Orion Marine Group Inc (ORN)

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Orion Marine Group, Inc. (OMGI)

Q4 2008 Earnings Call

March 5, 2009 10:00 am ET


Chris DeAlmeida – Director of Investor Relations

J. Michael Pearson – President & Chief Executive Officer

Mark R. Stauffer – Executive Vice President & Chief Financial Officer


Fred Buonocore – CJS Securities

David Yuschak – SMH Capital

Trey Grooms – Stephens Incorporated

Jack Kasprzak - BB&T Capital Markets

Alex Rygiel – FBR capital Market

John Rogers – D.A. Davidson & Co.

Steven Pedian – SAP Capital Management



Good day, everyone, and welcome to the Orion Marine Group Inc.’s Fourth Quarter 2008 Earnings Conference Call. Today’s call is being recorded. For opening remarks and introductions, I would like to now turn the call over to Mr. Chris DeAlmeida. Please go ahead sir.

Chris DeAlmeida

Good morning and welcome to the Orion Marine Group fourth quarter and full year 2008 earnings conference call. Joining me today are Mike Pearson, Orion Marine Group’s President and Chief Executive Officer; Mark Stauffer, our Executive Vice President and Chief Financial Officer; and Cabell Acree, our Vice President and General Counsel.

Regarding the format of the call, we have allocated about 20 minutes for prepared remarks in which Mike and Mark will highlight our results for the year and outlook for 2009, and then we will open up the call for questions.

During the course of this conference call, we may make projections and other forward-looking statements regarding, among other things, our end markets, revenues, gross profits, gross margin, EBITDA, backlog, projects and negotiation of pending awards as well as our estimates and assumptions regarding our future growth, EBITDA, gross margins, administrative expenses and capital expenditures. These statements are predictions that are subject to risks and uncertainties that may cause actual results to differ materially.

Moreover, past performance is not necessarily an indicator of future results. By providing this information we undertake no obligation to update or revise any projections or forward-looking statements whether as a result of new developments or otherwise. Also, please note that the EBITDA and EBITDA margin may be deemed non-GAAP financial measures under the rules of the Securities Exchange Commission, including Regulation G.

Please refer to the reconciliation accompanying this earnings call available on our website at www.orionmarinegroup.com for comments on the use of non-GAAP financial measures, as well as applicable reconciliations to the most comparable GAAP measures. Also, please refer to our earnings release issued this morning, March 5, 2009 and our quarterly and annual filings with the SEC, which are available on our website for additional discussions of risk factors that could cause actual results to differ materially from our current expectations.

With that, I will turn the call over to Mike Pearson, President and CEO. Mike?

J. Michael Pearson

Thank you Chris. Good morning and thanks for joining us. Although, we were faced with several challenges during the year, we are very pleased with our 2008 results and I believe we are well positioned for the future. We ended the year with a strong fourth quarter, and as a result of solid project execution. Our revenues for the full year for 2008 increased $51.4 million, or 24% as compared to 2007 that exceeded our revised revenue growth goal of 21% to 23%.

Our full year EBITDA was $41.3 million and that resulted in an EBITDA margin of 15.8% and that’s at the upper end of our revised full year goal range of 14% to 16%. Now before we talk about our outlook for the year ahead, I wanted to just check a moment to review 2008. And as I look back over the year, we had many successes and many challenges. We remain focused on growing the business to meet market demands by reinvesting in our core assets and we expanded our geographic footprint.

During the year, we opened a base in Norfolk, Virginia and laid the groundwork for a base in Charleston, South Carolina and we also acquired substantially all the assets and business of Florida-based Subaqueous Services. In 2008, we continue to see good overall demand for our turnkey construction services. As port expansion continued, the cruise industry added new destinations; bridge construction remained a focal point and hurricane restoration and repair activity increased.

While projects involving dredging services in the Western Gulf Coast started the year slower than expected. The volume of bid opportunities from Army Corps of Engineers increased during the fourth quarter. We also experienced some challenging situations during the year, and as previously mentioned we have two projects involving dredging services that incurred significant production problems in the first half.

Additionally, an active hurricane season resulted in all of our jobs in several states being shutdown at various times during the third quarter. However, we worked hard to overcome these challenges to deliver the solid results that we’ve reported here today. As a final word on 2008, I want to thank the management team and all our employees for job well done during the year. Through their dedication and perseverance we met difficult challenges head on and positioned the company for the future.

Now turning over to our end markets and outlook for the remainder of 2009, as stated before continued port expansion and the need for U.S. infrastructure improvements, coastal wetland restoration projects, and expansion in the cruise industry should continue to provide us with good bid opportunities. Additionally, we’ve been performing some repair and replacement projects to marine facilities as well as projects involving dredging services as a result of an active 2008 hurricane season. And we do expect additional bid opportunities for this type of work to continue.

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