Great Lakes Dredge & Dock Corporation (“Great Lakes” or the
“Company”) (Nasdaq:GLDD), the largest provider of dredging services
in the United States, today reported financial results for the
quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Revenue was $194.3 million in the first quarter
- Total operating income was $18.8
million in the first quarter
- Net income was $11.1 million in the
first quarter
- Adjusted EBITDA was $29.7 million
in the first quarter
Management Commentary
Lasse Petterson, President and Chief Executive
Officer commented, “Although we reported solid results in the first
quarter of 2022, we did not fully meet our expectations as we
experienced delays from abnormal weather events, production
impacts, and some lingering costs from the COVID-19 pandemic that
diminished as the quarter progressed.
As previously discussed on our last earnings
call, two bomb cyclones brought heavy snow and coastal flooding to
the Northeastern United States in January and strong sustained
winds impacted several projects in the Southeastern United States
pushing production into later quarters. Climate change continues to
impact our nation, and our coasts continue to see damage that is a
result of severe storms and rising waters. Although these weather
events have short term impacts to our operations, we expect the
resulting damage to add to the recurring nature and increased long
term demand for dredging related projects.
In addition to the unusual weather impacts, the
Liberty Island was in scheduled dry dock the entire first quarter
and two of our cutter dredges were partially idle during the
quarter due to project start delays.
In April, after the quarter close, Empire Offshore Wind, a joint
venture between Equinor and BP p.l.c., awarded to Great Lakes, in
consortium with Van Oord, a contract to perform the offshore subsea
rock installation work for the Empire Wind I and II wind farms off
the east coast of the United States. This project is estimated to
provide over 2 gigawatts (“GW”) of renewable energy for the State
of New York. The renewable power generated by the two wind farms is
expected to power more than one million households in New York.
This project is considered a flagship offshore wind development,
shaping the future of this industry in the United States.
This award is significant for our entry into this new market.
The offshore subsea rock installation will start in 2025 and this
award will provide a solid foundation as we build the backlog for
our new subsea rock installation vessel from 2025 and onwards.
Great Lakes will be generating local content, employment, and
economic activity in the State of New York by purchasing rock from
domestic New York quarries, and using its marine logistics base in
Staten Island for its site operations.”
Quarterly Results
- Revenue was $194.3 million, an
increase of $16.7 million from the first quarter of 2021. The
higher revenue in the first quarter of 2022 was due to higher
domestic capital and coastal protection revenue, offset partially
by a decrease in revenue from maintenance dredging, rivers and
lakes and foreign projects.
- Gross margin percentage declined to
17.0% in the first quarter of 2022 from 18.6% in the first quarter
of 2021. The Dredge 54 completed her drydock at the end of the
first quarter and has returned to work in the second quarter. The
Liberty Island remained in drydock throughout the first quarter and
is expected to return to work in the middle of the second quarter.
The cutter dredge Carolina went into the shipyard for emission
upgrades and is expected to return to work in June. As noted above,
we have experienced weather delays and several production issues
that have impacted several projects.
- Operating income was $18.8 million,
which is a $2.2 million increase from the prior year quarter. The
increase is a result of $1.7 million lower general and
administrative expenses than the prior year quarter. The decrease
in general and administrative expenses for the quarter was due to
lower share-based compensation and Houston relocation
expenses.
- Net income for the quarter was
$11.1 million compared to $8.8 million in the prior year quarter.
The increase is driven by higher operating income and lower
interest expense, offset partially by higher income tax
expense.
- At March 31, 2022, the Company had
$142.6 million in cash and total long-term debt of $321.1
million.
- At March 31, 2022, the Company had
$473.5 million in backlog, a decrease of $78.1 million from
December 31, 2021. This decrease was expected as bidding activity
is historically low in the first quarter of the year.
- Capital expenditures for the first
quarter of 2022 were $25.6 million, which includes $8.7 million for
our new hopper dredge, $3.9 million for our new scows and
multicats, and $0.2 million for our rock installation vessel.
