Thank you for standing by and welcome to the Q3 2023 Orion Group Holdings, Inc. Earnings Conference Call. I would now like to welcome Margaret Boyce, Investor Relations for Orion, to begin the call. Margaret, over to you.

Thank you all for joining us today to discuss Orion Group Holdings' third quarter 2023 financial results. We issued our earnings release after market last night. It is 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 Scott Thanisch, 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 would 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. I'd also like to let you know that Orion will be presenting at the Noble Capital Market, NobleCon19 conference, December 3rd through 5th in Boca Raton, Florida. With that, I'd now like to turn the call over to Travis. Travis, please go ahead.

Thank you, Margaret, and welcome everyone to our third quarter 2023 conference call. On September 12th, Scott and I celebrated our first anniversary with Orion. And looking back, it's been a very exciting and productive year. Both Scott and I are proud of what our team has accomplished. When we assumed our leadership roles, we knew that success would rely on our people embracing change and pulling together to transform our business performance. They stepped up to the plate, eager to move Orion into a new era of collaboration and opportunity. We are now beginning to reap the benefits of the changes we put into place, and we continue to feel bullish about what we can achieve in the future. Last quarter, we told you that we expected continued improvement in profitability through the back half of the year, and we are delivering on that promise. Our third quarter revenue came in around $169 million, and our adjusted net income for diluted share was $0.02. Third quarter adjusted EBITDA was $9.4 million versus $3.7 million in Q2. While revenue is down somewhat year-over-year due to our exit from Central Texas, the higher quality of our revenue was delivering improved profitability. Since March, our concrete business has been profitable in improving on an adjusted EBITDA basis, and it is operating income positive on an unconsolidated basis in the third quarter. We have recent wins totaling $50.8 million in concrete and they are the type of projects that require our expertise and will deliver strong margins. Bid activity has remained steady in our core markets of Dallas and Houston. As I mentioned last quarter, the cost of capital is still a restraining factor in converting bids to backlog. But demand is strong and we are staying focused and disciplined pursuing projects aligned…

Thanks, Travis. I'll cover some highlights and then review the third quarter results. As Travis pointed out, there's a lot of opportunity ahead for Orion. And maintaining a strong balance sheet and liquidity is a top priority in executing our growth strategy. Financial strength is extremely important in winning large contracts that can span over multiple years. As I reported last quarter, we increased our access to capital with our lenders and succeeded in monetizing $25 million in sale leaseback transactions, including the $12 million sale of our Port Lavaca South Yard. We remain focused on monetizing our real estate assets such as our East West Jones property. East West Jones is a unique development opportunity with 345 acres on the Houston Shipping Channel and has generated interest from multiple parties. We have previously announced a signed contract on this land, but that buyer ran into financing issues. We're now negotiating with another buyer and we're confident that we will complete a transaction that will provide additional capital to invest and grow our business in 2024. As a result of our performance and Orion's improved financial position, we've also been able to significantly increase our bonding capacity. This gives us a greater ability to bid and win larger projects and grow our business above where we are today. To wrap up on the balance sheet, as of September 30th, we had $3.9 million of cash and total debt outstanding of $50.3 million. Our debt is higher than the end of the second quarter due to a temporary investment in working capital with a mobilization underway in Hawaii. Moving on toward financial results. Orion produced a $168.5 million of revenue in the third quarter, down 8% sequentially and 8% from the prior year. The revenue decline was largely driven due to…

[Operator Instructions]. Our first question comes from the line of Joe Gomes from Noble Capital. Please go ahead.

Good morning. Thanks for taking my questions.

Good morning, Joe.

Good morning, Joe.

So I wanted to start just on the top-line on the revenue. Came a little bit lighter than we were expecting. I think consensus was expecting. Was wondering did top-line revenue in line with you guys thoughts prior to the quarter was a little softer than what you were thinking and how does that look? You just mentioned, Scott, the general upward trend should continue. But I think consensus for the fourth quarter is more around that $200 million level. Are we all being a little too optimistic there for the fourth quarter, even with some of these new contracts coming online?

No, I don't think the fourth quarter is optimistic from the perspective of what I've seen out there in those expectations. But we're pleased with where the quarter ended up. We have a growing backlog. And so although the revenue timing may vary a bit from quarter-to-quarter with the backlog growing, the revenue will come. And so the margin is -- the margin performance was pretty significant this quarter and we're happy to see that continue. So I think that for the full-year, we're kind of in line with what we were originally thinking it would look like, and going into next year, we expect to have some good momentum.

Okay, thanks for that. And then you talked a little bit about the bidding environment. Just maybe getting your guys' thoughts. Obviously, what's happening in Washington, the continuing resolution. Are you seeing any impact on the bidding environment from that, or do you think that, given some of the past bills that have been passed for spending in the area, especially on the marine side, that the continuing resolution shouldn't have much of an impact than you guys, assuming it doesn't just drag out forever?

Yes, we're not seeing any impacts yet, Joe. It's been fairly kind of consistent, and we haven't seen the bid opportunities slowing down because of continuing resolution, yet to be seeing what happens next year, in case if something does shift there. But I think things are continuing to move.

And I think that there's generally good support on both sides of the aisle for the projects that we would benefit from. So, Washington has its issues, but I think everyone agrees that the country needs investment in infrastructure, particularly in the marine space.

