Good morning, everyone, and welcome to Orion Group Holdings Third Quarter 2019 Earnings Conference Call and Webcast. Joining me today are Mark Stauffer, Orion Group Holdings' President and Chief Executive Officer; and Robert Tabb, our Vice President and Chief Financial Officer. Regarding the format of the call, we've allocated about 15 minutes for prepared remarks, in which Mark and Robert will highlight our results and update our market outlook. We will then open the call for questions. For the course of this conference call, we'll make projections and forward-looking statements regarding, among other things, our end markets, revenues, gross profits, gross margin, EBITDA, EBITDA margin, backlog, projects and negotiation and pending awards, as well as our estimates and assumptions regarding our future growth, administrative expenses and capital expenditures. These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements. Moreover, past performance is not necessarily an indicator of future results. By providing this information, we undertake no obligation to update or revise any new projections or forward-looking statements, whether as a result of new developments or otherwise. Also, please note that adjusted net income, adjusted earnings per share, EBITDA and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including Regulation G. Please refer to the reconciliations and definitions inclusive to the most comparable GAAP measures and reconciliation tables accompanying these earnings call within the press release included this morning. The press release can be found on our website at www.oriongroupholdingsinc.com. Also, for additional discussion of risk factors that could cause actual results to differ materially from our current expectations, please refer to our quarterly and annual filings with the SEC, which are also available in the Investors Section of our website. And with that, I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Mark?

Thank you, and good morning, everyone. Thanks for joining us today. Today we’ll discuss our 2019 third quarter results and provide an update on our Invest, Scale and Grow initiative, or ISG. The key takeaways from our remarks today will be our sequential and year-over-year improvement in our top and bottom-line performance, our backlog remaining near an all-time high, with a record level in the Concrete segment, and our ISG update. I’ll begin by giving an overview of the quarter, Robert will then discuss our financial performance and capitalization in more detail, and finally I’ll come back to discuss our markets, provide an update on our ISG initiative, and comment on our expectations for future results. As always, I’d like to start by saying thank you to our nearly 2,500 co-workers for their commitment, hard work, and dedication to the company, which they show day-in and day-out. It’s because of our dedicated team, we are able to meet the needs of our customers and achieve our goals. During the third quarter, we posted the highest quarterly revenue in company history. We were also able to improve our bottom line, as both the concrete and marine segments delivered positive operating profit. The improved operational performance of both segments led to increase EBITDA, both sequentially and year-over-year. Our Concrete segment now has positive operating profit year-to-date, as we saw improved weather conditions and our ISG initiative begin to yield positive results, especially in the area of labor efficiency. We remain focused on executing our strategy of being a premier specialty construction company, providing solutions for our customers across the infrastructure, industrial and building sectors, while maintaining a healthy financial position and maximizing stakeholder value. Our end-market demand remains strong, as evidenced by our robust backlog of $630 million as of the end of the third quarter of 2019, and our outlook for top-line growth is favorable. This, combined with the operational transformation, we’ve been implementing through our ISG initiative, supports our ability to deliver improved results as we progress through 2019 and into 2020. Now, I’ll turn the call over to Robert to discuss the financial results for Q3, 2019.