Market Update
At the end of 2021 the domestic dredging bid
market reached $1.8 billion in projects bid. We expect the 2022 bid
market to be as strong as 2021 as the market continues to be driven
by the large-scale port deepening projects along the east and gulf
coasts. We ended the quarter with a 50% bid market share,
consisting of several coastal protection projects that will added
to our total backlog. In 2022, we expect to see the continuation of
port deepening bids in the ports of Norfolk, Freeport, Mobile,
Sabine and additional phases in the Houston Ship Channel. In
addition, our nation’s coasts are subject to climate change,
increasing severe weather events like Hurricane Ida, and sea level
rise, which can cause an increase in beach erosion and other damage
that adds to the recurring nature of our business and the need for
more frequent coastal protection and port maintenance projects.
We continue to see strong support from the Biden Administration
for the dredging industry. On March 15, 2022, the Omnibus
Appropriations Bill for fiscal year 2022 was signed into law, which
included funding for the U.S. Army Corps of Engineers totaling $8.3
billion for fiscal year 2022. This is an increase of $548 million
above the fiscal year 2021 level and an increase of $1.6 billion
above the President’s original budget request. Appropriations
included $4.57 billion for Operation & Maintenance, $2.49
billion for the Harbor Maintenance Trust Fund in accordance with
the Coronavirus Aid, Relief and Economic Security Act and the Water
Resource Development Act, and $35 million for the Flood Control and
Coastal Emergencies account including $19.8 million for the
construction of shore protection projects.
This past year we have seen strong support for offshore wind
from the Biden Administration to confront climate change. We
believe the Biden Administration’s commitment to offshore wind will
create thousands of jobs, and help our country transition to a
cleaner, more diverse energy future. In March 2021, the White House
announced new initiatives that will advance the Administration’s
goals to expand the nation’s offshore wind energy capacity in the
coming decade by opening new areas of development, improving
environmental permitting, and increasing public financing for
projects. As part of that initiative the Departments of the
Interior, Energy and Commerce committed to a shared goal of
installing 30 GW of offshore wind power generation capacity in
United States waters by 2030. In addition, in January 2022 the
Biden Administration announced plans to auction more than 480,000
acres in the New York Bight for six new offshore wind energy
leases, the Biden Administration’s first wind sale and the largest
lease area ever offered, with potential build-out capacity up to 7
GW.
The Company will be holding a conference call
at 9:00 a.m. C.D.T. today where we will further discuss
these results. Information on this conference call can be found
below.
Conference Call Information
The Company will conduct a quarterly conference
call, which will be held on Tuesday, May 3, 2022 at 9:00 a.m.
C.S.T. (10:00 a.m. E.S.T.). The call-in number is (877) 377-7553
and Conference ID is 1383479. The conference call will be available
by replay until Thursday, May 5, 2022 by calling (855)
859-2056 and providing Conference ID 1383479. The live call
and replay can also be heard on the Company’s website,
www.gldd.com, under Events & Presentations on the investor
relations page. Information related to the conference call will
also be available on the investor relations page of the Company’s
website.
