Prepared remarks
Good day and welcome to the Orion Group Holdings Second Quarter 2026 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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, ma'am.
Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings' second quarter 2026 financial results. We issued our earnings release after market last night. It is available in the Investor Relations section of our website at oriongroupholdings.com. I am here today with Travis Boone, Chief Executive Officer of Orion, and Alison G. Vasquez, Chief Financial Officer. On today's call, management will provide prepared remarks and then we will 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 are forward-looking statements. Our actual financial conditions 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 these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-Ks. With that, I will turn the call over to Travis.
Travis, please go ahead.
Thanks, Margaret. And thank you all for joining our call today. I want to start by acknowledging that our results for the quarter were not in line with your expectations or ours, due to some client delays in our marine business. It is a timing issue, not a performance or operational issue. These delays are now behind us. We often talk about construction being a lumpy business. This quarter is a good example. Things are going well. Our people are engaged. And we are performing. If not for these delays, results would have been right in line with our expectations. We will give more details on the quarter shortly. Bigger picture, our win rate continues to be high, our concrete business is operating at historic levels, we had a strong quarter of bookings, our pipeline continues to grow and our story remains unchanged. We have a historically strong marine construction market opening in front of us and we remain confident in our ability to grow over the coming years. With multiple new marine projects kicking off, we expect the back half of 2026 to be strong. And we are optimistic about 2027 as well. Turning to the market outlook, today, our business is benefiting from powerful long-term themes that include significant long-duration capital investments spanning defense infrastructure, port and transportation infrastructure, energy, data centers, health care, and commercial construction. For marine, we are well positioned on the doorstep of a marine infrastructure investment mega cycle that enables continued U.S. economic competitiveness, energy security, supply chain resilience and national defense. These priorities are driving increased investment in larger, more technically complex marine infrastructure projects that require specialized marine construction capabilities, a highly skilled workforce and fit-for-purpose equipment — precisely the type of projects Orion is increasingly pursuing, winning and executing. The President's $1.5 trillion defense budget proposal made its way to the House last week but has yet to clear legislative hurdles in the Senate before reconciliation can begin. While spending levels will be debated, investments across naval infrastructure modernization, Indo-Pacific Command strength, logistics and port resilience continue to be priorities with solid bipartisan support. We are closely monitoring the U.S. defense budget as we look ahead to programs that will catalyze our long-term growth. On to the concrete market outlook, where momentum remains very strong. We are benefiting from the build-out of physical infrastructure supporting the investment in AI, cloud computing and domestic manufacturing. As our clients seek to streamline project coordination, compressed schedules and increased execution certainty, many are directly engaging with our team earlier in the project lifecycle to advise on design and execution. Additionally, our expansion into site civil services is going very well, and we are seeing increased opportunities to pursue this scope on a broader set of projects. Overall, confidence in the long-term outlook across our business is robust and our pursuit pipeline has grown to approximately $27 billion, with almost $1.6 billion in projects quoted awaiting award. As you may recall, this number was sitting right around $1 billion at the beginning of the year, and reflects our near-term award opportunities. Our win rate during the quarter was well above industry average, and we were pleased to record over $275 million in bookings in the quarter, representing a 1.25x book-to-bill, bringing backlog at quarter end to $722 million. Bookings across our Marine and Concrete businesses reinforce our compelling competitive position in attractive end markets and include a large port terminal expansion project in Alabama, a dredging project in the U.S. Virgin Islands, a couple of jetty wins from Pacific Rock and Dredge, a.k.a. McCamis, who we acquired in February, and additional phases on multiple data center projects. With a growing opportunity pipeline, expanded capabilities and an outstanding team delivering projects that matter, our conviction in Orion's long-term growth trajectory is well intact. On to some high-level comments on the second quarter results. Our results reflect the growth of concrete, alongside the temporary softness in marine caused primarily by slower-than-expected project starts and elongated award cycles. Our Concrete business posted excellent results reporting over 30% top-line and 45% adjusted EBITDA growth in the quarter, benefiting from expansion into site civil services, favorable utilization and solid execution. Marine top-line and profitability were down primarily due to the timing of project awards, startups and completions. We have reset our full-year 2026 guidance to reflect this timing shift. Today we have very good visibility into the remainder of the year with nearly 90% of our marine work under contract and continued concrete momentum to achieve our updated guidance. Before handing it over, I would like to take a moment to give a shout out to our Pacific Rock and Dredge team who are prominently featured in the new documentary movie, Taming the Mouth. We had the honor of attending the premiere this past weekend and it is definitely worth seeing. The documentary is a fascinating piece on the treacherous mouth of the Columbia River, where it meets the Pacific Ocean — an area commonly known as the Graveyard of the Pacific. The movie highlights McCamis' recently completed reconstruction of the massive jetty and breakwater system to calm the turbulent seas. Starting August 4, you can stream it on Apple TV or Amazon Prime. I will now turn it over to Alison to discuss the details. Alison?
