Greetings, ladies and gentlemen. Welcome to the Orion Third Quarter 2020 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Mr. Fran Okoniewski. Thank you. You may begin.

Good morning everyone and welcome to Orion Group Holdings Third Quarter 2020 Earnings Conference Call Webcast. My name is Fran Okoniewski, Vice President of Investor Relations, and joining me today are Mark Stauffer, Orion Group Holdings, President and Chief Executive Officer, and Robert Tabb, our Vice President and Chief Financial Officer. This is my first earnings call with the Orion Group after spending 28 years on the buy side, so I'm pretty excited to be here. Regarding the format of the call, we've allocated about 10 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. Through 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 for the most comparable GAAP measures and reconciliation tables accompanying this earnings call within the press release issued yesterday. 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. Thank you for joining our call. Today we will discuss our third quarter 2020 results and provide you with an update on the current state of our business. I'll begin with a few comments on the quarter, then turn the call over to Robert to review our financial results in more detail and then I will make some concluding remarks before we turn to Q&A. Before getting to our third quarter results, I'd like to address the tragic accident that occurred during the quarter taking the lives of five of our colleagues and injuring several others, some seriously. On August 21, an explosion and fire sank our dredge Waymon Boyd in the port of Corpus Christi ship channel, while it was performing work near a pipeline. Right now, our primary concern is the well-being of the crew members involved in this incident and their families. Safety is an essential part of our guiding beliefs and part of the fabric of our culture. We remain deeply committed to our target zero program to support our vision of an incident free workplace. Our support, thoughts and prayers remain with the crew of the Waymon Boyd and their families. The cause of this incident remains under investigation led by the National Transportation Safety Board in collaboration with other governmental agencies. We continue to fully cooperate with the NTSB investigation and we are eager to understand the cause of this accident. With respect to the COVID-19 pandemic, we continue to be able to work on our projects with only minor disruptions. During this challenging environment, the health and safety of our team members is our top priority, and to that end, all the precautionary measures we've implemented in response to this public health crisis will remain in place for the foreseeable future. I'm proud of our entire team on all our project sites, vessels, construction yards, shops and field support offices and their continued resilience and commitment to improve our performance despite the challenges brought about by COVID19. Turning to our financial results, in the third quarter, we once again delivered solid bottom line improvements with the year-over-year expansion in gross margin and adjusted EBITDA margin along with improved operational performance in both segments. We continue to see bid opportunities in both our segments and we expect that opportunities to accelerate when the headwinds from the COVID-19 pandemic abate. We have diversity in our end markets, which continue to drive project bid opportunities. We also believe in the resiliency of those end markets currently being impacted by the pandemic, and we are confident in the long-term strength of these markets to drive future bid opportunities. To that end, we are seeing signs of recovery in some of the end markets impacted by the pandemic. We will continue to focus on targeting the end markets and projects we expect to provide the most profitable opportunities moving forward. Additionally, our liquidity position remains strong and provides us with more than sufficient financial flexibility to continue to pursue new awards and execute existing backlog. I'm confident in our team's ability to navigate through the pandemic, with the health and safety of our employees always as our foremost priority. Now I'll turn the call over to Robert to discuss our third quarter results in more detail. Robert?

