Good morning, everyone, and welcome to Orion Group Holdings Fourth Quarter 2019 Earnings Conference Call and Webcast. Joining me today are Mark Stauffer, Orion Group Holdings' President and Chief Executive Officer; and Robert Tabb, our Vice President and Chief Financial Officer. Regarding the format of the call, we've allocated about 15 minutes for prepared remarks, in which Mark and Robert will highlight our results and update our market outlook. We will then open the call for questions. For the course of this conference call, we'll make projections and forward-looking statements regarding, among other things, our end markets, revenues, gross profits, gross margin, EBITDA, EBITDA margin, backlog, projects and negotiation and pending awards, as well as our estimates and assumptions regarding our future growth, administrative expenses and capital expenditures. These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements. Moreover, past performance is not necessarily an indicator of future results. By providing this information, we undertake no obligation to update or revise any new projections or forward-looking statements, whether as a result of new developments or otherwise. Also, please note that adjusted net income, adjusted earnings per share, EBITDA and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including Regulation G. Please refer to the reconciliations and definitions inclusive to the most comparable GAAP measures and reconciliation tables accompanying these earnings call within the press release included this morning. The press release can be found on our website at www.oriongroupholdingsinc.com. Also, for additional discussion of risk factors that could cause actual results to differ materially from our current expectations, please refer to our quarterly and annual filings with the SEC, which are also available in the Investors Section of our website. And with that, I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Mark?

Thank you and good morning everyone. Thanks for joining us today. Today, we'll discuss our 2019 fourth quarter results and provide an update on our Invest, Scale and Grow Initiative or ISG. The key takeaways from our remarks today will be the vast year-over-year improvement in our top and bottom-line performance, the next steps of our process improvement program and our 2020 outlook. I'll begin by giving you an overview of the quarter. Robert will then discuss our financial performance, our capitalization, and provide an update on expectations for our future results in more detail. And finally, I'll come back to discuss our markets and provide an update on our ISG initiative. I'd like to start by noting our team's outstanding performance in safety during 2019 with our Marine and Concrete divisions reaching historically low recordable incident rates. While this is a remarkable achievement, the importance of this is not a statistic that ladder in our commitment as a company to watch out for one another and then having a safety mindset and performing our tasks whether they're on the job or at home. Our goal under our Target Zero program is for all our coworkers to go home to their families each day, injury free. I want to say thank you to all my coworkers for their efforts and looking out for each other and for conducting our operations in a safe manner. During the fourth quarter, we posted the highest quarterly revenue in company's history. More importantly, we were also able to improve our bottom-line compared to the prior year period as both the Concrete and Marine segments delivered positive operating profit, the improved operational performance of both segments, let you increase year-over-year EBITDA. Both segments also finished their positive operating profits for the full year as we saw improved execution on projects in our sizable backlog and positive results from our ISG initiative, especially around labor and equipment efficiency. We remain focused on executing our strategy of being a premier specialty construction company and providing solutions for our customers across the infrastructure, industrial and building sectors. Our end market demand remains strong as evidenced by our robust backlog of $572 million as of the end of 2019. This combined with the operational transformation we've implemented through our ISG initiative, supports our ability to deliver improved results as we progress into 2020. Now, I'll turn the call over to Robert to discuss our financial results for Q4 '19.

Thank you, Mark, and thanks everyone for joining us. Revenues for the fourth quarter 2019 were $199.8 million, compared to $99.2 million in the fourth quarter 2018. Our revenues in the prior year period were impacted by $22.8 million charge related to customer driven overruns on certain projects in our Marine segment. Excluding his charge, our fourth quarter revenues increased by 64% year-over-year, reflecting our improved execution across both segments. Fourth quarter, 2019 reported gross profit was $19.1 million, as compared to a gross loss of $22.2 million in the prior year period. Excluding the previously mentioned $22.8 million charge, along with $4.33 million reserve on receivables, fourth quarter 2018 gross profit was $4.8 million. The year-over-year gross profit increased in the fourth quarter was a result of better labor efficiency in both segments and better equipment utilization in Marine. SG&A expenses for the fourth quarter 2019 were $16.3 million, which compares to $13 million in the prior year period. The year-over-year increase in SG&A expenses is primarily driven by ISG related costs along professional fees. As a percentage of revenues, SG&A in the fourth quarter 2019 was 8.2%, as compared to 13.1% in the previous year, excluding $1.1 million of ISG related costs, our fourth quarter 2019 SG&A as a percentage of revenues was 7.6%, well below our target of 8.5%. For the fourth quarter 2019, we report net income of $159,000 or $0.01 diluted earnings per share, which includes $1.3 million or about $0.04 per share of non-reoccurring costs and other charges, predominantly related to the ISG initiative. Adjusted net income for the fourth quarter 2019 was $1.5 million or $0.05 earnings per share. Net loss in the prior year period was $94.4 million or a loss of $3.32 cents per share. On an adjusted basis, this translated…

