Good morning, and welcome to the Orion Group Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce of Investor Relations for Orion. Please go ahead.

Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings' First Quarter 2024 financial results. We issued our earnings release after market last night. It's available on the Investor Relations section of our website at Orion Group Holdings inc.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'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 these 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'd now like to turn the call over to Travis. Travis, please go ahead.

Thank you, Margaret, and good morning, everyone, and thank you for joining our first quarter 2024 conference call. I'll start with a quick overview of our first quarter results as well as providing more color on the tremendous opportunities before us. Then I'll turn it over to Scott to cover our financial results. We generated first quarter revenue of $160.7 million and adjusted EBITDA of $4.1 million. We are continuing to focus on increasing our margins. We expect revenue to build throughout the year with our current backlog and strong pipeline of opportunities. In addition to first quarter being our seasonally slowest period, revenue was affected by reduced activity on 2 major projects related to scheduling impacts outside of our control. These delays should not impact the critical completion of these large projects under contract for the total anticipated revenues or margins generated from these contracts. It is normal on construction projects for unexpected delays to occur. We have strong project teams that are nimble and able to respond quickly to get the projects back where they need to be. We expect to recover this work in the upcoming quarters with strong momentum in the back half of the year. Based on the activity level that we are seeing for our services, especially in marine construction, we are reiterating our full year 2024 expectations for revenue in the range of $860 million to $950 million and adjusted EBITDA in the range of $45 million to $50 million. We entered the first quarter with a solid foundation and a much healthier business. After our hard work transforming the business throughout 2023, we are now in a position to reap the benefits. We have put disciplines, processes and procedures in place. Expectations are crystal clear for our teams and everyone is aligned…

Thanks, Travis, and good morning, everyone. Starting with our first quarter financial results. We generated revenue of $160.7 million, up 1% over last year. As Travis mentioned, we experienced a schedule shift during the first quarter in 2 large projects and expect to recover this work over upcoming quarters in 2024. While total revenue for the quarter remained largely flat compared to last year, the mix of revenue changed dramatically with marine revenue up 34% and concrete revenue down 32%. This change in mix reflects our focus on marine segment growth opportunities as well as the disciplined bidding standards we adopted to win quality work at attractive margins in our concrete segment. We have learned to walk away from work that doesn't fit us and direct our energy to projects that deliver solid margins. With the shift towards marine projects, we are also increasing the average size of projects in our backlog. To give you a sense of typical project size in our Marine segment, a $150 million project is right down the middle of the fairway for us. And in our Concrete segment, that's about $30 million for a large project. Data center projects in concrete may run between $20 million and $50 million. Targeting these larger projects ultimately gives us better revenue visibility over longer time periods. We also gained efficiencies in managing resources for a large project versus many small projects. Our goal is to have a more reliable and predictable revenue stream. Three to 4 large projects rolling out over a 1- to 2-year time line would help dampen some of the quarterly revenue fluctuations driven by job starts and completions. At this time last year, we had just a couple of large projects in our opportunity pipeline. Today, our business development team is pursuing over…

We will now begin the question-and-answer session. [Operator Instructions] At this time, we'll pause momentarily to assemble a roster. Our first question -- our first question comes from Julio Romero from Sidoti & Company.

I wanted to start with talking about Marine and wanted to talk about the increasing number of bidding opportunities there. Specifically, if we could go into the magnitude of the U.S. enabled defense spending opportunity, you guys talked about the Pearl Harbor project and that you expect it won't be the largest U.S. Navy project for long. I guess if you could help us understand kind of how big the opportunity is relative to the past?

So we don't have a -- I can tell you, based on what we've compiled it's tens of billions in the Pacific. We don't know the exact number. I'm not sure it's actually been published. We just know by pulling together parts and pieces of different projects that we're aware of. It's a very large number in the multibillions.

Okay. Got it. And then talking about the concrete business, can we just talk about your shift in focus to data centers for a bit? Maybe help us understand how much of like trailing 12 months sales in concrete are from data centers and maybe what percentage of concrete revenues do you anticipate that makes up a year from now?

So I'm not sure -- I don't have the number on the top of my head enter. But we've done -- I know our biggest contract to date in concrete was a data center that was roughly $55 million that we signed last year that we're completing this year. And there's several others. I mean as Scott mentioned kind of on the call there, the range is typically $20 million to $50 million, and we've been seeing quite a few -- quite a few of the opportunities spring up here in the last couple of years, especially. And as we've completed more and more of those, we've kind of got involved in more of them. And so it continues to ramp up here as the AI-driven infrastructure is kind of hot at the moment.

Got it. And then just if you can help us understand how a data center project is maybe a little different than your traditional concrete project from a concrete contractor perspective, would there be some incremental complexity or specialization of the project? And does that lend itself to hopefully higher bid margins for that type of project?

It's not necessarily that it's super different work than what we already do in concrete. We do a lot of complex concrete work in our concrete business on a regular basis, and it's pretty similar to what we do is just put together a slightly different for a data center, but it's a very similar work to what we kind of normally do. Typically, the -- as far as we've performed pretty well on the data centers that we've done. I'm not going to speak to specific project metrics. But generally speaking, we've done very well on our data center work.

Understood. I'll pass it on and I'll hop back in the queue.

The next question comes from Alex Rygiel from B. Riley.