Thank you, Mark. And thanks everyone for joining us. Today, I will review the financial results for the quarter, provide an update on the Company's liquidity position and the status of our ERP initiative, finally, I'll close by discussing the Company's fourth quarter 2020 outlook. Starting with the financials, revenues for the third quarter 2020 were $189.4 million compared to $199.5 million in the third quarter of 2019. Decline in revenues was driven by tropical weather in Texas that in the quarter impacted production in our concrete segment. The third quarter 2020 reported gross profit was $22.5 million or 11.9% as compared to $28.9 million or 10.5% in the third quarter of last year. The year-over-year increase in margin was driven by a 200 basis point improvement to project margins. Now turning to the segments, the marine segment margins increased by 10 basis points year-over-year. The improvement is driven by execution related margin gains on certain projects. The concrete segment's year-over-year margins improved by 130 basis points. Also driven by execution related margin gains. Moving to SG&A, for the third quarter 2020, SG&A expenses were $15.3 million, up from $14.6 million in the third quarter of 2019. The increase is driven primarily by the full ratable accrual of the annual incentive compensation plan during the current year period. As a percentage of revenues, third quarter 2020 SG&A was 8.1% up from 7.3% in the prior year quarter. We remain focused on SG&A being at or below 8.5% of revenues for the full year recognizing that we may see quarterly fluctuations. Third quarter 2020, operating income was $13.1 million compared to $6.1 million in the third quarter of last year. Now to the bottom line results. For the third quarter 2020, we reported net income of $11.8 million or $0.39 per share. These results compared to net income of $4 million or $0.14 per share for the same period a year ago. After adjusting for approximately $2.5 million of non-recurrent items and $2.2 million of tax expense related to federal and state valuation allowances, adjusted net income for the third quarter of 2020 was $7.1 million or $0.23 per share. Third quarter 2020 adjusted EBITDA was $17 million, representing an adjusted EBITDA margin of 9% compared to adjusted EBITDA of $14.9 million for a margin of 7% in the third quarter of last year. I'd like to point out over the past 9 months, Orion has generated approximately $42 million of adjusted EBITDA and our trailing to a fourth quarter adjusted EBITDA is $53 million. The Company also has posted five straight quarters of positive earnings, this is indicative of the operational turnaround and the hard work of our employees, especially during an extremely difficult period. In the third quarter of 2020, we bid on approximately $734 million worth of opportunities, and were successful on $90 million. This resulted in a win rate of 12% and a book-to-bill of 0.47 times. As of September 30, 2020 backlog was $429 million, of which $242 million was associated with our marine segment and $187 million with the concrete segment. Currently, the Company has $1.1 billion worth of bids outstanding, including $108 million of which it is the apparent low bidder or has been awarded contracts subsequent to the end of the third quarter 2020. In total, we currently have $537 million of projects between backlog and low bid. Now to liquidity, our current liquidity position is solid and we have generated over $36 million of free cash flow in the first three quarters of 2020. We ended the third quarter with $2.7 million of cash on hand and access to $58 million under the revolving lines of credit. We ended the quarter with $42 million in total debt, of which $10 million was related to the revolver, and $32 million was related to the term loan. This translated in a 1x leverage ratio and a fixed charge ratio of 4 times, both was well within our covenant requirements. Our current liquidity situation provides us with the flexibility to execute our strategy, pursue new awards, and perform work in backlog. Additionally, we are continuing to percent steps to further enhance our liquidity including continuing the process of selling non-core assets, particularly surplus real estate. Success in this regard will put us in an even better position to drive shareholder value. Now to the ERP update. As previously discussed, we have launched our ERP initiative, which was delayed earlier this year due to COVID-19. This project will move the Company onto Microsoft Dynamics 365 and provide Orion the foundation to scale and grow the business. We expect to complete the design phase during the fourth quarter of 2020 and start the build phase early in 2021. Overall, I expect this project to last 18 to 24 months and cost $15 million. Now moving to the 4Q 2020 outlook. We are extremely pleased with our financial performance during a difficult period for the Company and the country as a whole. Given the seasonality of the fourth quarter, we expect to generate between $10 and $12 million of adjusted EBITDA for the fourth quarter of 2020. As written before, we are pleased with our results, but we remain focused on execution and rebuilding backlog. Now, I'll turn it back over to Mark.