Great, thanks for taking the question. I will get back in queue.

Our next question comes from the line of Julio Romero from Sidoti. Please go ahead.

Thanks, hey good morning Travis and Scott.

Hi, how are you?

Hey, so I appreciate the color you gave about the current bidding environment for dredging. Maybe what's your sense about when the competitive environment might abate? Maybe you can point to historical instances when something like this has happened. And when do you think the environment will allow you to bid for projects with more proper bid margins that you're targeting?

We think it's going to be sometime, probably late next year. It's probably going to continue somewhat like this for some period of time. Obviously, we'd like for it to be sooner, but it seems like it's going to continue this way for a little while longer.

Yes, so we're just making ourselves look at our schedules, be mindful of our maintenance cycles, being disciplined in the bidding processes that we're engaged in and making sure that we value our contributions appropriately and we're pricing ourselves right. We're not going to lock our equipment up on low margin work for long periods of time. But we'll price ourselves according to market dynamics and kind of ride out the storm. We're larger than some of these small players that have to act more desperately.

Got it. That's very helpful. And then maybe piggybacking on Joe's question a little bit about the top-line, maybe specifically on the marine side. Because the marine sales sequentially contracted a bit. Is it fair that they're expected to inflict back upward next quarter towards maybe second quarter's top-line figure or is that not in the ballpark?

Yes, we should see a continuing growth in the marine revenue line as we have more and more production coming off of Hawaii that will really start to produce in the fourth quarter. Just early starts on that the Grand Shipyard in Grand Bahamas. That's also going to start contributing. So the top-line in the marine is going to come up pretty significantly starting in the next quarter and then really in earnest starting into the first and second quarter of next year.

Really appreciate the color there. I'll hop back into queue. Thanks very much.

Thanks, Julio.

Our next question comes from the line of Dave Storms from Stonegate Capital Markets. Please go ahead.

Good morning.

Good morning, Dave.

I appreciate you taking my call. Just wanted to start with the East West Jones property. If I remember correctly, that had a price tag of about $36 million. Will that or has that been repriced and is there an expected close date with the new potential buyer?

Yes, so we're still marketing in that same neighborhood and we anticipate the conversations that we're engaged in right now to the extent that those continue and conclude successfully the timing of a transaction would be early next year.

Very helpful. Thank you. And then just one more for me with the great contract win in the Grand Bahamas. Are there any logistical challenges or resource constraints that you're foreseeing considering you're going to have two very large projects on either side of the continent?

No, it's not really an issue for us. We've got multiple crews and multiple teams and it's different resources both with our equipment and people that will be delivering each project. So no concerns as far as resource constraints internally. It's a different country. So there's challenges with different things getting going in a different country. But it's moving quickly and we're mobilizing and getting started on the Bahama project.

That's very helpful. Thank you.

Our next question comes from the line of Alex Rygiel from B. Riley. Please go ahead.

Thank you, gentlemen. Coming back to the Grand Bahama project. What's the margin profile of that project relative to some others and any notable working capital needs in the short-term?

Yes, we don't talk about specific project margins, but that's a project that we're really happy with both in terms of it fitting our strategic direction being a design build contract, bringing more of our services to bear for our customers. And also just being in a different geographic space than in Hawaii where we've also got some growth going on. It's nice to kind of balance out that. So I'm happy with the margin profile and expect to see continued improvement in the overall marine margins as we execute on that and the Hawaiian project going forward.

And then any working capital needs in short-term on that?

There's a fairly good dynamic within that contract for mobilization payments. So the working capital investment is relatively small. Obviously working in some different currencies will drive a little bit extra need than what we might normally have. But relatively modest, so not a significant build in working capital anticipated related to Grand Bahamas.

And then as it relates to fourth quarter directionally, how should we think about SG&A expense? I know last year turned it down sequentially quite a bit, but given the increase in work here, how should we think about SG&A in the fourth quarter relative to the third?

Yes, I think that we'll see kind of continued levels around where we are, potentially a little growth in those legal expenses that I mentioned as we have some customer claims that we're pursuing. And that's probably going to be a higher need over the near-term as we have a couple of fairly significant customer claims that we'll be investing legal expense in. But I would think the third quarter would be a good measuring stick for where it's expected to be in the fourth quarter and beyond.

And was there any positive benefit from when East West broke apart?

Relatively minor. I mean, there was some earnest money that was forfeited, but not a material amount.

Great. Thank you very much.

Thanks.

[Operator Instructions]. There are no further questions at this time. I would now like to turn the call over to Travis Boone for closing remarks.

Thanks, Mundy. We are proud of the progress we have made with transforming this business to be healthier, profitable, and set up for future success. We have been doing what we said we would do, and the results are starting to show. Our team has been working hard to make it all happen, and we appreciate all of their efforts to make us a stronger company. Finally, our thoughts and prayers are with those who are facing the adversities of war. While being a U.S. domestic company may provide some insulation, we can only keep praying for a peaceful resolution to these devastating conflicts. Thank you for participating today, and as always, we welcome the opportunity to maintain an open line of communication with current and potential investors.

I would like to thank our speakers for today's presentation and thank you all for joining us. This now concludes today's call. You may now disconnect.