Use of Non-GAAP measures
Adjusted EBITDA, as provided herein, represents
net income (loss) from continued operations, adjusted for net
interest expense, income taxes, depreciation and amortization
expense, debt extinguishment, accelerated maintenance expense for
new international deployments, goodwill or asset impairments and
gains on bargain purchase acquisitions. Adjusted EBITDA is not a
measure derived in accordance with GAAP. The Company presents
Adjusted EBITDA as an additional measure by which to evaluate the
Company's operating trends. The Company believes that Adjusted
EBITDA is a measure frequently used to evaluate performance of
companies with substantial leverage and that the Company's primary
stakeholders (i.e., its stockholders, bondholders and banks) use
Adjusted EBITDA to evaluate the Company's period to period
performance. Additionally, management believes that Adjusted EBITDA
provides a transparent measure of the Company’s recurring operating
performance and allows management and investors to readily view
operating trends, perform analytical comparisons and identify
strategies to improve operating performance. For this reason, the
Company uses a measure based upon Adjusted EBITDA to assess
performance for purposes of determining compensation under the
Company's incentive plan. Adjusted EBITDA should not be considered
an alternative to, or more meaningful than, amounts determined in
accordance with GAAP including: (a) operating income as an
indicator of operating performance; or (b) cash flows from
operations as a measure of liquidity. As such, the Company's use of
Adjusted EBITDA, instead of a GAAP measure, has limitations as an
analytical tool, including the inability to determine profitability
or liquidity due to the exclusion of accelerated maintenance
expense for new international deployments, goodwill or asset
impairments, gains on bargain purchase acquisitions, interest and
income tax expense and the associated significant cash requirements
and the exclusion of depreciation and amortization, which represent
significant and unavoidable operating costs given the level of
indebtedness and capital expenditures needed to maintain the
Company's business. For these reasons, the Company uses operating
income to measure the Company's operating performance and uses
Adjusted EBITDA only as a supplement. Adjusted EBITDA is reconciled
to net income attributable to common stockholders of Great Lakes
Dredge & Dock Corporation in the table of financial results.
For further explanation, please refer to the Company's SEC
filings.
The CompanyGreat Lakes Dredge
& Dock Corporation is the largest provider of dredging services
in the United States. In addition, Great Lakes is fully engaged in
expanding its core business into the rapidly developing offshore
wind energy industry. The Company has a long history of performing
significant international projects. The Company employs experienced
civil, ocean and mechanical engineering staff in its estimating,
production and project management functions. In its over 132-year
history, the Company has never failed to complete a marine project.
Great Lakes owns and operates the largest and most diverse fleet in
the U.S. dredging industry, comprised of approximately 200
specialized vessels. Great Lakes has a disciplined training program
for engineers that ensures experienced-based performance as they
advance through Company operations. The Company’s Incident-and
Injury-Free® (IIF®) safety management program is integrated into
all aspects of the Company’s culture. The Company’s commitment to
the IIF® culture promotes a work environment where employee safety
is paramount.
Cautionary Note Regarding
Forward-Looking Statements
Certain statements in this press release may
constitute “forward-looking” statements as defined in Section 21E
of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Private Securities Litigation Reform Act of 1995 (the "PSLRA") or
in releases made by the Securities and Exchange Commission (the
"SEC"), all as may be amended from time to time. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance or achievements of Great Lakes and its
subsidiaries, or industry results, to differ materially from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Statements that are not historical
fact are forward-looking statements. Forward-looking statements can
be identified by, among other things, the use of forward-looking
language, such as the words “plan,” “believe,” “expect,”
“anticipate,” “intend,” “estimate,” “project,” “may,” “would,”
“could,” “should,” “seeks,” “are optimistic,” or “scheduled to,” or
other similar words, or the negative of these terms or other
variations of these terms or comparable language, or by discussion
of strategy or intentions. These cautionary statements are being
made pursuant to the Exchange Act and the PSLRA with the intention
of obtaining the benefits of the “safe harbor” provisions of such
laws. Great Lakes cautions investors that any forward-looking
statements made by Great Lakes are not guarantees or indicative of
future performance. Important assumptions and other important
factors that could cause actual results to differ materially from
those forward-looking statements with respect to Great Lakes
include, but are not limited to: the impact of the COVID-19
pandemic and related responsive measures, including productivity
impacts and increased expenditures; our ability to obtain and
retain federal government dredging and other contracts, which is
impacted by the amount of government funding for dredging and other
projects and the degree to which government funding is directed to
the Corps and certain other customers, which in turn could be
impacted by extended federal government shutdowns or declarations
of additional national emergencies; our ability to qualify as an
eligible bidder under government contract criteria and to compete
