Orion Group Holdings, Inc 2026 Q3 Earnings Call

Please go ahead. Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings' third quarter 2026 financial results.

We issued our earnings release after market last night. It's available in the investor relations section of our website at oriongroupholdingsinc.com. I'm here today with Travis Boone, Chief Executive Officer of Orion, and Alison Vasquez, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we'll open up the call for your questions. Before we begin, I'd like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts are forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements.

Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-K. With that, I'll turn the call over to Travis. Travis, please go ahead. Thanks, Margaret.

Before we review the quarter, I'd like to recognize two recent honors. Orion was named one of the Houston Business Journal's Best Places to Work, reflecting the strong culture our team has built and the progress we have made as an organization. Orion was also ranked the number three contractor in marine and port facilities and number 12 in specialty concrete by ENR Magazine. These recognitions reflect our commitment to safety, accountability, collaboration, and continuous improvement, and I commend every member of the Orion team for their contributions. Turning to the quarter, we delivered a strong third quarter. Our consolidated revenues grew 14%. Adjusted EBITDA margin expanded 120 basis points, and adjusted EBITDA increased 37% compared with the third quarter of 2025. Alison will provide more detail shortly, but our results reflect highly active projects, strong equipment utilization, favorable operating conditions, and disciplined execution across the business.

I'm pleased to report that our Pacific Rock and Dredge team, or McAmis, made significant contributions in the quarter, supporting strategic pursuits and also delivering revenue with highly accretive margins and positive cash conversion. We've successfully integrated this business onto our platform, retaining the entire workforce, and we couldn't be more pleased with this acquisition and the work they do. Onto the market outlook. Customer activity remains strong across both operating segments, with a broad range of opportunities active or coming into focus across our end markets and geographies. We are in the early stages of a multi-year infrastructure investment cycle spanning national defense, energy security, port modernization, coastal resilience, industrial and manufacturing reshoring, and mission-critical investments.

While our backlog isn't yet reflecting it, bid activity has increased across our business, and our opportunity pipeline remains strong, including a sizable $2 billion of submitted bids awaiting award, compared with just over $1 billion at the beginning of the year. The $2 billion is split roughly evenly between concrete and marine. Our win rate is strong and has remained steady, and the increasing volume of submitted bids is indicative of owners being slow to award projects. Award timing can vary by quarter, but the scale and breadth of the pipeline in both operating segments and across all geographies reinforce our confidence in the outlook for our business. The work is there, and we are positioned well to win it and deliver it. During the third quarter, we booked $179 million of new contract wins and were awarded competitive positions on two additional Navy MACCs, which I'll discuss shortly.

In marine, demand remains strong, while the path from opportunity to award continues to evolve. We are pursuing larger, more complex projects through alternative delivery methods that involve contractors earlier in the project lifecycle. Early engagement allows us to support design, execution planning, and scope-to-budget decisions, improve risk management, and build stronger client partnerships from planning through delivery. In September, we were selected as the marine contractor on a fully funded federal design-to-budget contract in the Pacific Northwest with an expected value to Orion of about $200 million. We expect the project to convert to backlog in mid to late 2027. We were also selected to reconstruct a wharf on a naval base project in Florida, a couple of smaller projects in Hawaii, and for the next phase of reconstruction of the North Jetty of the Columbia River.

We were also recently selected as a prime contractor on two significant NAVFAC Northwest Multiple Award Construction Contract, or MACC, vehicles. I'm proud of Orion for being selected as a prime contractor on these U.S. Navy MACCs because it shows how far we have come as a company in the last few years. The first contract is the U.S. Navy VENTI MACC, a $9 billion contract vehicle and the largest procurement action in NAVFAC Northwest history, encompassing a broad range of major construction projects across the region. The second is a $700 million NAVFAC Northwest Waterfront MACC focused on the construction, repair, and modernization of piers, wharves, and other critical waterfront infrastructure. These MACCs are strategically important because the Navy awards a few contractors to compete for task orders under large federal programs.

Being a prime contractor on these MACCs gives our team greater control over pursuit and delivery strategy and access to a meaningful pipeline of future opportunities. Together, alternative delivery methods, MACC vehicles, and traditional pursuits provide multiple paths to engage clients earlier in the procurement process and better position Orion to convert attractive opportunities into backlog. In concrete, demand remains strong across mission-critical and other large-scale infrastructure projects. Our geographic expansion, broader site civil capabilities, and diverse project mix combine to create additional avenues for growth. Early engagement, consistent execution, and strong safety performance also position us to expand our scope and participate in additional phases of large multi-phase projects. Our geographic expansion is broadening our customer base, project mix, and end market exposure while reducing the impact of localized weather events on our overall results and strengthening the resilience of our concrete platform.

As customer priorities and award timing evolved, we have increased flexibility to deploy our capabilities where demand is strongest. During the quarter, bookings came from all four of our concrete regions and included a large concrete paving package, new phases of multiple data center campuses, a college research building, and a water treatment plant. Overall activity remains strong, and our customers continue to be disciplined in the selection and timing of project awards. At quarter end, we had approximately $1 billion of outstanding concrete bids. I am happy to report that in October, after the close of the third quarter, our team secured about $100 million of new awards, including two large mission-critical projects, site civil work for a premier tech company, a cold storage facility, a hospital, and multiple commercial buildings that we will add to our backlog in the fourth quarter.

As we close out the year, we remain focused on strong execution in 2026 and positioning Orion for continued success in 2027 and beyond. Across marine and concrete, we see substantial opportunities supported by a diverse client base, a growing portfolio of MACC vehicles, and healthy end markets. Our disciplined approach to project selection, risk management, and predictable execution gives us confidence in our bullish outlook for the future. We are pleased to reiterate our full year 2026 financial guidance and are tracking toward the upper end of the range for each financial metric. I will now turn it over to Alison to review the financials.

Alison? Thanks, Travis. We are pleased to report third quarter revenue of $256 million, which represents 14% growth over last year, gross profit of $33 million, GAAP net income of $5.5 million, adjusted EPS of $0.12 per share, and adjusted EBITDA of $18 million, which represents 37% growth over last year.

From an overall perspective, as compared to the prior year quarter, I will highlight that consolidated gross profit margin was generally flat, SG&A was down modestly, and borrowing costs came in higher, primarily related to the McAmis acquisition and revolver borrowings in the quarter. Turning to our marine business. Revenue grew 13% to $161 million, attributable to strong contributions from projects like our Sargent Beach Coastal Restoration project, a port modernization project in Alabama, and a bridge construction project in Texas, as well as contributions from Pacific Rock and Dredge with the opening of their work window.