What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-30 · 105 added, 58 removed, 102 unchanged (62% of the section changed)

15 unchanged sentences

Orion Group Holdings, Inc.

and subsidiaries (hereafter collectively referred to as the “Company”), is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through our marine segment and our concrete segment.

Our marine segment provides construction and dredging services, including marine transportation facility construction, marine pipeline construction, marine environmental structures construction, dredging of waterways, channels and ports, environmental dredging, design, and specialty services related to marine construction, fabrication, and dredging.

and its subsidiaries (hereafter collectively referred to as the “Company”), is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing

services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through our marine segment and our concrete segment.

Our marine segment provides construction, dredging and specialty services.

Construction services include construction, restoration, maintenance, dredging and repair of marine transportation facilities, marine pipelines, bridges and causeways and marine environmental structures.

Dredging services generally enhance or preserve the navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock.

Specialty services include design, salvage, demolition, surveying, towing, diving and underwater inspection, excavation and repair.

Our concrete segment provides turnkey concrete construction services, including concrete surface place and finish, site preparation, layout, forming, and rebar placement for large commercial, structural and other associated business areas.

We are headquartered in Houston, Texas with regional offices throughout our operating areas.

Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors.

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Our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed.

Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a

twelve-month period.

Given the typical duration of our contracts, which is generally less than a year, our

backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve-month period.

We have not been adversely affected by contract cancellations or modifications in the past, however we may be in the future, especially in periods of economic uncertainty.

Backlog as of the periods ended below are as follows (in millions):

March 31, 2025

December 31, 2024

September 30, 2024

June 30, 2025

March 31, 2024

December 31, 2024

Marine segment

Concrete segment

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $1.3 billion of quoted bids outstanding at quarter end, of which over $51 million were awarded but not fully contracted as of or awarded subsequent to March 31, 2025.

These estimates are subject to fluctuations based upon the scope of services to be provided, as well as factors affecting the time required to complete the project.

Backlog is not necessarily indicative of future results.

In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending award at any given time.

Delays in decisions on pending awards also have a negative impact on the timing and amount by which we are able to increase backlog.

Income Statement Comparisons

Three months ended March 31, 2025 compared with three months ended March 31, 2024.

Three months ended March 31,

Three months ended June 30, 2025 compared with three months ended June 30, 2024.

Three Months Ended June 30,

(dollar amounts in thousands)

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Other (expense) income:

Interest income

Interest expense

Other expense, net

Income (loss) before income taxes

Income tax (benefit) expense

Net income (loss)

Contract Revenues.

Contract revenues for the three months ended June 30, 2025 of $205.3 million increased $13.1 million, or 6.8%, as compared to $192.2 million in the prior year period.

The increase was primarily due to new awards and higher volume across the marine and concrete segments.

Gross Profit.

Gross profit was $25.8 million for the three months ended June 30, 2025 compared to $18.3 million in the prior year period, an increase of $7.5 million, or 41.1%.

The increase in gross profit was primarily driven by increased revenue, improvement in marine projects, and reduced indirect expenses, partially offset by favorable concrete project close-outs in 2024 that did not reoccur in 2025.

Selling, General and Administrative Expense.

Selling, general and administrative (“SG&A”) expenses were $22.8 million for the three months ended June 30, 2025 compared to $21.1 million in the prior year period, an increase of $1.7 million or 7.8%.

The increase in SG&A was primarily due to increased spending to support business growth.

Gain on Disposal of Assets, net.

During the three months ended June 30, 2025 and 2024 we realized $0.4 million and $0.1 million, respectively, of net gains on disposal of assets.

Other Income, net of Expense.

Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses.

Income Tax (Benefit) Expense.

We recorded a tax benefit of $0.2 million in the three months ended June 30, 2025, compared to a tax expense of $0.6 million in the prior year period.

Our effective tax rate for the three months ended June 30, 2025 differs from the federal statutory rate primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

Six months ended June 30, 2025 compared with six months ended June 30, 2024.