Thanks, Robert. Turning to our markets. As I stated earlier, while pandemic related uncertainty has pushed some bid opportunities in certain sectors to the right. We continue to pursue projects in both of our segments. Our focus is on profitably bidding these opportunities as opposed to simply filling backlog at any cost. And our ability to adjust between different end markets continues to serve us well in this regard. Additionally, we continue to target select larger and longer duration projects to provide us with greater operational visibility. We are in constant communication with our private sector customers regarding their projects and bid opportunities, and in our marine segment, we continue to target government sector projects at the federal, state, and local level. Specifically in our marine segment, we continue to track bid opportunities driven by Hurricane Harvey relief funding. Significant funding is in place for these projects and we expect bid packages related to this funding to materialize in the coming quarters. We also continue to track any movement on Federal Infrastructure Bill either as a replacement for the FAST Act or as part of future similar spending plans in response to COVID-19. Any action on infrastructure funding would likely provide significant bid opportunities that we are well positioned to capitalize on. Additionally, in the energy sector, we are seeing long range projects begin to move forward, which will provide bid opportunities in the near-term. In our concrete segment, we are seeing bid opportunities from end markets in the sectors of the economy that have continued to operate throughout the pandemic, we are also seeing long range projects move forward for structural projects. We continue to execute on our strategy of expanding our structural concrete business, where our competitive dynamics for this type of work has led to securing more of these projects, such as the large multi use tower structure in Houston that we began work on during the third quarter. Our performance on structural projects has greatly contributed to the improved operating performance of our concrete business. Texas also remains one of the leading states for population and business growth in the United States, which will continue to provide opportunities for all types of concrete construction. We continue to strong operational performance in the third quarter that we saw in the first half of 2020. And we enter the fourth quarter with combined backlog and low bed at strong levels despite the COVID-19 impacts on some of our end markets. We also currently have over 1.1 billion of bids outstanding of which we are low bidder or has been awarded subsequent to the end of the quarter 10 8 million. We have performed incredibly well in a difficult and challenging environment. And we continue to improve our liquidity and strengthen our balance sheet. As a result, we are incredibly well positioned with options to execute our growth strategy as we move forward and look toward a post pandemic economy. I'm confident our team's ability to perform in the current environment and the challenges that brings along with it. We have shown that in spite of one of the most challenging macroeconomic periods in recent history, we're able to improve operational effectiveness and profitability by focusing on business development, efficiently executing the work on our projects and controlling indirect costs, in particular unabsorb labor and equipment. We remain confident in the diversity, sustainability and long-term drivers of our markets. And we believe, we are well positioned to capitalize on both current demand and post-pandemic demand across our end markets. With that, I'll turn the call back to the operators for questions.

Thank you, ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from line of Joe Mondillo, Sidoti & Company.

So my first question just regarding the marine segment. So backlog has declined sequentially for the last couple quarters? I'm just curious, just overall how you're thinking about that business over the next handful of quarters or going into 2021?

Well obviously we've been, we've been burning work that we've had in backlog and we've had some timing of new awards that have impacted the book-to-bill, but we've booked or low bidder on $108 million since the end of the third quarter, roughly about half of that's been on the marine side. We're starting to see some of the end markets that have been impacted, particularly in the energy sector have started moving forward with long range projects. We commented on that in our prepared remarks. We're seeing upcoming bid opportunities there. It's a weird environment right now, but we're confident that we're going to have the opportunities, as I've said on prior calls, we're targeting where the work is coming out and we're trying to book profitable backlog. We're targeting the areas that are generating the bid opportunities for us and we're seeing those. So, I think some of this is timing. Some of this is, certain projects moving to the right, but we're confident that we've got opportunities upcoming and we're going to keep grinding away and replaced in the backlog.

So that's what I was sort of thinking, it seems like things, sort of a timing situation. It sounds like there's a lot of opportunity out there just things may be being delayed or does not the trigger not being pulled immediately. What do you think about the following factors, the FAST Act expiring and then sort of being extended one year? The election, state budget constraints, and I don't know what's going to happen if the fiscal stimulus affects you at all. But are any of those factors, do you think, sort of delaying things from moving along?

Well, clearly, some of our end markets have been impacted by the COVID pandemic, and it's kind of one of those things, if you think about the parts of the economy that have been moving forward are continuing to drive opportunities for us. The parts of the economy that have been impacted, there has been a pause in some of those, in some of those opportunities or they've shifted right. We have a lot of things that we were targeting when the pandemic hit. Those projects haven't gone away, but they have been, they've been delayed and pushed to the right. Clearly the election, from a macroeconomic standpoint is kind of out there. Hopefully, we'll get resolution on that in the next week. We think once there is a resolution on that and people assess what that means, then things will, to the extent that's impacting decisions, that decisions will be made and so things like that will move forward. Also parts of the economy, like I said, that have been impacted, we're starting to see things from a more long-range standpoint move forward. If people are thinking about a two- or three-year long outlook for their particular project, we're starting to see stuff like that move ahead. So again, we're confident in the ability to pursue the work that is coming out right now and we're confident in the end markets that have been impacted that, like I said, we're starting to see some of those things move forward now, and we're confident that once we sort of get to a little more certainty on the COVID pandemic and therapies and treatments and vaccines and stuff like that, that we think all of our end markets will provide us bid opportunities.

And then in your prepared remarks, you mentioned the Harvey Hurricane fund and some opportunities there. So this year we saw a record amount of hurricanes. Just yesterday, we saw category 2 hit the gulf. How much opportunity do you see related to the storms that we've seen this year?