Thanks, Robert. Turning to a review of our market sectors in our marine segments, we continue to have extensive opportunities with both public and private customers for the maintenance and expansion of marine facilities and waterways. This is reflected in the strong during environment we are seeing and in our expectations of new awards in 2020. The recreational market continues to be an important driver of project opportunities. The cruise industry being the fastest growing category in the leisure travel market, cruise lines in particular our key source of these opportunities. Newer larger vessels continue to come online driving demand in our markets for construction work on existing peer facilities and for new destinations and peer facilities that can that can accommodate these massive vessels. The energy sector continues to be a source of bid opportunities for both Marine and industrial projects. LNG export terminals represent a sizable part of these opportunities with 8 projects under construction and an additional 12 projects currently approved by -- and plan for construction within our operating footprint. We expect these along with other midstream and downstream energy driven projects to be a major source of bid opportunities in the years to come. By expanding our addressable market for project opportunities, we view the industrial sector as a key growth opportunity both in 2020 and in the future. A recent award of a $47 million project, for the Port of New Orleans represents one of the types of projects in the industrial space we are targeting and we are excited about our pipeline of projects in this sector. Our existing skill set aligns well with work in this space, which in many cases are being driven by our existing customer base, all of which makes this an attractive area for organic growth for Orion.…

Thank you. We will now be taking questions from sell-side analysts. [Operator instructions] Our first question comes from the line of Alex Rygiel with FBR & Company. Please proceed with your question.

First, you're a low bidder on $154 million, that's a big number. Any -- first congratulations, but secondly, any additional details here as to kind of what types of projects, which segments, so on and so forth?

It's a combination of both segments. We should have some announcements coming out, starting as early as next week. So, they're kind of midsized projects mostly in that number and -- but talent spread between the segments and sectors.

And then as you think about your total backlog now, can you characterize the margin profile of that backlog versus maybe what we've seen come through your P&L in the last 12 months? And then comment on sort of the absolute dollar of dredging backlog that you might have?

First, I would say is in terms of the margin profile, we're pleased with what we're seeing on the marine side in terms of that margin profile. We're working to as always outperform what we sort of see is our as bids and our contingency and work through that to where we can outperform. Our basic role in those segments is, we want to bring in all projects, projects that are above or is bid margin. Concrete, we've got a little bit, more of a competitive pressures, generally speaking, although we've been able to, in certain areas, improve on our as bid margins there. So, if we look at kind of our performance on the Marine side, we're getting into the zone of sort of our EBITDA margin expectations. And we've seen a big improvement on the Concrete side. We've got more work to do on the Concrete side. We're performing well in some of our markets. In other of our markets, we've got a little bit more work to do and we're focused on changed management and equipment rationalization in that business and we expect to be able to drive improvement in our delivered margins in that business as well.

Our next question comes from the line of Marco Rodriguez with Stonegate Capital Partners. Please proceed with your question.

I was wondering, if maybe you could talk a little bit about the gross margin in the quarter. Sequentially, you had a little bit of a decline, roughly the same revenues when I look at them Q3, Q4. Can you maybe talk a little bit about the drivers that you saw in there to kind of I moved that around a little bit?

Sure. I'll take that. What it was really driven by is, we had about $10.5 million of uninstalled materials related to 606 accounting where it says that when you have uninstalled materials, you book that revenue in cost at zero margins until you have it installed. So, if you take that adjusted that 10.5 million out, you would see margins look a little bit closer to what they were in Q3. So, it's really tonic from some are larger projects and bringing some of the materials on site.

So the expectations I'm assuming that's from an accounting standpoint as you catch that that comes back to you guys in the latter part of the project completion?

Yes, we recognized that margin as we place those. We installed those materials on the job.

And then maybe, if you can also talk a little bit about, in your prepared remarks, you talked about a very robust bid market and pipeline of projects that you guys are looking to pursue. If you could just talk a little bit about, provide some more color on those types of opportunities that you're looking at. If you can parse them between the Marine and the Concrete, that would be helpful.

