Good morning and welcome to the Orion Group Holdings Third Quarter 2024 Financial Results Conference Call. [Operator Instructions]. I'll now like to turn the comments over to Margaret Boyce, Investor Relations. Please go ahead.

Thank you, Operator, and thank you all for joining us today to discuss Orion Group Holdings Third 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 oriongroupholdingsinc.com I'm here today with Travis Boone, Chief Executive Officer, 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 the factors that could cause our results to differ materially from those forward looking statements are contained in our SEC filings, including our reports on Form-10Q and 10-K. With that, I'll now like to turn the call over to Travis. Travis, please go ahead.

Thank you, Margaret, good morning, everyone, and thank you for joining our third quarter 2024 conference call. I'll start with an overview of our third quarter results and market update, and then I'll turn it over to Scott to cover our financial results. For the last few quarters we said that we expected momentum to pick up strongly in the back half of this year, and that did play out in the third quarter, total revenue came in at $226.7 million and adjusted EBITDA was $15.2 million, a 62% improvement year over year. The $15.2 million in adjusted EBITDA is higher than the $9.6 million we reported in the entire first half of this year. In fact, 59% higher. Our top line growth was largely driven by the ramp up of our Pearl Harbor and Grand Bahama projects now that the project delays have been resolved. Also, a number of projects that began during the summer contributed to the strong quarter. Our third quarter results demonstrate the level of profitability our business can generate as we scale and grow. For the full year we're on target to deliver adjusted EBITDA off in the range of $40 million to $45 million for 2024 which would greatly exceed the $24 million reported in 2023. We won $116 million in new contract awards in October that will start in the fourth quarter. Here's a few examples of our recent wins. First, Marine was awarded a $30.6 million subcontract to Skanska, USA to construct a temporary trestle for the Portage Bay Bridge project for the Washington State Department of Transportation. This work is expected to begin in the fourth quarter of 2024 with a construction duration of approximately six months for the first phase. We were also awarded an $8.5 million contract for the…

Thanks, Travis and good morning everyone. Our third quarter generated strong results, with revenue increasing 35% over last year to $226.7 million an adjusted EBITDA increasing 62% to $15.2 million. As we indicated earlier this year, the Pearl Harbor and Grand Bahama projects ramped up in the third quarter, and we also had the start of one project that was slated for the fourth quarter accelerate into Q3. This combined to deliver results above our expectations for Q3, like last quarter, our revenue mix continued to shift, with Marine revenue up 73% and concrete revenue decreasing 1%. As we've said, The Marine opportunity is immense, and we're intensely focused on winning that work. Our concrete segment was relatively flat on the top line, but we're winning our fair share of quality projects that meet our discipline bidding standards of attractive margins. Consolidated third quarter gross profit margin increased to $27.1 million or 11.9% of revenue, up from $19.1 million or 11.3% of revenue in the same period last year. The 60 basis point increase in consolidated gross margin was primarily due to improved pricing and execution in both segments. SG&A expenses were $20.8 million up from $17.1 million in the comparable period. As a percentage of total contract revenues, SG&A expenses decreased to 9.2% from 10.2% SG&A dollars increased due to compensation, business development and legal expense, in addition to some one time cost of process improvement initiatives. Turning to profitability, adjusted net income was $5.6 million or $0.16 cents per diluted share in the third quarter, compared to adjusted net income of $1 million or $0.03 per diluted share prior year period. The third quarter net income included $1.4 million or $0.04 per diluted share of adjusted items and GAAP net income for the third quarter of 2024 was…

[Operator Instructions]. Our first question will come from Aaron Spychalla with Craig-Hallum.

Maybe first for me, can you just kind of give a little bit more detail on the bidding environment? Backlog was down a little quarter-over-quarter. I know you've talked about exiting the year with higher backlog. It sounds like you're starting to see the bidding activity pick up here, funding start to hit the market, but I was just hoping you could elaborate a little bit on that.

Yes. So the bidding environment has been strong. I wouldn't say it's hot, but it's strong, been holding steady. As you can tell from our backlog, we've been keeping a fairly backlog -- fairly steady backlog throughout the year. It's -- we've got several big pursuits that look like they're lining up for the first quarter for awards. So it's looking like a fairly steady year. And then like I said, quite a few lined up for 2025. So generally good and getting stronger.

And then just maybe on the Navy in particular, can you give us an update there on just how you're thinking about that opportunity progressing, what that can look like for you here in the coming years?