Six Months Ended June 30,

(dollar amounts in thousands)

Contract revenues

Cost of contract revenues

Selling, general and administrative expenses

Gain on disposal of assets, net

Operating income (loss) from operations

Other (expense) income:

Interest expense

Other expense, net

Loss before income taxes

Income tax expense (benefit)

Income tax (benefit) expense

Contract Revenues.

Contract revenues for the three months ended March 31, 2025 of $188.7 million increased $28.0 million or 17.4% as compared to $160.7 million in the prior year period.

The increase was primarily due to an increase in revenue from large marine construction contracts and new concrete projects.

Contract revenues for the six months ended June 30, 2025 of $393.9 million increased $41.1 million or 11.6% as compared to $352.8 million in the prior year period.

The increase was primarily due to new awards and higher volume across the marine and concrete segments.

Gross Profit.

Gross profit was $23.0 million for the three months ended March 31, 2025 compared to $15.5 million in the prior year period, an increase of $7.5 million, or 48.1%.

Gross profit in the quarter was 12.2% of total contract revenues as compared to 9.7% in the prior year period.

The increases in gross profit dollars and

margin were primarily driven by an improvement in indirect expenses in the marine segment as a result of a higher volume of work, partially offset by lower margins in the concrete segment which were primarily driven by normal seasonally lower productivity.

Gross profit was $48.8 million for the six months ended June 30, 2025 compared to $33.8 million in the prior year period, an increase of $15.0 million, or 44.3%.

Selling, General and Administrative Expense.

Selling, general and administrative (“SG&A”) expenses were $22.5 million for the three months ended March 31, 2025 compared to $19.0 million in the prior year period, an increase of $3.5 million or 18.7%.

As a percentage of total contract revenues, SG&A expenses increased to 12.0% from 11.8%.

The increases in SG&A dollars and percentage reflect an increase in compensation expense and operating lease expense.

SG&A expenses were $45.3 million for the six months ended June 30, 2025 compared to $40.1 million in the prior year period, an increase of $5.2 million, or 12.9%.

The increase in SG&A was primarily due to increased spending to support business growth.

Gain on Disposal of Assets, net.

During the three months ended March 31, 2025 and 2024 we realized $0.4 million and $0.3 million, respectively, of net gains on disposal of assets.

During the six months ended June 30, 2025 and 2024 we realized $0.8 million and $0.4 million, respectively, of net gains on disposal of assets.

Other Income, net of Expense.

Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses.

Income Tax Expense (Benefit).

We recorded tax expense of $0.1 million in the three months ended March 31, 2025, compared to tax benefit of $0.4 million in the prior year period.

We expect near break-even operations for the full year ended December 31, 2025, such that a small change in the year-to-date operations could result in a large change to the estimated annual effective tax rate.

Therefore, our effective tax rate for the period ending March 31, 2025, is based off actual year-to-date operations.

Income Tax (Benefit) Expense.

We recorded a tax benefit of $0.1 million in the six months ended June 30, 2025, compared to a tax expense of $0.3 million in the prior year period.

Our effective tax rate for the six months ended June 30, 2025 differs from the federal statutory rate primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment, segment revenues as a percentage of consolidated revenues and segment operating income (loss) as a percentage of segment revenues.

Three months ended March 31, 2025 compared with three months ended March 31, 2024.

Three months ended March 31,

Three months ended June 30, 2025 compared with three months ended June 30, 2024.

Three Months Ended June 30,

(dollar amounts in thousands)

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Marine Segment

Revenues for our marine segment for the three months ended March 31, 2025 were $127.2 million compared to $106.3 million for the three months ended March 31, 2024, an increase of $20.9 million, or 19.6%.

The increase was primarily due to an increase in revenue from large marine construction contracts.

Operating income for our marine segment for the three months ended March 31, 2025 was $4.8 million, compared to operating loss of $4.9 million for the three months ended March 31, 2024, an increase of $9.7 million.

The increase in operating income was primarily related to an improvement in indirect expenses and more disciplined execution and bidding standards to exclude lower margin contracts.