Well generally speaking, storms drive opportunities for us in the long term. So as an example, Harvey hit Texas two years ago, three years ago now and we're just now starting to see a lot of that long-term funding generate project opportunities. So we typically will see anywhere from a one- to five-year tail on project opportunities driven by hurricane activity. So we'll see what comes out of this, obviously Louisiana was very hard hit this year. I think that was probably about the fourth or fifth storm that hit that state this year yesterday. So we'll see what happens, there is work that we've been chasing over there related to prior storms and then just flood control and reclamation projects and things like that. So we'll see what happens. But again, that can be a good long-term driver for us just like we've seen with Harvey three years ago.

Thank you. Our next question comes from the line of Poe Fratt with Noble Capital Markets. Please proceed with your question.

Good morning. I have a couple of follow-up questions if you wouldn't mind. Mark can you talk about, you alluded to it a little bit that you have flexibility in the concrete business to bid or transition to where you think end markets are stronger and avoid weaker markets. Can you highlight some of the stronger end markets and maybe also some of the weaker end markets that you're seeing out there on the concrete side?

Well that comment was really in reference to both, both segments but specifically on the concrete side, I mean, again, if you think about things that have been impacted by the pandemic, as an example, back in the first part of the year, we had several projects on our light commercial side related around gym facilities or movie theaters or things like that. Clearly those businesses have been impacted by the pandemic and so we're not seeing a lot of those opportunities right now and ones that we were working on have been suspended or shifted to the right. So that's an example of kind of what's been impacted, but on the same token, we're seeing other areas for distribution centers and things like that related to that, again a lot of e-commerce type stuff has been going on and booming as a matter of fact and so we're seeing opportunities driven by that business. Likewise, as I said just a minute ago, long range projects. We're seeing people make decisions to move forward with things, structural work, again tends to be longer term duration and so, even though our work on a structural project may be 12 to 18 months, the overall project for that investor is probably 2-year to 3-year-long project for them. So, there a lot of people are, they are taking a long-term view and they're confident that two to three years out, we're going to be in a post-pandemic environment and so they're making decisions to move things forward. And likewise even with some of the states being impacted, again a lot of our exposure is in states that have been back moving and opening their economies early on and so we're seeing, we're continuing to see bid opportunities driven and again a lot of, a lot of the opportunities that we see in the government sector are driven by Federal dollars and so, we're still seeing opportunities driven by that and we would expect that to continue, particularly if there is any kind of additional stimulus, but there's been a lot of stimulus that's come in already that is potentially going to help draw those opportunities for us.

And then if we could talk about the weather impact in the third quarter, typically when you see weather impact, historically you've seen an impact on the profitability but profitability held up even though the revenues were down. Robert, can you maybe quantify the impact that you saw in revenues in the quarter and then also help us understand how profitability, you did hold up in the third quarter.

Yes, Poe. I think the revenue impact was $18 million on the concrete side, if you go, I think what you're alluding to when you go back to a few years ago when Hurricane Harvey hit, it was a weather pattern issue in that year. So, we had a lot of unabsorbed labor that pull back on margin. I don't expect to see that going forward, this was an event that just shifted, that were going to happen at the end of the quarter into the fourth quarter. So, we don't expect to see a margin impact from that just purely a timing thing.

Yes, in the last, I'd add to that, I mean, this again, we mentioned this on the remarks I believe but it's indicative of the ISG initiatives that we went through and implemented last year and just our teams are just really performing well despite, despite challenges, and as Robert said, this was, this was very, this was like quick hit kind of stuff that impacted shorter periods of time. This wasn't like a, bad weather pattern like we saw a few years ago.

And then thanks for putting guidance out there for EBITDA for the fourth quarter. I have two questions on that guidance. First of all, do you have a mix, Robert, on the $10 million to 12 million for EBITDA for the fourth quarter and then when you look out into next year, if you do hit the low end of your guidance, you're looking at $52 million for the year adjusted EBITDA. And when you look at how 2021 is shaping up, clearly there is some uncertainty, but do you think that you can at least meet or stay in that same $50 million range in 2021 from an adjusted EBITDA standpoint or can you give us just a little bit of a preview on 2021, if you wouldn't mind?