successfully against other qualified bidders in order to obtain
government dredging and other contracts; cost over-runs, operating
cost inflation and potential claims for liquidated damages,
particularly with respect to our fixed cost contracts; the timing
of our performance on contracts and new contracts being awarded to
us; significant liabilities that could be imposed were we to fail
to comply with government contracting regulations; increasing costs
to operate and maintain aging vessels and comply with applicable
regulations or standards; increasing costs of fleet improvements to
remain competitive; equipment or mechanical failures; impacts to
our facilities and suppliers from pandemics, epidemics or outbreaks
of infectious disease affecting our markets; market or supply chain
disruptions as a result of war or insurrection; impacts to our
supply chain for procurement of new vessel build materials: our
international dredging operations; instability and declining
relationships amongst certain governments in the Middle East and
the impact this may have on infrastructure investment, asset value
of such operations, and local licensing, permitting and royalty
issues; capital and operational costs due to environmental
regulations or extreme weather events; market and regulatory
responses to climate change; contract penalties for any projects
that are completed late; force majeure events, including natural
disasters, pandemics and terrorists’ actions; changes in the amount
of our estimated backlog; significant negative changes to large,
single customer contracts; our ability to obtain potential
financing for the construction of new vessels, including our new
offshore wind vessel; potential inability to secure contracts to
utilize new offshore wind vessel; unforeseen delays and cost
overruns related to the construction of new vessels, including
potential mechanical and engineering issues and unforeseen changes
in environmental regulations; any failure to comply with Section 27
of the Jones Act provisions on coastwise trade, or if those
provisions were modified or repealed; fluctuations in fuel prices,
particularly given our dependence on petroleum-based products;
impacts of nationwide inflation on procurement of new build
materials; our ability to obtain bonding or letters of credit and
risks associated with draws by the surety on outstanding bonds or
calls by the beneficiary on outstanding letters of credit;
acquisition integration and consolidation, including transaction
expenses, unexpected liabilities and operational challenges and
risks; divestitures and discontinued operations, including retained
liabilities from businesses that we sell or discontinue; potential
penalties and reputational damage as a result of legal and
regulatory proceedings, including a pending criminal proceeding in
Louisiana; any liabilities imposed on us for the obligations of
joint ventures, partners and subcontractors; increased costs of
certain material used in our operations due to newly imposed
tariffs; unionized labor force work stoppages; any liabilities for
job-related claims under federal law, which does not provide for
the liability limitations typically present under state law;
operational hazards, including any liabilities or losses relating
to personal or property damage resulting from our operations; our
ability to identify and contract with qualified MBE or DBE
contractors to perform as subcontractors; our substantial amount of
indebtedness, which makes us more vulnerable to adverse economic
and competitive conditions; restrictions on the operation of our
business imposed by financing covenants; impacts of adverse capital
and credit market conditions on our ability to meet liquidity needs
and access capital; our ability to maintain or expand our credit
capacity; limitations on our hedging strategy imposed by statutory
and regulatory requirements for derivative transactions; foreign
exchange risks, in particular, as it relates to the new offshore
wind vessel build; losses attributable to our investments in
privately financed projects; restrictions on foreign ownership of
our common stock; restrictions imposed by Delaware law and our
charter on takeover transactions that stockholders may consider to
be favorable; restrictions on our ability to declare dividends
imposed by our financing agreements and Delaware law; significant
fluctuations in the market price of our common stock, which may
make it difficult for holders to resell our common stock when they
want or at prices that they find attractive; changes in previous
recorded net revenue and profit as a result of the significant
estimates made in connection with our methods of accounting for
recognized revenue; maintaining an adequate level of insurance
coverage; our ability to find, attract and retain key personnel and
skilled labor; disruptions, failures, data corruptions, cyber-based
attacks or security breaches of the information technology systems
on which we rely to conduct our business; and impairments of our
goodwill or other intangible assets. For additional information on
these and other risks and uncertainties, please see Item 1A. “Risk
Factors” of Great Lakes' Annual Report on Form 10-K for the year
ended December 31, 2021.
Although Great Lakes believes that its plans,
intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, actual results could
differ materially from a projection or assumption in any
forward-looking statements. Great Lakes' future financial condition
and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and
uncertainties. The forward-looking statements contained in this
press release are made only as of the date hereof and Great Lakes
does not have or undertake any obligation to update or revise any
forward-looking statements whether as a result of new information,
subsequent events or otherwise, unless otherwise required by
law.
