Category: Industrials

3Q2020 Awards now total $416.8 million with six new awards for $59.8 million announced at the end of last week. The scope of work is broad and the awarded work includes a total of 21 projects, including six capital awards for $195.1 million, eight maintenance awards for $111.0 million, and seven coastal protection awards for $110.7 million. While awards of $452.5 million were announced in 3Q2020, three awards for $35.8 million were related to 2Q2020 awards, so the 3Q2020 award figure excludes those awards. Also, the 3Q2020 award number is even higher since there was an unquantified award in July from Bechtel for work on a LNG project.

October Awards. On October 2nd, six awards for $59.8 million were announced. As detailed in previous research notes, several dredging awards had been posted on government web sites in September, but not yet announced. The most recent press release captures the remaining to-be-announced awards, including three maintenance awards for $26.2 million, two coastal protection awards for…

Low apparent bid on Galveston work awarded.  As expected, the low apparent bid of $15.8 million on dredging work in the Galveston Harbor and Channel discussed in a mid-August research note turned into a final award. The project involves base dredging of 3.42 million CY of material for $11.3 million, and option dredging of 1.65 million CY of material for $4.5 million.

Investigation on tragic Corpus Christi accident under way.  No impact on work with US Army Corp of Engineers (USACE). In August, the Waymon L. Boyd dredger sank in the Port of Corpus Christi after puncturing an energy pipeline and catching fire. Four crew members perished and others were injured. We offer our condolences to families of crew members who perished and hope that the injured crew members …

Jacksonville C award of $104.98 million posted. The US Army Corp of Engineers (USACE) posted the award, which does not include options, on the DoD and government services web sites. Bids were solicited via the internet and there was only one other bidder. The project was on a Request for Proposal (RFP) basis so we don’t know the identity of other bidder nor the bid amount. The award is positive for the intermediate term outlook since the majority of the work will be completed in 2021 and 2022 given the estimated completion date is October 15, 2022.

Two smaller awards totaling $24.4 million also posted.  The larger award named South Atlantic Regional work in four harbors (including Brunswick, Morehead City, Savannah, and Wilmington) for $16.4 million has been highlighted as a low bid pending award in several past research notes, and the smaller award of $8.0 million involves maintenance dredging on the Morehead City Harbor …

Low bids converted into final awards of $118.8 million. A $4.3 million award was added after market closed so low bids pending award of $33.6 million remain outstanding. Yesterday, final awards of $118.8 million were announced, including several projects that we highlighted as pending at the start of the week. The awarded work includes capital work of $75.6 million, coastal protection work of $37.0 million and maintenance work of $6.2 million. The two largest projects in Charleston and Freeport represented ~$68.4 million of our low apparent bid estimate, but several low bids on other projects were not included and are pending award. The Fernandina Harbor award of $4.3 million was finalized late yesterday so we consequently estimate that low apparent bids of $33.6 million remain outstanding.

Combined with awards announced in mid-August that totaled ~$118 million, the new awards of $119 million and low bids pending award of $38 million should help stabilize backlog in 3Q2020.  In 3Q2020, awards of $237 million have been announced, including $119 million announced yesterday and $118 million announced in mid-August. The scope of work is broad and it includes a total of six projects …

Tragic accident in Corpus Christi. On Friday morning, Orion’s dredging vessel Waymon L. Boyd caught fire, broke apart and sank in the Port of Corpus Christi. According to a US Coast Guard bulletin, two crew members were rescued by a MH-65 Dolphin helicopter on Friday, the bodies of two crew members were recovered on Saturday morning, and the search for other two crew members was suspended late Saturday. We hope that the injured crew members will fully recover, and we offer our condolences to families of the crew members who perished in the accident. ORN’s management team mobilized to Corpus Christi on Friday and has offered condolences and support for the employees and families impacted by this accident.

Investigation under way. It appears that the cause of the accident has not been determined, and several state/federal agencies, including the Port of Corpus Christi, will investigate the cause of the accident. Several news sources have reported that a natural gas/propane pipeline operated by …

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New awards of $118 million are positive. After the market closed, several additional large awards were announced. The awards on six projects include four Maintenance for $78.6 million and two Coastal Protection for $39.2 million. While ~$48 million of the awards were discussed on the 2Q2020 earnings call, there were several new awards, including the Mississippi River work, that support our constructive view. In addition, there are other low bids pending award outstanding, including a low bid of $15.5 million on work at Freeport (TX) Harbor that was opened on August 10th.

News expected shortly on several large opportunities and Jacksonville C in 3Q/4Q2020. 2H2020 rebound backlog appears likely. While backlog dropped for the third consecutive quarter in 2Q2020, a rebound is expected in 2H2020 due to the announced awards and several upcoming opportunities. Two larger opportunities in Louisiana remain on the immediate horizon, and Jacksonville C is still on track for …

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Growth Across the Business.  Although a decline in “pass through” revenue was the cause of the lighter-than-projected revenue, DLH saw growth across its business segments. VA-related revenue grew to $24.8 million in the quarter, up from $23.1 million in the year ago period. HHS-related revenue grew to $23.3 million from $14.3 million in the year ago period, driven by the inclusion of S3 for the entire quarter versus a partial quarter last year. Other revenue improved to $3.4 million from $1.3 million.

Adjusted Earnings.  On a reported basis, DLH generated net income of $2.1 million, or $0.16 per share, in the fiscal third quarter compared to $0.8 million, or $0.06 per share, in the year ago period. Adjusting for the $1.2 million of acquisition related costs in …

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3Q20 Results. Revenue came in at $51.5 million, up from $36.7 million a year ago when S3 was only included for three weeks, but down sequentially and the lowest level since S3 was fully incorporated last year. We had projected $55 million and consensus was $55.7 million. EPS was $0.16, up from $0.06 y-o-y, although last year’s results were impacted by $1.2 million of acquisition costs. We were at $0.15 and consensus was $0.16. EBITDA was $5.5 million versus $2.6 million in the prior year period.

Margin Improvement. DLH reported solid margin improvement, in spite of the lower than projected revenue. Operating margin improved to 7.4% from 4.4% y-o-y. EBITDA margin rose to 10.7% from 6.7% while net margin improved to 4.1% in the fiscal third quarter up from …

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