Thank you, Mark, and thanks, everyone, for joining us. Revenues for the third quarter of 2019 were $99.5 million, compared to $125.1 million in the third quarter of 2018. The 60% increase is driven by better utilization rates in our Marine segment, and improved productivity in our Concrete segment. Third quarter 2019 reported gross profit was $20.9 million as compared to $4.8 million in the prior year third quarter. The year-over-year increase was primarily driven by process improvements resulting from ISG, increased cubic yard of production in our Concrete segment, and the aforementioned improved utilization rates for our Marine assets. But specifically, we have improved labor efficiency a great deal, which has resulted in project margin expansion and decreased unabsorbed labor and equipment. SG&A for the third quarter of 2019 were $14.6 million or 7.3% of revenues, which compares to second quarter 2018 SG&A expense of $12.4 million or 9.9% of revenues. The increase in SG&A expenses reflect approximately $1.1 million of non-recurring professional expenses and other fees related to our ISG initiative. For the third quarter, we reported net income of $4 million or $0.14 diluted earnings per share. These results compare to a net loss of $6.4 million or $0.22 diluted loss per share for the same period a year ago. Net income included $0.3 million or about $0.01 per share of non-recurring costs and other charges. Adjusted net income for the period was $4.3 million or $0.15 diluted earnings per share. Third quarter 2019 adjusted EBITDA was $14.3 million, representing an adjusted EBITDA margin of 7.2%, compared to adjusted EBITDA of $660,000 or a margin of 0.5% in the third quarter of last year. Looking at results with respect to our two segments. In the third quarter of 2019, our Marine segment had revenues of $107.4 million and adjusted EBITDA of $12.7 million with an adjusted EBITDA margin of 11.9%. This compares to revenues of $63.5 million and adjusted EBITDA of $2.5 million with adjusted EBITDA margin of 4% in the third quarter of 2018. The year-over-year improvement is primarily driven by increased utilization of dredging assets in core Marine equipment coupled with the margin expansion on certain projects. In our Concrete segment revenues -- third quarter revenues were $92.1 million as compared to $61.6 million in third quarter 2018. Adjusted EBITDA for the Concrete segment was approximately $1.6 million, representing a 1.7% adjusted EBITDA margin in the third quarter of 2019 as compared to a loss of $1.9 million with an adjusted EBITDA margin of negative 3% in the third quarter of 2018. Our Concrete segment year-over-year improvement was driven by increased cubic yards production and increased labor efficiency as evidenced by a sharp reduction in man hours per cubic yard. In terms of breakout by customer type, the Marine segment's third quarter 2019 revenues comprised of 69% from government agencies and 31% generated from the private sector. This compares to 62% and 38% from government and private sector customers, respectively in the third quarter of 2018. The Concrete segment's third quarter 2019 revenues comprised of roughly 85% from the private sector versus 80% in the third quarter 2018. For the third quarter of 2019, we bid on approximately $1 billion worth of opportunities and were successful on $169 million. This resulted in a book-to-bill ratio of 0.85 times and a win rate of 16.3% for the quarter. As of September 30, 2019, we had a backlog of contract under work of $630.5 million, of which $404.3 million was associated with our Marine segment and $226.2 million for the Concrete segment. Additionally we are apparent low bidder or have been awarded subsequent to the end of the third quarter $42.5 million worth of opportunities, of this $31.6 million is related to the Marine segment while $10.9 million is related to the Concrete segment. Until currently we have over $670 million of projects between backlog low bid -- and backlog and low bid, an increase of $195 million from the end of 2018. This positions us well for growth. Now turning to the balance sheet, as of September 30th of 2019, we had over $18 million of cash and revolver availability. We ended the quarter with approximately $70 million in total debt outstanding, of which approximately $32 million is related to the revolver and $38 million is related to the term loan. This translated into a 2.27 times leverage ratio and a fixed charge ratio of 2.14 times, well within our covenant requirements. Further, we finished the third quarter of 2019 in a net overbill position. Between the availability on our revolver and our expectations for free cash flow generation, we have more than ample liquidity to support our strategy. Additionally, our bonding program remains solid and is more than adequate to support our bidding activities. Now, I'll turn the call back over to Mark.