Thank you, Travis. In the second quarter, we generated revenue of $222 million, an 8% increase from the second quarter of last year. As Travis discussed, Concrete delivered another strong quarter while the timing of marine awards and project startups weighed on our results. Gross profit was $23 million, down $3 million from last year, due primarily to lower marine volume and equipment utilization. Specifically, we had several projects where our team's mobilization was delayed primarily due to client-related issues, such as site readiness and timing of delivery of client-provided materials. When marine productivity slows, we sometimes get a double whammy in the lost project profitability along with the correlated lower equipment utilization, and this definitely impacted this quarter's gross profit. These projects are now all in full swing and we expect good productivity through the second half of the year. The decline in marine gross profit was partially offset by nice volume and favorable project execution within our Concrete segment. GAAP loss for the quarter was $4.1 million compared to GAAP net income of $800 thousand in the second quarter of last year, which was caused primarily by reduced volume in our marine business, increased depreciation and amortization and an increase in GAAP taxes associated with valuation adjustments. Second quarter adjusted EBITDA was $7.9 million and adjusted EPS was $0.02 compared to $11 million or $0.07 per share in the prior-year quarter. Our balance sheet is in good shape with net leverage of 2.3 times providing us with financial flexibility to support our strategic priorities. As Travis mentioned, we have reset our full-year guidance to reflect the timing shifts in our Marine segment. Revised 2026 annual guidance is revenue in the range of $900 million to $950 million; unchanged adjusted EBITDA in the range of $50 million to $54 million representing 15% growth over 2025 actual results at the midpoint; adjusted EPS in the range of $0.23 to $0.30 representing 6% growth over 2025 actual results at the midpoint; and capital expenditures in the range of $25 million to $35 million which remains unchanged. With that, I will turn it back to Travis to wrap it up.
Thanks, Alison. Orion is embarking on a pivotal chapter. We have spent the last few years refining our capabilities, expanding our geographic footprint, recruiting and upscaling our people, and embedding a culture of teamwork, safety, delivery and integrity throughout the organization. We made these investments intentionally to seize on the vast market opportunities taking shape in the market. While timing can affect individual quarters, our confidence in where this business is headed is stronger than ever. We are on track and pleased with our business and our strategic direction. With that, I will hand it back over to the operator to open it up for Q&A.
Questions and answers
Thank you. We will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. In the interest of time, please limit yourself to one question and one follow-up. We will now pause momentarily to assemble the roster. The first question will come from Aaron Spychalla with Craig-Hallum. Please go ahead.
Yes. Good morning, Travis and Allison. Thanks for taking the questions.
Good morning, Aaron.
First for us, can you just maybe talk about guidance implies a pickup in margins in the back half. And can you speak to the confidence in achieving those? And broadly some of the opportunities you see for margin expansion moving forward?
Sure. We have some of those projects that experienced delays in the second quarter that are mobilized and kicking off. We have 90% of our marine backlog for the back half of the year under contract, and 80% of our business overall is under contract for the back half of the year. We feel really good about our ability to deliver; it is a big jump up from where we were in the first half. When we get all the marine assets utilized and everybody operating, it is going to make a big jump. So we are confident the back half will be a big step up.
Alright. Thanks for that. And then, good to see the orders starting to pick up. Has that carried over into July and again, maybe talk about what you are seeing in the market as you go to bid on the margin side of things as well?
Yeah. We have seen continued wins in July. Nothing specifically to write home about or we would have talked about it, but it has been a good group of wins in the first month of the third quarter. As far as pricing, it has generally stayed relatively steady. Nothing heading in the wrong direction, so that is a good thing. Our win rate, just to reiterate, has stepped up a bit in the second quarter from the first quarter, slightly in the marine business. That has been good and we expect that to continue.
Brent. Thanks for taking the questions. I will turn it over.
The next question will come from Brent Thielman with Oppenheimer. Please go ahead.
Hey, thanks. Good morning, Travis and Allison. I guess just on the concrete business, it seems like the backlog there is a little misleading relative to what you are seeing within the end markets. It has been under pressure here for a few quarters now. Could you sort of level set us on your expectations for growth for the segment into the second half?
And you said concrete, correct?
Yes, on the concrete segment.
