Another strong quarter driven by solid execution, especially in Concrete. 2Q2020 gross profit of $20.7 million and EBITDA of $12.6 million beat our estimates of $18.7 million and $10.5 million, respectively. Revenue was 8% higher than expected. Gross margin of 11.3% and EBITDA margin of 6.9% were ~30-70 basis points better than our estimates. Main driver was stronger-than-expected Concrete EBITDA margin of 3.0%. Marine profitability remained high due to strong execution and solid equipment utilization.2Q2020 backlog dropped to $528 million versus $610 million in 1Q2020 and $572 million at year-end 2019. Marine dropped $50 million to $312 million and Concrete fell $31 million off a record level to $216 million. Industry fundamentals remain positive despite state level concerns about COVID-19. YTD successful bids total $324 million ($167 million in marine and $157 million in concrete), and ~$73 million of low bids/not yet awarded are pending.2020 EBITDA guidance remains suspended due to uncertainty caused by COVID-19 but we are increasing our EBITDA estimate to $45.1 million based on solid 2Q2020 operating results and our positive view on the 2H2020 outlook.Free operating cash flow remained solid at $9.0 million ($0.30/share) in 2Q2020 due to strong operating results, positive working capital management and below average capex. Net debt dropped ~$15 million to $43.5 million in 2Q2020. Free operating cash flow should hit $28.3 million ($0.94/share) for the full year, and we expect net debt to end the year in the $42 million range. The financial leverage covenant remained at 3.0x in 2Q2020, and we don't foresee any compliance issue.Maintain Outperform and price target of $7.40/share. After a positive move of 19% in June, Orion dropped ~8% in July and is down ~45% this year, due to COVID-19 uncertainty and broader economic concerns. We remain convinced that the outlook is positive and the current stock price doesn't fairly reflect solid project execution, structural improvements from the ISG restructuring program, and the positive 2H2020 outlook despite the COVID-19 overhang. A combination of the above-average backlog, improved profitability, lower financial leverage and attractive valuation of 3.2x 2020E EBITDA supports our constructive view, and the current risk/reward profile remains compelling.Read More >>