Thanks Robert. Turning to a review of our market sectors, in our Marine segment, we continue to have extensive opportunities with both public and private customers for the maintenance and expansion of Marine facilities and waterways. We continue to see a strong bidding environment as evidenced by the $14 million of awards, we recently announced for two U.S. Army Corps of Engineers dredging projects on the Texas, Gulf Coast. Additionally, we are currently in the process of bidding or tracking a number of other large bid opportunities. We continue to track and pursue bid opportunities in the industrial sector to execute foundation and other heavy civil work inside the industrial and other land-based environments. We believe our prospects for using existing skill sets to expand our addressable market and build profitable backlog are very promising. In our concrete segment, we continue to expect solid long-term demand driven by population growth throughout our main end markets. Demand for structural work remains strong as evidenced by the several contracts we were awarded in the third quarter including a $26 million job for the construction of a 45-story residential tower in Austin Texas and a $7 million structural project in Dallas-Fort Worth. Likewise, we continue to see demand for light commercial work as evidenced by two recently announced projects in Houston totaling $22 million. We continue to believe in the strength of our markets in Texas with construction activity well above historical averages and we are very excited about the bid opportunities that we expect to materialize in the coming year. Our backlog in the Concrete segment reached an all-time high at the end of the third quarter and we are optimistic about our prospects for additional awards given the continued healthy bidding environment. Currently, we have over $1 billion worth of bids -- total bids outstanding of which $361 million is related to the Marine segment and $654 million is related to the concrete segment. Overall, we are tracking over $9 billion worth of current and future bid opportunities. With the combination of our current backlog, our low bids, the $1 billion of bids outstanding, and the $9 billion of opportunities we are tracking and the possibility that the funding picture may improve even further over the next several years if a new federal infrastructure bill is passed, we see significant growth potential for our business. We're confident in our ability to win work and execute on that work which we expect to drive an increasing top line for Orion. However, what we're acutely focused on is enhancing our profitability on this work and maintaining consistent profitability across projects, which leads me to our ISG update. During the third quarter we made significant strides in the implementation of our ISG initiative across all areas of focus labor management, equipment management, project execution, and corporate processes. In each of these areas, we've implemented enhancements and improvements to the functionality of data and reporting to provide better visibility leading to better efficiency and cost control. A main element of our ISG initiative has been a recommitment of our expectations to our teams and a reinforcement of the accountability of our teams. Our labor efficiency has improved a great deal which along with our efforts in equipment management has reduced unabsorbed labor and equipment costs contributing to significant gross profit improvement compared to the prior year period. We've also continued with our efforts to reduce corporate overhead and lay the groundwork to implement a shared services platform across our divisions to eliminate duplication of effort and cost all with the goal when fully implemented to reduce SG&A to less than 8.5% of sales. We outperformed our target in the third quarter with SG&A at 7.3% of sales and we're focused on achieving our goal in maintaining it over the long term. As stated before the end goal of our ISG initiative is to provide a pathway to performance that meets our expectations for our business segments on a consistent basis and it aligns with our strategic plan. As we complete the process of embedding ISG into our processes, we will continue to work on full implementation of shared services and conversion to a common ERP platform across our divisions. In addition to these areas of focus under ISG, recent awards of larger projects in our Marine segment are enhancing our capabilities to pursue and execute these larger anchor projects, which in turn improves our visibility and predictability. Similarly, in our concrete segment, as we expand our market share in structural projects we are positioning ourselves to add larger and longer duration projects into backlog with the same improvement in visibility and predictability. We are pleased to see the steps we have taken in our ISG initiatives are taking hold and yielding improved results which we remain -- and we remain acutely focused on continuing this trend as we move into the fourth quarter of 2019 and into 2020. Now, I'll hand the call back over to the operator for the Q&A portion of the call.

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Alex Rygiel of FBR & Company. Please proceed with your question.

Mark and Rob, really nice quarter.

Thank you.

Thanks Alex.

Couple of questions. First, can you give us a little bit more detail or color on sort of your views about the fourth quarter as it relates to the third quarter and then your early look at 2020?

Well, I'll kind of start and then let Robert jump in. As we said kind of in the release, we're pleased with the backlog. We certainly think fourth quarter 2019 is going to be much improved over fourth quarter 2018. We do note that especially with a -- the performance we had in Q3, oftentimes Q4 can be a little bit of a pullback just seasonality-wise. We're hopeful that we continue the good weather trend that we've had. So, that's going to factor into it. But we think we might see some pullback from Q3 as we move ahead in the fourth quarter, but certainly much, much improvement over last year. As we go into 2020, just generally speaking, I mean, we're focused on the implementation and have been on the implementation of ISG initiatives. And again our drive with all of this is to just get us back to consistent performance in the range of expectations that we expect our divisions -- our two segments to perform. So, that's what our focus is and we're working to do that. We're pleased with the backlog that we have going into 2020. As we noted in the release this morning, we're already seeing some projects that will fill up some periods of some of our schedule in the back half of next year. So, that's very positive. And we see a lot of opportunities that we're either pursuing or currently bidding that we're very excited about. So, we think we've got good markets good backlog. And again we're focused on doing the things that we've been doing this year with these changes with our ISG initiatives and to drive improved results.