Sure. Still very bullish about Navy opportunities in the Pacific. Lots of big opportunities out there that we're lining up for. A year ago, we thought there would be a couple of big pursuits with the Navy in 2025. It looks like with the way congressional funding rolled out. Some of those will be probably later in 2025. So as far as big Navy opportunities, I think there -- while there's -- like I said, still very bullish about the opportunity over the next 5 years or more. The big opportunities that we're looking at will likely be late in '25 for pursuits.

All right. Understood. And then just maybe last for me on CapEx. Can you kind of talk about the outlook there as you look to kind of bring in more equipment to capitalize on this opportunity, how we are thinking about it for this year and as we look towards 2025 as well?

Yes. We’ve been looking at ways in which we could acquire some of the equipment that we think will drive our growth in the future and have our eyes on a few items. I think if we can find ways to complete those transactions in the very near term, we’re going to be looking for ways to do that. We’ve got a strong balance sheet and good liquidity right now to make those investments. So we anticipate that we’re going to be increasing our CapEx spending going into next year as a result of that drive to kind of prepare for growth.

Our next question will come from Julio Romero with Sidoti & Co.

Maybe to start on the Concrete side, specific to data centers, you mentioned you completed or are working on 29 separate data center projects. Maybe if you could help us frame that figure a bit. Is that 29 projects kind of post-COVID to date, year-to-date? And maybe any frame of reference of how does that compare to prior periods?

Yes. That's a total number that we've worked on over the last probably 5 years or so. A large number of them, though, have been in the last couple of years. And this year, we've been bidding and working on more than ever. So it's been a pretty rapid increase starting kind of last year. I don't know the exact number, honestly, for this year, but it's been quite a few of them. Some of them have been very large. Some of them have been on the smaller side. We've got, I think, 14 active pursuits right now. Most of those are in North Texas, but there's also several in other states outside of Texas, where we're going with key partners who have asked us to follow them into other states. So the environment on the data center side of things is pretty hot. You may remember, I think, 3 months ago, I said that we were at 24. So there's been 5 of those added in the last few months. So it's been quite heavy active on the data center side. And again, the size ranges vary pretty significantly. Some are small, some are very large.

Got it. That's very helpful there. And then I wanted to ask about the really impressive cash flow you did in the third quarter. Scott, I think you mentioned much of that was due to Hawaii generating cash and that Hawaii cash generation should continue in 4Q. So just given that expectation, how do you kind of -- how should we be thinking about cash flow for Orion overall to shake out in the fourth quarter?

Yes. We did have a great cash flow quarter and it kind of lined up the timing on some of that Hawaii revenue as well. So I think that we're going to continue to see cash thrown off of the Hawaii project. We won't see a fourth quarter cash generation at the same levels in the third quarter, but still generating nice cash flow on the operating line as we finish out the year.

Okay. Excellent. And then just last one for me would be kind of staying on cash a little bit is you have a bolstered balance sheet. You generated really strong cash, and you talked about earlier about some CapEx deployment for your growth plans. If you could just give us a quick kind of refresher on how you're thinking about capital allocation overall, kind of growth versus debt repayment versus other in the near term and kind of just size that up for us there.

Yes. So obviously, with the stronger balance sheet that we have after the secondary offering and the strong cash flow that we’ve achieved in the third quarter, we’re thinking about the ways that we ought to be structuring our capital going forward. Our net debt right now is 0. So we have options that we can think about the ways that we can move forward. We do think that with our improved credit position and stronger balance sheet that we’ve got a pretty good hand to play as we talk to our existing lender about how we modify the agreement to move forward to make it better suited to give us the flexibility we need for growth. We see a lot of opportunity to potentially put money into equipment in the near future. And I think that, that’s going to be able to drive the top line and earnings faster. So we want to generate internally the cash flow that we need to drive those investments, and that’s our primary focus.

Our next question will come from Min Cho with B. Riley Securities.

So just a question on potential impact from the hurricanes. Can you talk about any positive or negative impacts on your business? I know you talked about some emergency work in Florida post the hurricanes, but I'm assuming that's more kind of 4Q. Wondering if there's any negative impact to your Concrete margins specifically.

