Orion Marine Group, Inc (OMGI)

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Orion Marine Group, Inc. Reports Third Quarter 2008 Results
Thursday November 6, 5:00 am ET


HOUSTON, Nov. 6, 2008 (GLOBE NEWSWIRE) -- Orion Marine Group, Inc. (the ``Company') (NasdaqGM:OMGI - News), a leading heavy civil marine contractor, today reported net income for the three months ended September 30, 2008, of $3.8 million ($0.17 diluted earnings per share). Excluding one time items related to tax reconciliations, the Company would have reported third quarter net income of $3.2 million ($0.15 diluted earnings per share). These results compare to net income available to common shareholders of $5.8 million ($0.26 diluted earnings per share) for the same period a year ago.

``Overall, we are pleased with our results for the third quarter in light of the active storm season,' said Mike Pearson, Orion Marine Group's President and Chief Executive Officer. ``During the quarter we felt the effects of seven named storms that resulted in all of our projects being shut down at least once during the quarter, and some projects being shut down three times. However, our employees did an excellent job of executing our hurricane emergency plans, securing jobsites, and returning to work quickly. While the project delays caused short term disruptions, and resulted in revenues shifting out of the third quarter, we expect to recognize these revenues in future periods, and more importantly, we expect to see new long-term projects as a result of this active hurricane season.'

Financial highlights of the Company's third quarter 2008 include:


* Third quarter 2008 contract revenues increased to $62.9
million, up 4.8% as compared to the third quarter of 2007.
Third quarter contract revenues were impacted by seven named
storms resulting in approximately $6 million of revenues
shifting from the third quarter into future periods.

* Gross profit for the quarter was $12.6 million which
represents a decrease of $1.7 million or 12.1% compared
with the third quarter of 2007. Gross profit margin for
the quarter was 20.0%, which is down 3.9 points from the
prior year period, primarily due to high margins related to
certain jobs in the third quarter 2007.

* General and administrative expenses for the third quarter
2008 were $7.4 million, which represents an increase of $2.1
million year-over-year, primarily due to amortization and
overhead costs related to the recent acquisition and a full
complement of public company expenses.

* The Company's third quarter 2008 EBITDA was $10.3 million,
representing a 16.5% EBITDA margin, which compares to third
quarter 2007 EBITDA of $12.2 million, or a 20.4% EBITDA margin.

* Backlog of work under contract as of September 30, 2008 was
up 38.5% to $160.5 million as compared with backlog under
contract at September 30, 2007 of $115.9 million. Given the
typical duration of the Company's projects, which range from
three to nine months, the Company's backlog at any point in
time usually represents only a portion of the revenue it
expects to realize during a twelve month period. Backlog
consists of projects under contract that have either (a) not
been started, or (b) are in progress and not yet complete,
and the Company cannot guarantee that the revenue projected
in its backlog will be realized, or, if realized will result
in earnings.

* The Company's effective tax rate for the quarter was 24.5%
primarily due to reconciling federal and state deferred taxes
and the benefit of the domestic production deduction.
Excluding these reconciliation items, the Company's effective
tax rate would have been 36.4% for the quarter.

``Excluding the impact of the storms, our results were in-line with our expectations,' said Mark Stauffer, Orion Marine Group's Executive Vice President and Chief Financial Officer. ``Overall we had a good quarter and once again maintained our solid financial position. Given the current economic and financial environment, I am pleased with our balance sheet, positive free cash flow generation, and low leveraged position.'

2008 Outlook

Given the current backlog and bid opportunities, the Company expects fourth quarter 2008 revenue will grow 19% - 26% year-over-year. The Company's fourth quarter EBITDA margin goal is 15 - 18%. The Company will not fully realize the revenue that shifted out of the third quarter during the balance of 2008 as some of this revenue will shift into 2009. Additionally, the bidding and award of some contracts were delayed as a result of the storms, specifically Hurricane Ike, which reduces the amount of revenue opportunity in 2008. Therefore, full year revenue growth will be below the Company's previously stated goal of 28% to 32% year-over-year and will now be in the range of 21% to 23% year-over-year. The Company remains comfortable with its previously announced full year EBITDA margin goal.

2009 Outlook

Continued port expansion, U.S. infrastructure updates, coastal and wetland restoration projects, and expansion in the cruise industry should continue to provide good bid opportunities long term. Additionally, the Company expects to see bid opportunities for repairs and enhancements to marine facilities as well as projects involving dredging services from the active 2008 hurricane season. Already, the Company is working with several customers on small emergency repair projects. Additional federal emergency funding may also provide bid opportunities in the future.

``So far 2009 appears to be shaping up to be a good year,' said Mike Pearson, Orion Marine Group's President and Chief Executive Officer. ``However, we will remain vigilant about the uncertainty in the economic environment. As we previously have stated, depending on the breadth and depth of the downturn, we could see negative impacts on our business. It is not unreasonable to think that some of our end markets could see some deterioration or bidding delays as a result of the uncertainty in the economy. However, other end markets could reasonably see increased bidding opportunities and outperform due to increased spending on infrastructure projects as well as hurricane protection and restoration projects. Currently we are seeing good overall bid opportunities for 2009 and are cautiously optimistic about the year ahead.'

Looking at 2009 in detail, the Company expects $96.6 million of the previously stated $160.5 million in backlog to be liquidated during 2009. Earlier this week, the Company was awarded a large port channel deepening project near Galveston, TX which added approximately $13 million to 2009 backlog. Including this project, the Company has almost $110 million worth of backlog expected to be liquidated in 2009. Additionally, the Company is tracking almost $1.4 billion of bid opportunities for 2009, which excludes the recent federal supplemental emergency storm funding. As a result of the current backlog and current expected bid opportunities, the Company's initial full year 2009 revenue growth goal is between 12% and 16% as compared to full year 2008. The Company's initial full year 2009 EBITDA margin goal is 14% - 18%.