Yeah, concrete is tough to tell from pipeline or backlog what is happening because things happen so fast. In marine, you see it coming for a long time and there tends to be quite a few delays; there is a longer lead up to actually getting to work. With concrete, oftentimes we hear about an opportunity and two weeks later or three weeks later we are in it. It is a really quick turnaround. So not seeing it in the backlog is not an indication of our expectations. We have got over $1 billion in our concrete business in outstanding bids. So quite a bit of work we are waiting to hear on and feel really good about our concrete business. I was on a bid review this morning for a large project. There is a lot of things happening.
Okay. Excellent. And then, Travis, you did express confidence in the growth opportunities into 2027. Obviously a lot going on in both business groups. Maybe you could highlight some of the factors in particular that you are seeing. I know there are some larger naval-related programs out there you are pursuing. Should we expect to see kind of build in the book of the business through the second half as we go into 2027?
That is what we expect, albeit there have been a lot of slides and delays and opportunities that we think are going to happen that slide. I do want to caveat it with expectations versus reality—sometimes it is a little different based on clients pushing procurements and awards. But our pipeline is very strong for the rest of this year as well as the first half of next year. So we are feeling really good about our ability to continue to grow the business and build on where we have been talking about for a long time.
Yeah, and I will just add to that: you mentioned the naval side, Brent, but the pipeline and the opportunities that we are pursuing are quite balanced across the Department of Defense, and also include non-DoD pursuits. In this quarter alone, from a second quarter perspective, the largest project that we won was a large port modernization project in Alabama. So we are seeing a nice balance between defense, port modernization, commercial, energy, oil and gas, and chemical clients looking to make investments in a more favorable regulatory environment while they can press forward. We are seeing good momentum across a number of different fronts, so I would not pigeonhole it into just naval opportunities.
The next question will come from Min Cho with Texas Capital Securities. Please go ahead.
Hi. Good morning. Thanks for taking my questions.
Good morning.
First question has to do with the concrete margins. They were obviously below 1Q. I know that was a high watermark for you, especially given the weather. But is 2Q the margins a good run rate for the rest of the year? Or what could lead to some expansion there?
So the second-quarter margins came in right in line with what we expected, between 5.5% to 6%, and that is generally what we pencil out for them for the year. Do they have opportunities to bump that up to the extent that they can have additional capacity flow through? They do. From a second-quarter perspective, we did see a downtick from the first quarter really associated with some weather and starts and stops. But from a momentum perspective, we are seeing good momentum in that business overall, strong pipeline, and really strong backlog as we enter into the third quarter. The concrete team is busy and executing, and I do not see any issues with that team hitting close to that 6% margin from a full-year perspective, which is what we are targeting for that business.
Great. Thank you. And then can you just tell us what percentage of Concrete revenue and Concrete backlog is currently from data centers?
It is roughly 50% this quarter for data centers on concrete revenue.
And I would say the pipeline is probably in line with that, maybe slightly higher. As a reminder, it was 40% in the first quarter.
And then if I can just slip one quick one in here: your pipeline of opportunities has increased to $27 billion now up from the last quarter. Can you talk about any notable trends that you are seeing? What was kind of added? Any additional information about the growth in the pipeline?
Alison's point about a good balance across Army Corp, Army pursuits, private industry energy type work, and state and local agencies like ports or DOTs — it is pretty well balanced. We are seeing continued shifts to larger projects as well as shifts toward more alternative delivery models, meaning not traditional design-bid-build but design-build, progressive design-build and other delivery models. We have seen an uptick in those, and those are typically larger, more complex projects with alternative delivery components.
Got it, great. Thank you so much.
Thank you. The next question will come from Tomohiko Sano with JPMorgan. Please go ahead.
Hi, good morning everyone.
Good morning, Tomohiko.
You have said marine phasing and high visibility into the back half are understood. Where is the equipment utilization today? What utilization levels are you targeting in the second half? And could you quantify margin sensitivity to utilization please?
We do not disclose specific utilization percentages. But I would say they were below expectation in the second quarter. As we think about the third and fourth quarters, as those projects ramp and are ramping in as we kick off new work, our equipment plans show much higher equipment and labor utilization. We have good line of sight into expansion of revenue and growth in the back half, and much of that profitability will have opportunities to fall to the bottom line because equipment cost is incurred whether you use it or not. As we grow revenue and use our own fleet, more of those dollars fall to the bottom line, which gives us opportunities to expand margins meaningfully in our marine business.
Thank you. One more follow-up: on McCamis, how should we expect McCamis' integration to contribute in the back half to utilization, wins and profitability? Are there any areas where integration is behind or costing more than expected?
We feel really good about the integration so far. The team has continued to win projects and their work window just opened this month, so they are off to the races with quite a few projects underway. They will contribute more heavily in the back half of the year because of the work windows in their area. They will be highly utilized and very busy for the back half of the year.