Can you also comment on sort of the implied profit margin in backlog today as it stands relative to maybe the last couple of years? And also talk a little bit about sort of your pricing strategy out there in the market. And how -- that has changed and how that has impacted your win rate?

Yes, well a couple of things. So, I think that generally speaking we're pleased with the bid or the backlog margins. There's improvement there. But also I want to kind of touch back on the areas of focus for our ISG initiative because the execution of the project is part of the equation. The other part of that is not having that performance on those projects get deteriorated by unabsorbed labor and equipment costs, so that's why that's been a key area of focus for us. With ISG is, we think that we've got a good, good backlog obviously and we're pleased with the margins we have in that backlog. But we also want to make sure that we're not only executing that work well but that we're controlling the indirect. So, that we're not seeing a deterioration of that after we execute on those projects. So, that's a key focus for us. We like what we're seeing so far. We are seeing improvement in labor efficiency. We commented on that. We're seeing improvement in the area of equipment and underutilized equipment. Clearly, those are two areas where we're going to continue to focus on. We've got more work to do there and if we can do that and that's going to help translate our backlog into profitable results. And the last thing on pricing, we've talked about this a little bit on the last call is that it also is part of ISG. We're focused on improving and enhancing, if you will, the analytics we have around project selection or bid selection, I should say. Which projects we go after? How we price in those projects? What are those that give us the best chance of success? What are we -- what types of work that we perform better at than others? And things like that, so just really a lot of the things that we've always done but just trying to see if we can do those better. So that we can kind of continue the momentum that we're generating right now.

And lastly, can you discuss various opportunities to improve your cash position including asset sales or real estate sales and operating activities and then your likely uses of that cash over the next six to 12 months?

Yes. I'll kind of touch on this but I'll Robert drill down at it. And so that's a continued area of focus on us. I mean you saw that we delevered on the term debt this past quarter. As we -- as Robert noted in his comments, we're in an over-bill position on our -- net over-bill position on our projects. We want to continue to execute well on the backlog maintain that level of overbilling. And we are ramping up and ramping up some more particularly on the Marine side. So we're managing that working capital need. We do have -- as an area of focus and I'm going to let Robert Touch on some other parts of this. But just with the equipment piece that I touched on a minute ago, that's part of the equation to make sure that we're maintaining the optimum size of fleet. And if we have surplus or excess things that we liquidate that and we generate cash out of that. And we work towards delevering. And I'll let Robert talk about it.

Yes. Alex I'll answer that. In the third quarter we executed a sale leaseback on one of our properties. That generated roughly $18 million that we used to pay down term debt. There will be a sizable disclosure on that in the queue when we file it tomorrow morning or tomorrow afternoon. So you can read up on that. There was no P&L benefit to the quarter. It was a balance sheet transaction. The way we're going to account for this thing is you'll see an uptick in other liabilities and current liabilities those -- we'll amortize that out through that line. As far as cash flow yes, no it's something we watch and we manage. We've seen an uptick in AR just from the nature of increased activities in billings. If you look since the end of last year AR is up, roughly $30 million but we expect that to liquidate out as the year progresses and we'll continue to use those bonds to delever. So that's kind of the strategy around working capital right now.

Very helpful and thank you for hosting my Washington Nationals, and Houston.

Blue hats, Alex, blue hats. Not the outcome we wanted to see but congratulations.

Thank you. Good luck.

Thanks.

[Operator Instructions] Our next question comes from the line of Poe Fratt of NOBLE Capital Markets. Please proceed with your question.

Good morning, Mark. Good morning, Robert.

Good morning.

Just a follow-up on the working capital. It's been negative for the last two quarters roughly $9 million and then about $13 million will that start to turn. And Robert mentioned account receivables is up. Will that start to turn in the fourth quarter? Or is that more of a 2020 event?