Yes. In both segments, we're seeing activity that we'd like to see. In Marine sector or segment, we're seeing work from government agencies. Robert noted the kind of tilt towards the government sector revenue that's really been driven by a couple of the large projects that we have from a local port authorities that we're executing on now. But, we're continuing to see those opportunities. We're seeing a lot of opportunities in the Caribbean related around the remarks I made with the increased the volume of cruise ships and new cruise ships. We talked about this for quite some time. So, we're seeing those opportunities. In the energy space, we continue to see opportunities driven by just the domestic energy production that's been being delivered to the Gulf Coast refineries and storage facilities, and in some cases export facilities. So, that's driving, continuing to drive opportunities for us. We've seen an increase in opportunities that those projects drive for our dredging fleet. We're getting coverage with our dredging fleet, both in the private sector and the public sector, which we hope to see that continue. And so, we're seeing a lot of different things that, that we like there and including, medium sized project and some larger projects that we talks about pursuing, select larger projects. On the Concrete side, we continue to see, of course, the normal sort of like commercial type projects that we target. And those things, those are kind of small to medium size, generally speaking, projects, but we're also seeing it because we're targeting structural works that we've been very pleased with the structural projects that, that we're seeing and we're tracking and we're bidding on. We announced the project last year for structural projects in Austin that is now kicked off. So, we're starting to see that our efforts in structural go beyond just the Houston market. And as I said in my remarks, this is an area of that we targeted for expansion. So, we're pleased with what we're seeing there and again, starting to see that in our other markets starting to see the payoff of our efforts in other markets, besides Houston for structural work.

And last question, if I might. You guys recently announced industrial market win. It's been a strategic initiative that you guys have been working on here for a few years now. I was wondering, if you could just talk a little bit about maybe what you learned over this period of time? What you kind of took away from this particular win? And what changes if any, to your approach you're sort of looking at or implementing to get this to be a larger revenue driver and something that might be more consistent or larger piece for you guys?

Well, we've done a lot of groundwork and legwork instilling the seeds for our efforts in industrial over the last couple of years. We're starting to see some of that of pay off, which we are very happy about. We continue a lot of the work that we're targeting is we talked about in my remarks were from existing customer base, and we've done a lot of work there to, as I say, lay the groundwork. We are tracking numerous projects that both have they have both a Marine component to it, as well as kind of an industrial component to it. So, we're hopeful that we'll see those opportunities progress than we'll see that payoff for us in terms of backlog in both for Marine work and industrial work. So, I guess the key takeaway we've done from this is just being persistent. We're persistent in our pursuit of this, getting on the bid work getting the opportunities for us to bid on this work. And then when we haven't been successful using that as, a learning feedback route to inform us better on the next proceed. So, again, a lot of things that we see going on that that impact the Marine market will also impact the, the industrial space force as well. So, we're working to gain some momentums on that in 2020 as we see some of these projects come to fruition.

Our next question comes from the line of Poe Fratt with NOBLE Capital Markets. Please proceed with your question.

I was just wondering if you could highlight whether the low bids outstanding not yet awarded $154 million. Is that exclusive of the awards that you've already announced this year? Or are those awards part of that number?

It's a combination of both, but the majority of the awards, like the industrial ward is included in that as well. So, this is the mix, but the majority of the awards that we've announced this year are part of that number, the subsequent award number.

Okay, great. And then Robert, could you highlight among your backlog, what portion of the backlog you expect to recognize over the next year or so or just give us an idea of the aging of the backlog?

Yes. We don't give out the specifics, but we do think that are good, chunk of it will burn off this year. Now, we do have a couple of larger projects, the Port of Seattle project that's a multi-year projects that's sizable in the backlog. The Port Everglades project that we announced several quarters back substantially wrap up this year. So, you know, when we think about our guidance and what we've laid out, we still have some work to go get to capture of what we do have a significant portion of that in now.

Yes. I would just add to that just to underscore what Robert said. Yes, we liked where we were coming into the year as far as what our backlog was relative to our guidance, and we've been pleased with the low bid and the go get, as Robert said. So, we like where we're tracking, still have more work to do, but we like where we're positioned right now.

Okay. And the industrial awards, Mark, is going to be part of Marine, you're not going to break out the industrial segment at this point in time?

Not at this point. Hopefully, that'll be it a good problem to have, if we get to the point where we need to break that out. But at this point, it's not of the size that we'll split that out. So, we'll continue to report that over the Marine segment for now.

And then, when you look at the -- when you look at sort of -- where you are in the ISG process? If you help for a long, do you think you are in the process there as far as realizing the benefits of the program? And then also if you give me, an idea that timing and cost of the ERP implementation and also in the context of what potential you're going to see in CapEx for 2020?

