Orion Group Holdings, Inc.

Good day and welcome to the Orion Group Holdings first quarter 2023 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. To ask a question, analysts may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key and to withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce, 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 2023 financial results. We issued our earnings release after market last night. It is available in the investor relations section of our website at oriongroupholdingsinc.com. I'm here today with Travis Boone, Chief Executive Officer of Orion, and Scott Banish, 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 would 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, such as statements regarding the current and expected status of our negotiations regarding a replacement credit facility, are forward-looking statements. Our actual financial conditions and the 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 these forward-looking statements are contained in our SEC filings, including our reports on Form 10Q and 10K. With that, I'd now like to turn the call over to Travis. Travis, please go ahead.

Thank you, Margaret. On our last earnings call, we outlined our strategic plan for improved performance. And today we have a lot of positive news to share. Before that, I want to acknowledge that our first quarter results did not meet expectations. The main issue was volume and continued wrap-up of problem projects. We had several marine jobs that experienced owner delays in the quarter. And I know no one wants to hear us talk about weather, but we did, in fact, have some abnormally bad weather that impacted our business in Texas in January. and this significantly impacted our production rates and volume for the quarter. As we've said, we are working toward closing out legacy underperforming projects by mid-year. This resulted in revenue declining 9% to $159.2 million with a gross profit margin impact of around $5.8 million. In the construction business, we are used to lumpy quarters both on the upside and downside due to project timing and weather and other unforeseen delays. And we saw some of that this past quarter in both our concrete and marine businesses. We were very successful in winning significant contracts early in the quarter that will drive our volume later in the year. But we were seeing slower activity from major customers like the Army Corps of Engineers, especially for dredging in the Gulf. Generally, we have seen some bids as well as contract awards slipping to the right. Overall, we think some of the hesitation with agencies revolves around funding availability from the Infrastructure Investment and Jobs Act, especially with marine and transportation infrastructure projects. However, on the concrete side of the business, we are continuing to see attractive bid opportunities from our key clients and partners, although we are hearing indications of possible slowing somewhat later in the year. While we still have some project going up to complete, Based on our current backlog, we anticipate that the second quarter will significantly improve over this quarter, and in the back half of the year, we'll see some major acceleration. Until then, we're carefully managing expenses and running the business as efficiently as possible. We're executing our plan, and all indications are that by September, we'll be cranking. Above all, we certainly don't think the first quarter is indicative of what we can do for the full year. Scott will go into more detail on first quarter performance. As we have said before, it will take time to get this ship turned around in performing to our expectations. Even so, we are acting with urgency and making steady progress on the execution front, and our new initiatives are starting to deliver tangible results. I'll start with our first initiative to fix profitability in the concrete business. During the first quarter, we reached an important milestone in our concrete segment. March was our first profitable month in two years. The steps we've taken to implement more disciplined bidding processes have resulted in higher margin projects in Dallas and Houston. And the low margin projects in Central Texas will roll off in the next few months. Based on our current backlog and new opportunities under bid, we expect this trend to continue. especially with our new leader of the concrete segment. Ardell Allred has already made important contributions in just a few short months. And we anticipate his leadership will have greater impact the longer he settles into his role. Ardell is focused on improving performance and profitability through continuing to right size the equipment fleet, streamlining the management structure, winning higher margin work, improving field productivity, building synergies with the marine business, and diversifying the concrete business into public sector projects. The second part of our plan is to strengthen business development to drive growth. We're in the process of recruiting senior level talent to build out our growth team. We have hired a business development leader for our efforts in Louisiana, which is an important state for us due to market opportunities there. We're also in the process of hiring an executive to lead corporate growth and strategy reporting directly to me. The candidates we are interviewing are very enthusiastic about Orion's capabilities and reputation and the positive industry dynamics ahead, including the $1.2 trillion infrastructure bill, the coastal investments in Louisiana and the Gulf, port expansions and maintenance as a result of the Panama Canal expansion, and strong construction demand in both the private and public sector of the growing Texas market. Our recent win in Hawaii is a game changer in so many ways, and I'd like to take a minute to expand on this joint venture to build a dry dock at Pearl Harbor. We're very pleased with the terms of our contract and our ability to proactively mitigate downside risk. We have strong local partners, good contract terms, and our material prices are locked in in our FOB Hawaii. These measures, among others, provide confidence that we can deliver on this large and important project profitably. This win also strengthens our team's credibility and reputation in the marketplace and will open the door to future opportunities working with the U.S. Navy in the Pacific theater. Our work at Pearl Harbor will be underway by late this summer and encompasses the early stages of construction. Consequently, we expect the nearly $450 million in revenue to be recognized over the first two and a half years as we finish our portion of the project. On the concrete side of the business, we've been pursuing larger, more complex, and more profitable projects. Some may be under the impression that we simply pour concrete for sidewalks and driveways. But in fact, the type of work we do is complex and requires an extensive amount of expertise. I'd like to share some details of a recent milestone in a 43-story tower project in Houston. We placed 3 million pounds of rebar in a few days and then poured 10,000 cubic yards of concrete, which is 1,000 truckloads, with 9,000 man hours of work in less than 24 hours to complete a MAF foundation. It was an incredible planning and execution effort by our team. Our ability to deliver outstanding infrastructure concrete services is the main reason we have 90% repeat business rate. Our partners have absolute confidence in the strength and reliability of our team to deliver. The third prong of our strategy is making the right investments and having the resources to realize our full potential. The big news is that we have reached final agreement on terms with the new credit facility. Scott will discuss further, but this is a key component in strengthening our financial flexibility. Another headline is that we executed a contract for the sale of our East and West Jones properties on the Houston shipping channel on April 26th. The purchase price is $36 million, and we anticipate closing in the third quarter. Scott will also give more color around our plan to monetize non-core property assets. With these funding sources, we have dry powder to make investments in the business to drive future growth and make fleet improvements. For example, investing in more efficient and lower emissions power plants in our dredging fleet will expand our opportunities and our margins, as well as support Orion's and our customers' commitment to the environment and lower carbon emissions. With the completion of our projects in Central Texas this year, we are disposing of some underutilized equipment. Also, most equipment that we use in our concrete business can be easily leased or rented rather than purchased, and we will be taking this capital light approach going forward. We've continued to remove the silos between divisions that has inhibited our talented people from sharing skill sets, relationships, and ideas. There's tremendous power in collaboration of an integrated team, and it has really energized our entire organization. I'm very proud that for the first time in our company's history, we brought all three divisions of our company together, our engineering group, our marine division, and our concrete division, to jointly pursue a major project. Right now, we don't know if we've won the project, but it demonstrates our new culture of eliminating historical silos and moving forward as an integrated company. Finally, the most important resource is our people, and I believe we have the best talent in the industry. Guided by our core values of safety, quality, delivery, and teamwork, all based on integrity, our experienced professionals bring an unmatched depth of industry knowledge and exceptional service to every project that we undertake. Morale is high and our people are more enthusiastic than ever to deliver exceptional results to customers and stakeholders alike. I will now turn it over to Scott to discuss the first quarter financials.