Yes. It should start to liquidate over the fourth quarter into Q1. Mark mentioned that -- this was the highest revenue quarter in company history, so as we build that out and start to collect that we'll see that position start to liquidate out. And as I mentioned before we'll continue to focus on paying down debt at this time and driving down our leverage ratio.

Thank you. And then on the sale leaseback Robert was there any savings that you could sort of quantify on term reducing the revolver and using the sale leaseback as the means to do that?

Yes. No the savings is -- obviously reduced the debt and interest expense and take on a little bit of lease expense but it was quite a push. The way to burn off is through interest and amortization. So long term no impact to EBITDA if that's what you're getting at.

Yes. I was just trying to figure out if the financing rate was advantageous to you relative to what you're paying on the revolver.

Yes. It was a push an immaterial difference. The key for us is that we want to drive down debt and continue to improve that liquidity position. And as we drive down the overall leverage ratio it drives down our overall cost of capital. So we factored all of those things in the decision. And as we continue to execute on our real estate strategy we'll continue to drive down the debt.

Great. And Mark talked about the ISG program and just the progress there. Can you -- the only one target it seems like you have out there is SG&A as a percentage of revenue and you're well under that and if you ex out the $1.1 million of onetime costs, you're well under it. Are there other measures that you're looking at whether it's gross margin improvement? Could you quantify anything else that you're looking at to help us understand where else we're going to see the benefits of the ISG program?

Sure. No. Good question. Absolutely it really relates back to actual -- the performance. I mean, it isn't gross margin and it isn't EBITDA and that's why we kind of say look we're -- our end goal here is to use this to strengthen our processes systems and tools to have the units be performing at the level of our expectations on a consistent basis. So if we think about the Marine division we've kind of said before that we think we should be in the 10% to 12% EBITDA margin range with periods of outperformance. And in the third quarter we were there. We were in the middle of that range with the performance that we had in the third quarter. With respect to the Concrete segment I mean we think in the 8% to 10% 11% from 8% to 10% or 11% EBITDA margin is the range we want to be in. We're not quite there in that division. We've made significant improvements there. We did generate positive operating income in that division. But clearly we've got more work to do there to get us back in the range that we expect. So really the culmination of all the efforts that we're doing are to have the businesses perform what our expectations are. So that's really the metric that we have out there and what you can measure against along with the SG&A target that you mentioned. So that's really why the emphasis around project execution and controlling the indirect around labor and equipment. So if we execute the way we should execute and we are executing well and we control the efficiency of labor or -- and reduce and minimize unabsorbed labor, unabsorbed equipment expense then that -- you're going to see the benefit of that in gross margins and therefore EBITDA -- bottom line in EBITDA.

Great. Mark. If I could follow-up on the -- getting to the construction or Concrete margin goal, if you look at the third quarter record revenue how much of that $92 million of revenue was if you will on unprofitable or low-margin projects that were bid? Last year we were in backlog. I mean can we look at it that way and say that we're 75% of the way burning off those projects? Or is there some metric that you can give me that -- to figure out just when we're going to see that improvement in EBITDA margins in the construction or Concrete business?

Yes. So a lot of different things go into that. So again we have largely burned off, as we said on the last call we largely kind of burned off some of the more challenging work that we had that was impacted by weather last year and into the first quarter of this year. We have made progress there in terms of our performance there as you say we had high revenue. We had very good production in the quarter. But there's other things that go into that in terms of improvement in our labor efficiency rate or cubic yards per man hour. We want to gain more improvement there. There's also the issue of rework that we have to do on certain projects and then the flow-through for change orders and getting paid for some of the work that we're doing there. So again, what I can say is that, we've made a lot of progress in the Concrete division. We clearly have more progress to make, but we're confident that our teams are focused on this. They're performing at a much quicker pace than -- were focused on the things that they need to be focused on. And so our goal is to get to where we think that expectation of performance should be as quickly as possible. Whether that's Q4, Q1, we'll wait and see and see what happens there. But we are focused on all the things that we should be focused on. The teams are focused on -- our team in Concrete is focused on the things they should be focused on. And so, we're moving in the right direction. And our goal is to perform at the level we should be performing at as quickly as possible.