Great Lakes Dredge & Dock Corporation |
|
Condensed Consolidated Statements of
Operations |
|
(Unaudited and in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Contract revenues |
$ |
194,349 |
|
|
$ |
177,633 |
|
Gross profit |
|
33,055 |
|
|
|
33,076 |
|
General and administrative
expenses |
|
14,604 |
|
|
|
16,322 |
|
(Gain) loss on sale of
assets—net |
|
(321 |
) |
|
|
106 |
|
Operating income |
|
18,772 |
|
|
|
16,648 |
|
Interest expense—net |
|
(4,025 |
) |
|
|
(6,586 |
) |
Other income (expense) |
|
(405 |
) |
|
|
141 |
|
Income before income taxes |
|
14,342 |
|
|
|
10,203 |
|
Income tax provision |
|
(3,285 |
) |
|
|
(1,389 |
) |
Net income |
$ |
11,057 |
|
|
$ |
8,814 |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.17 |
|
|
$ |
0.14 |
|
Basic weighted average shares |
|
65,847 |
|
|
|
65,269 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.17 |
|
|
$ |
0.13 |
|
Diluted weighted average shares |
|
66,436 |
|
|
|
66,159 |
|
Great Lakes Dredge & Dock Corporation |
|
Reconciliation of Net Income to Adjusted
EBITDA |
|
(Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Income |
$ |
11,057 |
|
|
$ |
8,814 |
|
Adjusted for: |
|
|
|
|
|
|
|
Interest expense—net |
|
4,025 |
|
|
|
6,586 |
|
Income tax provision |
|
3,285 |
|
|
|
1,389 |
|
Depreciation and amortization |
|
11,316 |
|
|
|
10,053 |
|
Adjusted EBITDA |
$ |
29,683 |
|
|
$ |
26,842 |
|
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation |
|
Selected Balance Sheet Information |
|
(Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
|
Period Ended |
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
142,583 |
|
|
$ |
145,459 |
|
Total current assets |
|
328,042 |
|
|
|
327,432 |
|
Total assets |
|
1,018,839 |
|
|
|
997,670 |
|
Total current liabilities |
|
151,854 |
|
|
|
154,735 |
|
Long-term debt |
|
321,108 |
|
|
|
320,971 |
|
Total equity |
|
415,404 |
|
|
|
398,997 |
|
Great Lakes Dredge & Dock Corporation |
Revenue and Backlog Data |
(Unaudited and in thousands) |
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
Revenues |
|
2022 |
|
|
|
2021 |
|
Dredging: |
|
|
|
|
|
|
|
Capital - U.S. |
$ |
101,010 |
|
|
$ |
77,606 |
|
Capital - foreign |
|
- |
|
|
|
4,709 |
|
Coastal protection |
|
71,917 |
|
|
|
46,631 |
|
Maintenance |
|
19,812 |
|
|
|
45,301 |
|
Rivers & lakes |
|
1,610 |
|
|
|
3,386 |
|
Total revenues |
$ |
194,349 |
|
|
$ |
177,633 |
|
|
|
|
|
|
|
|
|
|
As of |
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
Backlog |
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
Dredging: |
|
|
|
|
|
|
|
|
|
|
|
Capital - U.S. |
$ |
320,352 |
|
|
$ |
398,748 |
|
|
$ |
310,163 |
|
Capital - foreign |
|
- |
|
|
|
- |
|
|
$ |
2,077 |
|
Coastal protection |
|
120,457 |
|
|
|
99,048 |
|
|
$ |
82,589 |
|
Maintenance |
|
31,451 |
|
|
|
50,966 |
|
|
$ |
84,820 |
|
Rivers & lakes |
|
1,211 |
|
|
|
2,826 |
|
|
$ |
6,334 |
|
Total
backlog |
$ |
473,471 |
|
|
$ |
551,588 |
|
|
$ |
485,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For further information contact:Tina
BaginskisDirector, Investor
Relations630-574-3024
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