Orion Group Holdings, Inc. (NYSE:ORN) Q3 2023 Earnings Call Transcript

Julio Romero: Got it. That’s very helpful. And then maybe piggybacking on Joe’s question a little bit about the top-line, maybe specifically on the marine side. Because the marine sales sequentially contracted a bit. Is it fair that they’re expected to inflict back upward next quarter towards maybe second quarter’s top-line figure or is that not in the ballpark?

Scott Thanisch: Yes, we should see a continuing growth in the marine revenue line as we have more and more production coming off of Hawaii that will really start to produce in the fourth quarter. Just early starts on that the Grand Shipyard in Grand Bahamas. That’s also going to start contributing. So the top-line in the marine is going to come up pretty significantly starting in the next quarter and then really in earnest starting into the first and second quarter of next year.

Julio Romero: Really appreciate the color there. I’ll hop back into queue. Thanks very much.

Scott Thanisch: Thanks, Julio.

Operator: Our next question comes from the line of Dave Storms from Stonegate Capital Markets. Please go ahead.

Dave Storms: Good morning.

Travis Boone: Good morning, Dave.

Dave Storms: I appreciate you taking my call. Just wanted to start with the East West Jones property. If I remember correctly, that had a price tag of about $36 million. Will that or has that been repriced and is there an expected close date with the new potential buyer?

Travis Boone: Yes, so we’re still marketing in that same neighborhood and we anticipate the conversations that we’re engaged in right now to the extent that those continue and conclude successfully the timing of a transaction would be early next year.

Dave Storms: Very helpful. Thank you. And then just one more for me with the great contract win in the Grand Bahamas. Are there any logistical challenges or resource constraints that you’re foreseeing considering you’re going to have two very large projects on either side of the continent?

Travis Boone: No, it’s not really an issue for us. We’ve got multiple crews and multiple teams and it’s different resources both with our equipment and people that will be delivering each project. So no concerns as far as resource constraints internally. It’s a different country. So there’s challenges with different things getting going in a different country. But it’s moving quickly and we’re mobilizing and getting started on the Bahama project.

Dave Storms: That’s very helpful. Thank you.

Operator: Our next question comes from the line of Alex Rygiel from B. Riley. Please go ahead.

Alex Rygiel: Thank you, gentlemen. Coming back to the Grand Bahama project. What’s the margin profile of that project relative to some others and any notable working capital needs in the short-term?

Travis Boone: Yes, we don’t talk about specific project margins, but that’s a project that we’re really happy with both in terms of it fitting our strategic direction being a design build contract, bringing more of our services to bear for our customers. And also just being in a different geographic space than in Hawaii where we’ve also got some growth going on. It’s nice to kind of balance out that. So I’m happy with the margin profile and expect to see continued improvement in the overall marine margins as we execute on that and the Hawaiian project going forward.

Alex Rygiel: And then any working capital needs in short-term on that?

Travis Boone: There’s a fairly good dynamic within that contract for mobilization payments. So the working capital investment is relatively small. Obviously working in some different currencies will drive a little bit extra need than what we might normally have. But relatively modest, so not a significant build in working capital anticipated related to Grand Bahamas.

Alex Rygiel: And then as it relates to fourth quarter directionally, how should we think about SG&A expense? I know last year turned it down sequentially quite a bit, but given the increase in work here, how should we think about SG&A in the fourth quarter relative to the third?