I will add that the integration is going very well. They are fully transitioned over to our project controls, financial and IT systems. They contributed positively from a top-line perspective and were accretive to EBITDA margins during the quarter, so we feel good about that. Their work window is late June or early July through February, so our expectation is that through the back half of the year that will ramp up significantly.
Thank you, Travis, Alison. That is all.
Thanks, Tomohiko.
Thanks.
The next question will come from Gerry Sweeney with ROTH Capital. Please go ahead.
Good morning, Travis and Alison. Thanks. A couple of questions already answered, but another question on McCamis. Obviously they bring a unique skill set to Orion. I am wondering if the opportunity is to expand that skill set around jetties, etc., to other operating areas within your footprint. Opportunity there longer term?
Definitely. We have been tapping into their expertise to look at projects elsewhere across the business, into other geographies, and bringing their expertise onto existing projects as well to provide value and efficiencies. They have provided a lot of value already and we expect that to continue as we expand their capability set across the geography.
Got it. And one question on concrete: you mentioned that you get brought into these projects very close to when work starts so there is not a lot of lead time between you getting involved and work starting. With these data center projects, they are permitted and ground has already been cleared, so these projects are front and center and unlikely to be canceled. Do you have clear sight as to the opportunity right in front of you?
By the time they hit our desk, they are full go, which is why there is typically a short time between when we find out and when we are working. I mentioned a bid review this morning: we heard about that job early last week, final numbers go in today and we will be working within a month. It is a large project. It is a really quick turnaround on these things and they are very much full go mode by the time we get them, so it is highly unlikely that they get canceled at that point.
Two things give us confidence in the longer-term outlook for data centers. First, across the ecosystem we see long-lead items in the backlog of those companies — servers, racks, electrical components — and those backlogs are multi-year. Our expectation, because we are not a long-lead item and we are critical path with a much shorter window, gives us greater visibility into our path. We may hear about projects a week or a month before bidding in seriousness, but others who have long-lead items have multi-year visibility, which gives us confidence that our concrete and site civil services businesses will remain vibrant. Second, because of our credentials in this space, we are a known player for getting things done on time and collaboratively. That positions us to work with more premier clients rather than speculative developers and prioritizes where we sit in the opportunity stack for the longer term.
That is helpful. Essentially, you are working on data center projects that were planned two years ago, at the front end of the AI investment cycle?
That is right.
If I could slip one more in, last one: a little detail on site civil services. You brought this up as expanding — what is going on there and what is the opportunity?
We started site civil services late last year and have seen it go really well. General contractors and owners appreciate that we are doing site civil and concrete as a value proposition. We are only a couple of quarters in, but the team has performed well and our teaming partners have embraced it. It is going very well with lots of action and opportunities we are actively pursuing.
It simplifies execution for us and, more importantly, for our clients. They have one place to go and we can resolve issues internally, which really de-risks execution. It is quite attractive.
Got it. I appreciate it. Thanks for your time this morning.
Thanks. The next question will come from Laura Meyer with B. Riley Securities. Please go ahead.
Hi. Good morning, Travis and Alison. Thanks for taking the question.
Good morning, Laura.
My first question is on concrete. The book-to-bill was roughly 0.93x this quarter. Given the 6 to 12 month project duration, how should we think about the bookings cadence?
This was the first quarter in quite a while where book-to-bill was less than 1x, and I see that more as an episodic timing item. I do not see any issue with the bookings environment in concrete. It is purely timing in terms of awards; we just got a big award in July that could have come in June but timing fluctuated it. So I do not see issues there.
Okay. Thanks. And then my second question: are you seeing the same contract term improvements that the broader heavy civil market is seeing, specifically upfront mobilization payments and owner-funded escalation provisions? If so, is that showing up in marine or concrete or both?
Good question. We always work on trying to get upfront mobilization on our projects, both concrete and marine. It depends on the client; for the federal government there is little room to negotiate contract terms. On the concrete side, we are often able to negotiate better terms. Regarding escalation, for certain items we are able to get escalation protections. Fuel is a concern across our business due to diesel price variability. We either hedge, lock in, or build a contingency into our bids to cover higher diesel prices.
Thanks, Travis. Thanks, Alison.
Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Travis Boone, CEO, for any closing remarks.
Thank you. Quick recap of our key messages: this is a timing issue, not a demand issue — it's about timing of getting started on contracts. Our end markets are very strong, we are winning at or above historical rates and definitely above industry average, and our confidence in the long-term strategy is very high. As I mentioned earlier, our marine business has 90% of the work for the back half of the year under contract and 80% overall for the company, so we are feeling good despite how the numbers came in in the second quarter. We appreciate all of our employees who are working hard every day to deliver the business and thanks to our shareholders for believing in our story. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.