Great. And you talked about sort of a little bit the magnitude of the seasonality that the fourth quarter typically is the slowest time of the year. Are you talking about revenue booking or profitability? I mean, what should we expect lower revenue in the fourth quarter, but gross margin to hold up in the double-digits. So could you give me an idea of sort of how to look at the fourth quarter as far as the seasonality that you mentioned?

No. Poe, what we're talking about on seasonality is daylight saving ends this Sunday next week. So less daylight, less time to burn cost, which is a driver to how we book revenue. So yeah, we expect a pullback. Typically Q1 is the weakest. Q2 builds, then Q3 is the peak, and then we come back down in Q4. As far as margins what really goes into that is utilization and our ability to keep the equipment working. So I would expect margins to kind of mirror that not as dramatic as the change in revenue, but I would expect it to pull back slightly.

Great. And then just -- if you wouldn't mind just a couple of nitpicky things on CapEx target for the year. And then also were there any start-up costs for the Terminal 5 in Seattle that might have dragged down gross margin in the third quarter a little bit?

Yeah. So, as CapEx expectations, I think it will continue on the run rate that it has been on through three quarters. I think you can model that out. I don't expect a big spike up in Q4. As far as T5, yes, we do have what we call uninstalled materials that as we procure steel and some of those raw materials, we'll take those to the P&L revenue and cost at zero margin until they are installed, then we'll take the margin. So, some of that is flowing through in Q3 and some of that we expect to flow through Q4.

Okay. Still in Q4 Robert then.

Repeat that question again?

Sorry. There's still going to be a little bit of a start-up drag from Seattle T5 as you mentioned in the fourth quarter?

Yes. Yes. In Q4.

Yeah. And the other thing what I would add to that though is we still think that's -- we're still very excited about that project and performing that work for the port up there. It's a key project for them. I think that -- we think overall that's going to be a very, very good job. But again, there's just some of the quirks of construction accounting, POC accounting that may have a little bit of impact in Q4. But overall, that's -- we're very excited about that project as we move ahead.

Great. And then talking about the other project, big project that was on the radar screen that was mentioned on the second quarter conference call in August. It looks like Georgetown, there's going to be a voter referendum mid-December. Has your confidence level on that project changed at all over the last three months?

Well, we think we're very pleased with the team that we have there. We're -- we think that that's a very important project for the economy in the Cayman Islands. We think that our team has done a fantastic job at addressing the concerns around -- the environmental concerns and other concerns. And we -- our team is helping communicate the message about what we've done and some of the redesigns that have gone on some of the steps that we've taken -- we've taken with the environmental consultants that we've -- we partnered with to assist in some of the areas that are key for us to focus on from an environmental standpoint. So, we're very, very hopeful that the people will see the benefits of the project and see the steps that we've taken to address concerns that they may have. And so, we'll see what happens on the 19th. But I think we're hopeful for a positive outcome there. And assuming that occurs, then we're pleased to move to the next steps on that process as the preferred bidder.

Great. And then just to tie down a couple of loose ends that have been -- any change in your ability to recover that change order that you guys have been talking about for the last couple of quarters? I think it was up in Alaska.

Yeah. Well, yeah. Yeah. So, no news to report specifically, but I do think we've had some positive progress. We've had -- our team is up to meet with the customer on those -- on the project up there. I think we've got a good path forward for us to resolve those things that, I think, we can resolve easily and then to address those that might be a little more involved to resolve. But I think we have seen some positive progress in that area, and we'll just keep -- we're keeping our focus on that. And hopefully, we'll have something to report out on that relatively soon. But I think what I would say is again, we're pleased with the progress we've made with our teams meeting with clients, and we're keeping after it. And hopefully, before too long we'll have some resolution.

Great. Thank you so much and look forward to seeing a continued progress to the company. Thank you.

Thank you.

At this time, we have no further questions over the audio portion of the conference. I would like to turn the conference back over to management for closing remarks.

Thank you guys and we look forward to talking to you on the next conference call.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful rest of your day.