Yes, I think 2021 is going to depend on the next couple of months and how things shape out. I think Mark alluded to in his comments that there are a lot of great opportunities out there, obviously the timing of when these things take free and people press go on projects will really determine how much we actually get the burn in 2021, but we would like, as Mark said, we feel really comfortable with where the bid environment is and the opportunities that are in front of us. It's really going to boil down to the time to go win those projects, free up, and actually let out.

Yes. Well, I'd add, Poe, I think we've talked about this on prior calls. Our focus is on aggressively going after work and backlog. And again, we want to do it profitably. We don't want, as I said in my remarks, we don't want to just fill up on cheap work, just have work. We want to, we want to make sure that we're targeting the right things. Our message has been, cast a wide net, we're going to go after all the opportunities we see out there. We're going to expect to generate greater throughput with our estimating staff. We've added estimating capability and flex estimating capability so that we can make sure that we're targeting opportunities and were bidding everything we should be bidding and even if we're bidding more opportunities, just to make sure that we're finding the right work, finalized backlog, so that we can continue to perform well, as we go into 2021.

Yes, Robert. Mix on fourth quarter EBITDA, any rough estimates for marine versus concrete in fourth quarter?

I think it's going to look a lot like Q2. It's probably the best gauge from a revenue and a mix from the different segments. This quarter you have the time to shift this weekend, so you're going to have a score to date, let's say light. So it gives you a little bit like Q2 from our internal modeling.

Great. So still profitable in concrete and maybe a little bit of a slowdown, not slowdown but little lower from the standpoint of marine just because of those phase.

Yes, seasonality effect. Yes, that's a good way to think about it.

So importantly concrete looks like you potentially have hit a new level or at least have created a more sustainable profit fairway there?

Yes, I think again, we're not where we want to be yet but we've made tremendous progress really proud of the team there. The guys, the division there, are doing a fantastic job. There is just, there is a great energy in the division and they've just done a great job and they continue to do that. They're executing on our strategy and we've continued to make improvements as we've gone through this year, building off of what we did last year with ISG. And just really, really, proud of the effort everybody has done and what they're doing. And again, I think we've got more room to improve there. And so where we're going to keep grinding on that.

Great. If I could just talk about capital or CapEx in the context of also surplus real estate, you in the press release, you talked about that you're going to have proceeds from the insurance recovery to reinvest. You're looking at reinvesting that into the dredging market and replacing the Waymon Boyd. Can you put some color on what level of CapEx there? And then also, can you talk about the timing of the surplus real estate sales? I think in the last quarter you talked about a preliminary sales agreement on Tampa. And I was just wondering where that, what the status of the Tampa sale is?

Yes. We, as we said in our remarks, we're currently working on what makes sense for us in terms of capacity replacement with our dredge fleet. There is a lot of different opportunities and things like that that we're looking at to determine what's the best path forward for us on that. So we'll have more to say about that as we go forward. For now, CapEx is, I would kind of think about that in the same way that we've talked about that in the last couple of years in the ranges that we've talked about. As we determine which way we're going to go on capacity for dredging, we'll have more to say about that and whether or not that alters or increases our overall CapEx picture there, I'll let Robert touch on the, the real estate.

So update on the Tampa real estate is the linchpin for that property, moving forward is the rezoning with the city. That hearing has been moved to February. So once that hearing happens, we hope to close shortly after that. But in this COVID environment, I don't want to lock in on a time frame. It's just really underpin on the city of Tampa in their administrative process before we can move on that property.

And then, sorry.

I was going to say I do think, again, assuming that that we expect that to occur, we don't think there's any issues there, but we could see in the next couple of quarters, some movement on lease to the real estate properties we have.

I'm sorry, Mark, two other ones or?

Two of the ones that we were talking about, Tampa and one of the other ones in Texas. We could see movement on that in the next couple of quarters.

Is that East-West Jones?

This is the property surplus property in Port Lavaca. We have a deal port right now of PSA in placement now for $5.5 million, hopefully with, some things break right, maybe it's a Q4 item, but we're getting close on a deal as well.

Great, thanks, and just lastly, if you could talk about the ERP launch, you're through the design phase, by the end of the year and you're going to start in the first quarter 2021, you're going to spend a total of $15 million. Can you talk about the timing of that spending and then also more importantly what the pay-off is? What do you, can you give us a couple of examples of how the ERP is going to improve your operating or operations?