Revenues for our marine segment for the three months ended June 30, 2025 were $135.3 million compared to $131.0 million for the three months ended June 31, 2024, an increase of $4.3 million, or 3.3%.

The increase was primarily due to new awards and higher volume on our marine construction contracts.

Operating income for our marine segment for the three months ended June 30, 2025 was $6.2 million, compared to an operating loss of $5.5 million for the three months ended June 30, 2024, an increase of $11.7 million.

The increase in gross profit was primarily driven by increased revenue, reduced indirect expenses, and project delays in 2024 that did not reoccur in 2025 .

Concrete Segment

Revenues for our concrete segment for the three months ended March 31, 2025 were $61.5 million compared to $54.3 million for the three months ended March 31, 2024, an increase of $7.2 million, or 13.1%.

This increase was primarily due to new projects.

Operating loss for our concrete segment for the three months ended March 31, 2025 was $3.9 million, compared to operating income of $1.7 million for the three months ended March 31, 2024, a decrease of $5.6 million.

This decrease was primarily driven by lower margins which were primarily driven by normal seasonally lower productivity.

Revenues for our concrete segment for the three months ended June 30, 2025 were $70.0 million compared to $61.2 million for the three months ended June 30, 2024, an increase of $8.8 million, or 14.3%.

This increase was primarily due to new awards and higher volume on our concrete contracts.

Operating loss for our concrete segment for the three months ended June 30, 2025 was $2.8 million, compared to operating income of $2.7 million for the three months ended March 31, 2024, a decrease of $5.5 million.

This decrease was primarily driven by favorable concrete project close-outs in 2024 that did not reoccur in 2025.

Six months ended June 30, 2025 compared with six months ended June 30, 2024.

Six Months Ended June 30,

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

Private sector

Marine segment total

Concrete segment

Public sector

Private sector

Concrete segment total

Operating income (loss)

Marine segment

Concrete segment

Marine Segment

Revenues for our marine segment for the six months ended June 30, 2025 were $262.5 million compared to $237.3 million for the six months ended June 30, 2024, an increase of $25.2 million, or 10.6%.

The increase was primarily due to new awards and higher volume on our marine construction contracts.

Operating income for our marine segment for the six months ended June 30, 2025 was $11.0 million, compared to an operating loss of $10.3 million for the six months ended June 30, 2024, an increase of $21.3 million.

The increase in gross profit was primarily driven by increased revenue, reduced indirect expenses, and project delays in 2024 that did not reoccur in 2025 .

Concrete Segment

Revenues for our concrete segment for the six months ended June 30, 2025 were $131.5 million compared to $115.6 million for the six months ended June 30, 2024, an increase of $15.9 million, or 13.8%.

This increase was primarily due to new awards and higher volume on our concrete contracts.

Operating loss for our concrete segment for the six months ended June 30, 2025 was $6.7 million, compared to operating income of $4.4 million for the six months ended June 30, 2024, a decrease of $11.1 million.

This decrease was primarily driven by favorable concrete project close-outs in 2024 that did not reoccur in 2025.

Liquidity and Capital Resources

Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects.

At March 31, 2025, our working capital was $73.4 million, as compared to $78.2 million at December 31, 2024.

As of March 31, 2025, we had unrestricted cash on hand of $13.0 million.

Our borrowing availability under our revolving portion of our Credit Agreement at March 31, 2025 was approximately $40.7 million.

At June 30, 2025, our working capital was $76.9 million, as compared to $78.2 million at December 31, 2024.

As of June 30, 2025, we had unrestricted cash on hand of $1.7 million.

Our borrowing availability under the revolving portion of our Credit Agreement at June 30, 2025 was approximately $21.9 million.

Our primary liquidity needs are to finance our working capital and fund capital expenditures.

Historically, our sources of liquidity have been cash provided by our operating activities, sale of underutilized assets, and borrowings under our credit facilities.

Historically, our sources of liquidity have been cash provided by our operating activities, sale of underutilized assets, borrowings under our credit facilities, and equity issuances.

