Dredging award announced by US Army Corp of Engineers (USACE) late last week. ORN was awarded a $14.65 million contract for pipeline dredging in Port Mansfield, Texas. Bids were solicited via the internet with three received, and the contract was published on the Department of Defense web site. ORN has not yet issued a press release on the work, which has an estimated completion date of March 1, 2021.Risk to existing projects is moderating. Despite moves to curb the spread of COVID-19, work in Seattle continues on the Terminal 5 upgrade and the Fairview Avenue North bridge replacement. Also, the solid rebound in crude oil prices also dampens some risk on the pacing of construction in major Texas markets, notwithstanding the recent rise in COVID-19 cases in Texas. For a more thorough discussion of the current outlook, please see our recent video interview with Mark Stauffer, CEO, and Robert Tabb, CFO, that is available on our research portal, www.channelchek.com.Recent move to expand credit revolver is a positive. The revolver expansion of $20 million will bolster previous 1Q2020 liquidity of $25.6 million. Free cash flow remained strong in 1Q2020, but some capex and other discretionary spending, including development of an ERP system, has been deferred. Moreover, ORN is looking to monetize idle/non-core assets, including real estate, and has recently highlighted the Tampa yard as an attractive candidate.Maintaining 2020 EBITDA estimate. Minor disruptions seen to date and bidding activity continues in both segments. Work goes on and we expect EBITDA will move up more than 15% to $43.3 million. Since risks are moderating, we will not be surprised if 2020 EBITDA guidance is reinstated, possibly when 2Q2020 numbers are out in about five weeks. Maintain Outperform and price target of $7.40/share. Despite the positive move of 16% so far in 2Q2020, Orion is still down close to 42% 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 structural improvements from the ISG restructuring program and the positive 2H2020 outlook. A combination of the above-average backlog, improved profitability, lower financial leverage and attractive valuation of 3.6x 2020E EBITDA supports our constructive view, and the current risk/reward profile remains compelling.Read More >>