Yes. We think that spend is, a good chunk of is going to happen next year on into 2022, over the life of 18- to 24-month period of time. Speaking of the benefit, we think that this is going to be very beneficial to us, high return, just in the sense of being able to consolidate and standardize kind of our back office processes and how we execute projects in a more efficient manner, where we have better flow of data across the business. So when we launched ISG last year, we talked about labor management, equipment management, overhead management, this just reinforces all of those things and gives us the foundation to manage those resources better. The other benefit it's going to give us is, it's going to give us the ability to scale and grow the business as we think about capital allocation and what the next steps are of Orion, whether it's M&A or other opportunities like that. This will give us the platform to be able to scale up and really grow the business.

Our next question comes from the line of Greg Weiss with Boston Partners.

Just two follow up a little bit on some of the asset sale or the real estate sale questions. When you look at the various properties and/or assets you look to probably monetize here to as you try and make the portfolio more efficient and drive value, can you give any holistic kind of ranges in terms of kind of proceeds you think you could generate?

Yeah, so the Tampa property, we think we can generate somewhere around $20 million bucks for that one, and the Port Lavaca property, somewhere around $5 million. [indiscernible] is a little early in the process. No firm offers on that, but I can say that it's listed in the $40 million to $45 million range from that you apply some simple discounts on that for closing costs. I think you can calculate what you think the proceeds could be.

Yes. So and do any of these sales result in any degradation in EBITDA at preliminary run expense, but not really operation. You're not selling businesses that produce revenues or profits as part of this?

No, no. These properties are company-owned properties. In Tampa, where we're moving to, we're leasing it, but that expense has shown up in the P&L for the last three quarters. So all of the, I guess, additional operating costs it's already factored into the business. But these are gains to the business.

Is this surplus?

Surplus yes.

And just so this is, today your market cap is $90 million bucks. You said you have $36 million of debt. I think you just highlighted, I mean you highlight over $60 million of sales. But let's just $60 million, I don't know what the tax bill is on that, but, so basically post that, if you say you do it by value $125 million, it would be $75 million and I think you just said, you know, the low end of EBITDA range for next year is $50 million. Is that, I mean are those real numbers in theory?

In theory, yes.

It doesn't seem very expensive for the Company, but we'll see. Good day. It's nice to see another good quarter and great job with the balance sheet.

Thanks, Greg.

Thank you. Our next question comes from the line of, follow-up question from Joe Mondillo with Sidoti & Company. Please proceed with your question.

Hi guys, thanks for taking the follow-ups. Just on the concrete segment, you've made tremendous amount of progress over the last three, over the last couple of years actually, when you go back to 2018 actually. In the last three quarters of this year, you've sequentially made improvement, still ways to go to that 8% to 11% goal, but you've made a lot of progress. What more, what have you accomplished thus far and what more do you have to do to get to that 8% to 11% EBITDA margin goal at concrete?

Well, we've greatly improved project execution, and you're seeing that in our results. There is, we had some challenges in some of the markets, particularly Central Texas that was impacting us even after we came out of the poor weather pattern because couple of years ago, that was one of the biggest drivers of performance was just a really bad weather pattern in the State of Texas in all of our markets. But, we've, as part of the process last year, we were able to kind of get back to some basic blocking and tackling, generating and enhancing reports and stuff like that and this is stuff we've already talked about in the past but to just be able to get good information in the managers hands, so they can make good decisions. We have, again we've changed out some personnel last year and this year, and so we're seeing really good improvements on project execution, and I think we will continue on that. Also we'll have just focusing in on controlling indirects, and that's an area were of course we've been focused on but we will continue to focus on. And then just targeting the type of work with that we're the most successful on and provides us the best opportunities that we think to be successful and successful in executing the work profitably. So it's kind of like all the stuff we've been doing, we're just going to keep doing it and keep drilling down on that and we think that will continue to pay off for us and drive us to continued improvements in that business.

So I guess for the third quarter can you tell me how much structural made up of the concrete segment and looking at your bookings and the low bid awards and awards that you won post the quarter end, How does that sort of mix look like, what are your bookings looking like relative to structural and light?