The assessment of our liquidity requires us to make estimates of future activity and judgments about whether we are compliant with financial covenant calculations under our debt and other agreements and have adequate liquidity to operate.

Significant assumptions used in our forecasted model of liquidity include forecasted sales, costs, and capital expenditures, as well as expected timing and proceeds of planned real estate transactions.

As of March 31, 2025, management believes the Company will have adequate liquidity for its operations for at least the next 12 months.

The following table provides information regarding our cash flows and our capital expenditures for the three months ended March 31, 2025 and 2024:

Three months ended

As of June 30, 2025, management believes the Company will have adequate liquidity for its operations for at least the next 12 months.

The following table provides information regarding our cash flows and our capital expenditures for the three and six months ended June 30, 2025 and 2024:

Six months ended

Net income (loss)

Adjustments to remove non-cash and non-operating items

3 unchanged sentences

Cash flows used in investing activities

Cash flows used in financing activities

Cash flows (used in) provided by financing activities

Capital expenditures (included in investing activities above)

Operating Activities.

During the three months ended March 31, 2025 we used approximately $3.4 million of cash in our operating activities.

During the six months ended June 30, 2025 we used approximately $9.0 million of cash in our operating activities.

The net cash outflow was comprised of $26.9 million of outflows related to changes in net working capital, partially offset by $17.9 million of cash inflows from net income, after adjusting for non-cash items.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $27.7 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period and a $1.2 million decrease in operating lease liabilities, partially offset by $16.2 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period, a $1.3 million inflow related to a decrease in prepaid expenses and other, and $0.1 million of other inflows.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $58.8 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period and a $3.2 million decrease in operating lease liabilities, partially offset by $34.8 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period.

Investing Activities.

During the three months ended March 31, 2025, we used approximately $8.7 million of cash in our investing activities.

Capital asset additions and betterments to our fleet were $9.0 million and $1.9 million in the three months ended March 31, 2025 and 2024, respectively.

Proceeds from the sale of property and equipment were $0.3 million in both the three months ended March 31, 2025 and March 31, 2024.

During the six months ended June 30, 2025, we used approximately $15.0 million of cash in our investing activities.

Capital asset additions and betterments to our fleet were $16.2 million and $6.5 million in the six months ended June 30, 2025 and 2024, respectively.

Financing Activities.

During the three months ended March 31, 2025, we used approximately $3.2 million of cash in our financing activities.

During the three months ended March 31, 2025, we had borrowings and repayments of $3.0 million on the White Oak revolving credit line, payments on finance lease liabilities of $2.5 million, payments made on failed sale-leaseback arrangements of $0.7 million, loan costs of $0.3 million and repayments of $0.1 million on other debt, partially offset by inflows of $0.3 million from proceeds from issuance of common stock under the employee stock purchase plan and $0.1 million from proceeds from stock option exercises.

During the six months ended June 30, 2025, we used approximately $2.6 million of cash in our financing activities.

During the six months ended June 30, 2025, we had borrowings on credit of $77.0 million and repayments of $67.0 million on the White Oak revolving credit line, payments on finance lease liabilities of $5.3 million, payments made on failed sale-leaseback arrangements of $7.2 million.

Sources of Capital

1 unchanged sentence

Please see “Note 9 – Debt” in our unaudited condensed consolidated financial statements for a more detailed description of the Credit Facility.

We were in compliance with all financial covenants under the amended agreement as of March 31, 2025.

We were in compliance with all financial covenants under the amended agreement as of June 30, 2025.

Bonding Capacity

1 unchanged sentence

Our ability to obtain surety bonds depends on our capitalization, working capital, past performance and external factors, including the capacity of the overall surety market.

At March 31, 2025, the capacity under our current bonding arrangement was at least $1.1 billion, with approximately $535 million of projects being bonded.

At June 30, 2025, the capacity under our current bonding arrangement was $1.1 billion, with approximately $485 million of projects being bonded.

While we believe that our current bonding capacity is sufficient to satisfy current demand for our services, any new major project opportunities may require us to seek additional bonding capacity in the future.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis