 $75.9 $64.9
Concrete – Total ($M)$66.4 $86.7 $72.9
Total Contract Revenues ($M)$201.6 $226.7 $216.9
Segment ProfitabilityQ4 2023Q3 2024Q4 2024
Marine Operating Income ($M)$4.3 $5.5 $7.2
Marine Adjusted EBITDA Margin (%)8.4% 8.2% 9.2%
Concrete Operating Income ($M)$(4.8) $2.3 $2.5
Concrete Adjusted EBITDA Margin (%)5.3% 2.4% 5.3%
KPIsQ4 2023Q3 2024Q4 2024
Backlog ($M)$762.2 $690.5 $729.1
Backlog + Awards ($M)$883.0 $806.7 $977.3
Bids in Quarter ($M)N/AN/A$994.0
Awards in Quarter ($M)N/AN/A$256.0
Contract Value Weighted Win Rate (%)N/AN/A25.7%
Book-to-Bill (x)N/AN/A1.18x
Operating Cash Flow ($M)$45.7 $35.2 $13.4
Cash & Cash Equivalents ($M)$30.9 $28.3 $28.3
Total Debt ($M)$23.7 $28.0 $23.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025Not previously provided$800–$850 Initiated
Adjusted EBITDA ($USD Millions)FY 2025Not previously provided$42–$46 Initiated
Adjusted EPS ($)FY 2025Not previously provided$0.11–$0.17 Initiated
Capital Expenditures ($USD Millions)FY 2025Not previously provided$25–$35 Initiated
Revenue ($USD Millions)FY 2024 (as of Q2)$850–$900 Actual: $796.4 Missed prior guidance due to timing shifts

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Project timing/slippagesLowered 2024 revenue guidance due to delays at Pearl Harbor/Grand Bahama; revenue shifting into later periods Momentum picked up as large projects ramped; on track for strong H2 Q4 strong; some 2024 revenue moved “to the right” into 2025 (esp. Hawaii) Stabilizing; impact fading into 2025
Margin disciplineEmphasized disciplined bidding and quality work Gross margin improved to 11.9% on better pricing/execution Gross margin 14.0%; Adjusted EBITDA margin 7.9% with better pricing and execution Improving
Backlog/pipelinePipeline >$14B; backlog + awards $876M Backlog + awards $806.7M; recent wins across Marine and Concrete Backlog $729.1M; backlog + awards $977.3M; pipeline ~$16B Expanding
Navy/Pacific opportunitiesAnticipated DoD-driven demand Continued tailwinds; marine market strong MAC procurements progressing; opportunities likely later 2025/into 2026 Timing shifted right; scope intact
Data centers (Concrete)Added two North Texas data centers; growing footprint Concrete visibility improving; profitability scaling 35 data centers to date; large 1M sq ft Iowa project; turnaround story Strengthening
Technology/ERPInvestments in IT systems underway Continued investments; efficiency benefits ERP tools live in January; improves project oversight and efficiency Operational leverage ramping
Tariffs/macroN/AN/AMinimal steel tariff exposure, mitigated in bids; no spending pauses impact Neutral to positive tailwinds

Management Commentary

  • CEO strategic focus: “We did what we said we would do and we have built a cohesive organization that is focused on winning high-value, long-term projects with the right pricing to drive improved profitability” .
  • Market opportunity: “In Marine, our opportunity continues to be immense… Department of Defense work in the Pacific… Orion Concrete is a great turnaround story… ranging from 35 data centers… to Costco’s largest distribution center in Florida” .
  • Backlog/pipeline: “Our year-end backlog stood at $729 million… our pipeline increased from $3 billion to $16 billion… The key metric to watch this year is the increase in backlog” .
  • 2026 outlook: “We see 2026 as a year of transformational growth” .
  • CFO on execution: “Adjusted EBITDA margin improved 60 bps to 7.9%… Marine segment 9.2%… Concrete segment 5.3%… we bid ~$994M and won $256M (win rate 25.7%; book-to-bill 1.18x)” .
  • Balance sheet/cost of capital: White Oak credit amendment lowered pricing by 50 bps and extended maturity to May 15, 2028 .

Q&A Highlights

  • Revenue timing clarification: Management confirmed certain 2024 revenue (notably Hawaii) slipped into 2025; no project cancellations; backlog build remains priority for 2025 with bigger growth targeted in 2026 .
  • Pipeline drivers and margins: Pipeline expansion driven by data centers and Navy projects; margin environment favorable, enabling selective pursuit of higher-value work .
  • Navy funding/timing: No adverse impact from federal spending discussions; MAC procurements moving forward with named projects; transformational opportunities expected into 2026 .
  • Gross margin sustainability: Better pricing and execution plus equipment/labor absorption and project management tools should sustain and potentially expand gross margins with scale .
  • CapEx funding and sequencing: 2025 CapEx ($25–$35M) primarily marine equipment for Pacific/Gulf/Atlantic projects; expected to be funded largely by operating cash flow; revenue likely builds through Q2–Q3 with a lighter Q1 and a Q4 potentially below the prior-year Q4 as Hawaii wraps .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue could not be retrieved due to daily access limits; therefore, explicit comparisons to Street estimates are unavailable at this time. We will update when S&P Global data access resets.
  • Given the absence of consensus data, no beat/miss determination vs estimates can be made for Q4 2024.

Key Takeaways for Investors

  • Margin trajectory remains positive: gross margin 14.0% and Adjusted EBITDA margin 7.9% reflect pricing discipline and improved execution; management expects further leverage from ERP and scale .
  • Backlog and awards momentum is a near-term catalyst: backlog + awards reached $977.3M; book-to-bill above 1x and strong win rates support 2025 revenue and margin stability .
  • 2025 guide implies modest revenue growth with continued margin work: $800–$850M revenue and $42–$46M Adjusted EBITDA, alongside higher CapEx to position for 2026 opportunities; monitor backlog cadence and award timing .
  • Concrete turnaround broadens geographic and end-market exposure: data center footprint and repeat Tier-1 partnerships indicate durable demand; watch progress toward high single-digit margins medium term .
  • Marine remains the growth engine: Navy MAC projects, port expansions, and environmental work underpin multi-year visibility; timing may skew later in 2025 and into 2026 .
  • Capital structure improving: net cash position with reduced interest costs post-amendment enhances flexibility for growth investments .
  • Risks to monitor: elevated SG&A as growth investments continue, working capital swings in cash flow, and potential schedule shifts on large projects (especially Pacific) .