Most of the work and I'm trying to remember, I think most of the work in concrete that we've booked is included in that book, little bit numbers since the end of the quarter is light commercial. There might be a small structural and I mean I think it's mostly light commercial at this point. We do have some upcoming work that we're bidding on and structural so we're hoping to add to that backlog as we go forward. As far as the mix from structural year-over-year structural is up almost 60% year-over-year, we'll file our Q tomorrow. And you can see the aggregation of the different services and input. There was a mix shift in the concrete business structural was up like commercial was down year-over-year.

And that's for the third quarter that you're referring to?

Yes, third quarter 2020 versus third quarter 2019.

And then, just another question on concrete, it looks like the non-res construction market is going to turnover at least in a handful of sectors going into next year, looking at office buildings hotels, maybe retail, how are you thinking that is going to affect the concrete business as you go into 2021? How are you thinking about that.

Well, kind of what I just said earlier is the parts of the economy that have been moving forward are driving opportunities and so that's where we're seeing our opportunities today and that's what we kind of expect to see in the near term. Some of the buildings on the structural side that we're doing our kind of residential type or mixed use type structures. And again, those that are moving forward. People are thinking they're taking a long-term view on those type of deals, because that, by the time they bring those online, we're in the 2022-2023. So they're taking a longer-term view on that. We think there are a lot of opportunities in that infrastructure work that we're targeting. Also, the other thing too is that we're in a state that is continuing to see population inflow. We're seeing a lot of businesses relocate to Texas and again, obviously, office buildings and some of the retail things we're going to have to see how that shapes out, but residential towers mixed use towers, we're seeing those types of projects move forward. And we're seeing again a lot of light commercial work and larger light commercial work that's related to the parts of the economy that have been, really never slowed down and in some cases have expanded in this COVID economy drive opportunities for. So that's where we're looking to see, see those opportunities. In addition to even with the impact in education, again, we kind of have a mix of districts in Texas, going to school and going remote and a lot of, lot of districts are doing both at the same time. And so, we still, there is a lot of bond money that was already passed that we think can drive education opportunities to go forward.

And just going back to the sort of EBITDA margin goals that you have at that segment. Is there a mix percentage that you have to get to hit those goals at all? Like you have to get structural?

No, there's not really, I mean, again, what we want to do is target those opportunities that give us the continuity that we perform well on. We perform, our guys and our team, our guys and gals performed well in both segment. We do excellent work in both light commercial and on the structural work. And we work well with the general contractors that are performing that kind of work in both those areas. So we have the opportunity to achieve our objectives, regardless of the mix. But as part of our strategy, we are targeting more structural work. We like our competitive dynamics in that. It's larger work, longer duration, it gives us better operational visibility so we like that. And so that's key part of our strategy, but we do excellent work on the light commercial side as well and perform well in that type of work as well. So we think we can get there regardless of what the mix is going to be.

And just one last question on Corpus Christi explosion. I just wanted to verify, I think you sort of said, but I just wanted to verify you don't anticipate any liabilities related to the unfortunate incident?

Well, we have insurance coverage. And so we, what I would say is, we have, we believe we have adequate insurance coverage for this accident and all the claims associated with it.

And then lastly, also just to confirm, and you sort of already said it, but I just want to verify, what kind of risk there is losing that dredge, you don't think that affects much of your business at all?

Well, as we've said, I mean obviously it's a tragedy, first and foremost and we reiterate our support, thoughts, and prayers are with the crew members and their families that were impacted by this. Having just to repeat what we kind of said in the earnings release and in my remarks I think we believe we've got, we're able to work on all the, all the backlog that we have in hand and we've communicated that out to our customers that we will meet all of our commitments and we're in the process of determining what's the best way for us to replace that capacity and in what form, what form that takes. So we're still going through that we'll have more say on that later, but we're confident in our ability to execute the work we have in backlog.

Our next question comes from the line of Chris Hanson with Hanson Advisors.

With respect to the low bids, is the margin profile on those opportunities similar to where the segments are currently? Are they greater or less?

I'd say they're kind of the same. I mean obviously on some of the smaller sized contracts, we've seen a little bit of timing of competitive bid margins and from some of the smaller players. We're trying to target larger sized work to offset that. But I would say as a general comment we're pleased with where the bid margins are in the work we have in backlog.

Okay. And then with respect to approximately the $60 million worth of opportunities to monetize properties, where are those properties being carried on your books?

On the balance sheet as fixed assets.

No. Yes but what's the value? Is it valued at approximately where you plan on selling those properties?