Well, I think in terms of ISG, as I said in my remarks, we've kind of got that embedded those processes that we worked on over the past year. We kind of view this now as we're coming to the end of sort of the ISG spend. We will have some a little bit of spend for Q1, but really we're viewing this now as -- this phase is kind of telling to closure. We have in embedded the processes that we developed and enhanced, I'll say, not developed, but enhanced and improved throughout this last year in our processes. I think as we commented on, we've, we've seen any improvement in the back half of the year from those efforts. We obviously are going to continue on in those areas that we thought we've developed. But in terms of ISG and the expenditure there, we should see that, expenditure and call out a kind of complete in Q1. As we said though, we're now moving into the next phase, which is driven around continuing to enhance some things that are really kind of anchored around ERP. As I said in my remarks, we've got sort of antiquated if you will systems and we've got different systems and in both businesses, and so I think there's a lot of efficiencies we can gain by going through a common platform. And the end goal of it really is to get better, faster information in the hands of our project managers or our operational managers to drive their decisions. And so that's kind of the next phase, we will go in. We will talk. We're still in the process of finalizing the cost and the negotiations and things like that, with that effort. So, it's premature for us to talk about the cost there, but we will have more information on that as we as we move ahead, and we'll share that if you took your time and we get better further rebate.

And, Robert, if you could talk could talk about 2020 CapEx and then also, maybe in the context of what you think working capital is going to do in 2020 20, a big positive in '18 little pretty draught by use of working capital on 2019 and then sort of what should we expect in 2020?

I don't expect outside of and as Mark mention about the ERP and what will update on that. But I've said, CapEx just going to be enough, the normal rains that we've seen over the last few years, that sits in the $20 million range on a gross CapEx spend as far as working capital, and you saw this year we're receivables increase, and it starts to alleviate a little bit and is it operate in company, cash flow from operations was positive. So, we'll see that cash flow continued in for Q1 and Q2, this year. But, we expect CapEx to be kind of in the same range. We continue to focus as we generate free cash flows to succeed pay on debt. And as we progress forward in the year, you'll see us to continue to deliver from both ends both increasing as it own sort of either, and then just the total debt outstanding drop, as well.

And then, if you could just answer last one on your guidance for EBITDA in 2020 would help how much of a Concrete if you could break that out between Marine and Concrete. it sounds like you have at least rough idea. And, you've made a lot of progress, but Concrete profitability continues to lag. And can you outline a little more definitively the actions you're taking to improve profitability there?

Well, I think, as I've said earlier, we're a little bit further along and Marine in terms of being in the zone that where we want to be within in terms of EBITDA margins. And so, our guidance is primarily driven by the Marine sector. However, on the Concrete side, we've made significant progress there in terms of what we've done with our processes, how we're set up. So, we're very pleased with what we've done there. We're pleased with the efforts of our team and that in that division. We have great people that do great work in that division. We are working though to improve the bottom-line and get into the zone of where we want to be there in terms of performance. And as I said, we're heavily focused on improving and enhancing kind of our changed management efforts there. So that, when we're doing additional work, we're getting paid for that one way or another in terms of doing that additional work. We're really zeroing in on our contracts and treating our customers' right, but also being, treated rider as well in terms of that changed management. Equipment rationalization continues to be an area of focus for us in both segments, but also it's a big effort for us in the Concrete division and again just getting that transparency of information, so our managers make the decisions that they know how to make and see improvement there. And then also just with other costs rationalizations and so, our performance on the jobs has improved significantly in the last year and we're very pleased about that. And so, we'll continue to focus our efforts around that, but also around sort of the indirect overhead cost pressure as well. And again, that's about getting information in the hands of our managers, so they can make the decisions that they know they need to make and will make but it just going to have to get information there. So, we'll continue our efforts on improving and enhancing that data that they see to do that.

So, if you're not going to break out the Marine versus the Concrete profitability EBITDA in the guidance. Can you give me an idea of whether it's based on getting Concrete profitability or EBITDA into the zone or is that going to be a 2021 event?

Well, we certainly hope to outperform and obviously we will work as always to outperform what we're guiding too. But, yes, I think to answer your question right now, our plan for 2020, which we again hope to outperform on is to make progress towards getting where we think we should be. We do plan to have and that plan reflects that progress. And clearly, we'll work to try to outperform that. It'd be very nice for us to outperform in that division and get us back in that zone. But, I think this year our base plan is to make progress towards that and which would be significant improvements for the division. So, that's our goal and of course we'll work to outperform that.

There are no further questions in the queue. This does conclude our question-and-answer session. This does conclude our call. Thank you all for joining us today. We look forward to hearing from you during our next quarter. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.