A couple of quick questions here. First, the Commercial Concrete segment margins were very positive. Congratulations about that. But how confident are you that that's going to continue?

Thanks, Alex. Yes, that's a good question. Yes, we're confident in that business. We've -- as you know, we've done a lot of work over the last 1.5 years or so, getting kind of being more disciplined about what we pursue in our concrete business, being more disciplined about our minimum bid margins and then improving our ability to deliver the projects profitably. We're pretty confident that we've -- that we can continue to perform well in our concrete business based on the discipline we have and how we're approaching the work and feel very good about devedeliver strong margins in that business, whether it's exactly that number or something it's part of that -- part of that will be market driven and part of that will be other things. But generally speaking, we feel good about our concrete business continue to perform profitably.

Yes, I do think the first quarter was a little bit higher than average just based on the contracts that completed during the time frame. So I wouldn't necessarily take Q1 and then run that out the rest of the year, but we do expect that we continue to see year-over-year progress on our margins as we go forward.

That's perfect. And then can you remind us what your CapEx budget is for 2024? And maybe talk about a couple of the larger components within that.

The CapEx budget for the year... Yes. So we have maintenance CapEx needs that we always have every year, and we've typically talked about that being about $50 million a year for resets and just normal maintenance on our fleet. And then we've talked about investments that we're making to grow our fleet about $30 million in a dredge build program over the next couple of years. So that's kind of the things that we have in mind right now. There may be according to the opportunities, some shift of dollars, but I think those are probably the quantities that you should expect going forward.

Super helpful. And then lastly, can you remind us what the time line for the Pearl Harbor project is moving forward now? Sort of when do you see construction activity and how long does it last for?

Yes. So we'll be kind of fully ramped up and operating at kind of peak capacity near the middle of this year until, let's call it, the middle of next year before it kind of starts ramping down somewhat in the latter half of next year.

The next question comes from David Storms from Stonegate Capital.

Just hoping we could start with the current backlog. It had a nice jump. You mentioned roughly $100 million since the end of the quarter. Was this a timing thing? Was this just one big win that came through? Kind of what drove that backlog jump?

It was just a timing thing. We had -- there wasn't one specific win that drove that. There was quite a few wins in both Concrete and Marine that drove that number. And so it wasn't one specific project, which is a good thing, right? It's not just driven by one. I think that's had a pretty good run of wins there that drove that number.

Understood. And then just on the scheduling delays that you mentioned, are you able to give us a sense of maybe the magnitude of that and the spacing of any catch up? Should we expect most of that to be in Q2? Or will it kind of be equally spread out through the remainder of the year? How should we be thinking about that?

Yes, it will be spread out through the remainder of the year. Some of it, I think, on one of the projects, most of the catch-up will happen in Q3 and the other one will be probably sort of some in Q2 and then more in 3 and 4.

Understood. And then just one more for me. Your press release mentioned that your opportunity pipeline has almost quadrupled. Are there any specific initiatives that you're onboarding to try to capture, obviously, as much of this pipeline as you can?

We've been in progress for the last year plus working on quite a few things to capture that market. We had a pretty strong sense that it was going to be improving significantly, which has driven a lot of the investments and work that we've been doing over the past year plus, David. So it's been not necessarily that we've -- we're starting something new now. We've already been working on it for quite some time as we saw the market starting to blossom.

Good luck in the second quarter.

[Operator Instructions] Our next question comes from Josh Zoepfel from Noble Capital Markets.

It's filling in for Joe. So you guys talked a little bit Hawaii. It seems to be obviously having some delays. But can you guys just provide any just really additional color on the Grand Bahama project? How is that looking?

It's looking very good. We -- that would had some delays with a subcontractor, but kind of moved some noncritical path work to the right. They got a little delayed on some other things, and we'll be starting up a little later on their portion of the work than we had anticipated, but it was, again, noncritical path work and it didn't impact the schedule of the project or any of our work. It just sort of delayed their work for until the end of the second quarter.

Okay. Perfect. And obviously, there hasn't been a lot of time between the fourth quarter and now. But can you speak on the judging environment, you guys mentioned kind of the pick back later in the later half of this year, but you guys still kind of expect that.

That's what we're -- well, I'd say we're optimistic that it will start picking back up later this year. We haven't seen signs of it yet, but it's kind of the same sort of status that has been for a little while at this point. Again, we're optimistic that while things will start clicking a little more regularly with the core here later this year.

Okay. Perfect. And then I guess last one I'll squeeze in here. I guess in the SG&A, obviously, it's higher than we kind of anticipated. Should we kind of expect this to kind of continue throughout the year, this kind of run rate?

Yes, I think that this absolute dollar amount is probably a good run rate to use going forward as we continue to incur some costs related to claims and as we make the most of our business development opportunities by investing in that function. Thanks, Josh. And while we wait for more calls, it might be a good time to say, there was a typo in our press release that went across the wires and that was to the balance sheet, which had an incorrect current debt number. That has been corrected in the 8-K, which was filed with the press release there.

[Operator Instructions] There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Travis Boone on for any closing remarks.

Thank you. Thank you, everyone, for joining today. We appreciate your time. I guess in closing, I just want to thank all of our employees who are working really hard in our business every day to work safely and to work profitably and bring the best that they can to work every day. I also want to thank our shareholders for continued confidence in us and look forward to continued growth in the company here going forward. Thanks, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.