Sorry, I didn't answer your question. Yes, we expect to get decent sized gains on all of them.

So the true economic tangible book value of the Company is greater than where it's currently being stated vis-a-vis GAAP.

Correct, yes. And I think we've proved it out every quarter when you see that the gains on the sale of assets quarter-in quarter-out.

So do you have the ability within your covenants to buy back stock? Is that something that you're discussing? Do we have to wait for proceeds from those sales to happen if that's part of the plan or can you do it now because it would just seem like given where the stock is trading? This would be a great opportunity for the Company and for shareholders to see you guys buy back some stock.

According to our existing credit agreement that's in place today, that restriction was going through at the beginning of June, before the restriction comes up, but as we stated before, this is a option that's on the table on something that we consider all the time.

Okay, so you can't do anything until June unless there's maybe some proceeds from sales, and at that point, it will be something you guys, hope to consider?

It will require us striking a deal with the bank group to remove that restriction.

Okay. I mean I would hope, given where EBITDA is that you should be able, is that something that you're trying to do?

Well, we, I would answer it this way, we always look at all options including share buybacks for use of capital and we continue to do that. So your point is well taken and that is something that we continue to look at as always with all other options as well.

Thank you. Our next question comes from the line of Poe Fratt with Noble Capital Markets. Please proceed with your question.

Yes, thanks for allowing a couple of follow-ups. If you wouldn't mind something that hit the radar screen in September was the emergency work that you were awarded in Seattle, and then the subsequent disruption of that work. Robert, was any of that work recognized in the third quarter will be a fourth quarter event and can you frame potentially how the work that might, the work potential might have expanded because of the collapse of that pier?

I want to make sure I understand your question before answering it. Are you seeing the additional emergency work that got booked in Q3?

Did you book any of the emergency work? I think the original contract was $4 million bucks from the city of Seattle? And with that booked in the third quarter and then looking at how they're going to have to recover the fountain and other things, other structures that fell into the water? Can you just give us maybe a potential scope, how much that work is expanded from a scope perspective?

Yeah, so Poe, this is Mark. I'll answer that. So to the first part, I believe that that contract was booked in the third quarter if that's different, it did. So we booked that in the third quarter. It is too soon to tell what type of, so I'm not going to quantify any potential additional contract value at this time. We're working through that and just to be clear, the part that collapsed was, so this was the demolition of repair that the city identified as failing and so this was done as emergency work. This is a pier that they had planned to demolish and replace a couple of years from now, but their inspections determined that it was unsafe so they closed the pier down and they put out this contract, which we did book in the quarter. So the work, the failure that happened was work that was already going to be demoed. So we submitted a plan of the city. They are looking at that. We are working back on side, have been and are working on other areas, demolition of other areas of the pier not the part that failed. And so we will be working with the city to, and are working with the city to determine the best way to recover the parts that failed and fell into the water. So too soon to tell what that might mean in terms of overall contract value, but it is possible they can go up I just can't quantify at this point.

And then do you have a number for dredging, revenues for the quarter. And then can you talk about, you generated free cash flow even though working capital was negative by about $8 million bucks, can you give a forward-looking view on how working capital might change in the fourth quarter?

And again, the revenue we'll post up tomorrow as part of the Q, but we saw roughly about $5 million decline year-over-year in dredging revenues and Mark talked a lot about that earlier on the mix shift things but we saw an increase in marine construction which the overall number went up for marine. Moving to kind of your working capital question, I expect it to be more in line with Q3, this time of the year is when we typically build up, we had some really good selections towards the end of the quarter and it kept us to cash flow positive. We put in place some heightened controls and we've really tried to squeeze a lot of cash out of working capital. We'll keep those in place and will continue to work at that, but we expect, we don't expect to see a big buildup in working capital over the fourth quarter.

And then, can we just clarify on the insurance you. It sounds like you've defined the asset side of the liability there or the asset side of what potential recovery you're going to get from insurance and the liability is a little open. Have you recognized all the deductibles that you were likely to incur from the Corpus Christi accident?

Yes, those were recorded in the, as we said in the earnings release. that's a net number that you see there. So those have been recorded in the third quarter.

Thank you. Ladies and gentlemen, at this time there are no further questions, I'd like to turn the floor back to Management for closing comments.

Thank you everyone for attending today's call and we look forward to speaking to you on our next quarterly conference call in early 2021. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.