No. We don't anticipate -- I mean we were -- the last hurricane kind of was teed up on Tampa and then made a slight turn to the south, which was fortuitous for our business. So we were spared major impacts to our yard and our equipment and our people, quite frankly, and our projects. So there was a few days of kind of shutdown while in preparation for the storm. And then after the storm was over, we were able to get right back to work and pretty minimal impact. We had some -- a little bit of roof damage in our yard. And I mean, it was a very minor type damage that we had, didn't even meet our insurance deductible range. I mean, pretty minor stuff. So we were very fortunate to escape 2 major storms pretty well. And again, people able to get right back to work. And so it was good for us. And then there were some damage to some of our customers' facilities in the -- specifically in the Tampa Bay area that we've been helping them with and kind of jumping in to help them. None of them are huge major projects, but able to help our customers in time of need is important to us, so.

That's good to hear. Just wondering, I mean, it sounds like you're kind of reiterating your pipeline of opportunities around $13 billion, but I just wanted to make sure that was still the case. And if you're seeing kind of any increased opportunities, especially on the data center work.

Definitely, the data center work is like every day, there's more coming in. The data center work is definitely as I said earlier, pretty hot and continuing to pick up. As far as our pipeline goes, it's definitely holding strong. I don't know what the exact number is, but it's the $13 billion--

Yes, $13 billion, $14 billion around.

$13 billion, $14 billion range. So lots of good opportunities lined up for the next couple of years.

Okay. Perfect. And then just a final question on kind of your SG&A outlook. It sounds like you're definitely investing in equipment through CapEx, and you mentioned investing in people as well. Any guidance in terms of what we should expect in 4Q as a percentage of revenue or in dollars and looking out into 2025 as well?

Yes. We expect the dollar figure in the fourth quarter to be kind of similar to what it was in the third quarter as we complete our investments in systems and process changes should be at about that level. And then going into next year, then we’ll give you a little more guidance then as to what that looks like.

Our next question will come from Jason Ursaner with Bumbershoot Holdings.

It was just -- it was a rough end of the World Series last night, had James Earl Jones recently passed away in September and just got me thinking about Field of Dreams in that famous speech. It's like the growth will come, Travis. Going to come to the Gulf, the Pacific, for reasons they can't even fathom. They'll turn up to your doorstep, give you the money. But so being serious.

If you tell them, they will come, right?

Yes, well, it doesn't seem like there's any contention on the demand side longer term, which I think is pretty rare and desirable, I would say, in this market. But so the real question kind of seems to be coming down to execution and credibility and the ability to do the jobs, the people, the equipment, the bidding expertise. So assuming you can capture the market opportunities that are ahead for the next year or the next decade, it sounds like maybe even longer. I guess what's still giving you the confidence sitting here today? Or what is your confidence level that, that's going to translate into some of the profitability metrics and margin expectations that you previously laid out or maybe will be laying out, particularly in the Marine segment?

My confidence is unchanged. If anything, it's higher than it was a year ago. I feel really confident about the market and our ability to capture it and our ability to capitalize and kind of continue to improve our margins and performance as we scale our business and grow. So we're headed for some really great things. I think this -- the one thing that is, I think from the investor side, there's some concern when we have a year like this one where there's some things didn't quite go our way, but everything played out like we said it would, right? We've been saying from the beginning of the year, it's going to be a slow first half and a really big second half, and that's exactly how things are playing out. And construction is a bit of a lumpy business and -- but we're going to take things as they come and capitalize on every opportunity we can and minimize the downside every opportunity we can. So I think we're feeling really good about things going forward and looking forward to building this company into what it can be and kind of capitalizing on the potential.

Yes. And this is a different company than it was two years ago. And the investments that we've made in improving the operational performance and improving our ability to go win work and drive business, I think it's really starting to pay off and bear fruit, and we're just excited to see that continue.

And just maybe remind what have you guys communicated in terms of potential margin expectation on the Marine segment at a certain scale? I'm trying to go back at some of the quarters, what -- kind of what was the target level there?

Yes. The target levels that we've talked about, the low double-digit EBITDA margins for the Marine business, we see that as being kind of at the scale where we expect to be over $1 billion of revenue in the near future. So once you kind of get to that level in size and you get the operating leverage from spreading our fixed costs over more projects, then that's when we'll see those margins.

[Operator's Instructions] It appears there are no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Travis Boone for any closing remarks.

Thanks. Thank you all for joining our call today. I want to take this time to thank our employees for all their hard work and spending, working a lot of hours out in the elements and enduring a lot of different factors, including weather and other things. So thanks to our employees for everything they do every day. And thanks to all of our stockholders for believing in us and having confidence in what we can do. We look forward to speaking with all of you guys again next quarter.

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