First quarter net income from continuing
operations $20.5 million
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the
largest provider of dredging services in the United States, today
reported financial results for the quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Revenue was $192.6 million in the first quarter, a $59.0
million or 44.2% increase over the prior year quarter.
- Gross margin percentage increased to 25.9% in the first quarter
from 10.6% in the prior year quarter.
- Total operating income from continuing operations was $34.8
million, a $33.5 million increase over the prior year quarter.
- Net income from continuing operations was $20.5 million, a
$27.6 million increase over the prior year quarter.
- Adjusted EBITDA from continuing operations was $43.8 million as
compared to $13.7 million in the prior year quarter.
- Net debt to adjusted EBITDA from continuing operations was
1.53x.
Management Commentary
Chief Executive Officer Lasse Petterson
commented, “The first quarter of 2019 was an exceptional quarter
driven by strong project performance, resulting in net income from
continuing operations of $20.5 million and an adjusted EBITDA from
continuing operations of $43.8 million. During the quarter, we saw
better than expected productivity on the Tampa Big Bend project
which was completed ahead of schedule in the quarter and the San
Jacinto project which we expect will be completed in the second
quarter. We also had a contract modification to increase the
scope of work on a project in Delaware that was not budgeted to
contribute in 2019. While the first quarter of 2019 was
operationally very strong, our planned dry docking of certain
vessels will start to have an impact on results starting in the
second quarter and continuing into the third quarter.
The Company’s performance over the previous few
quarters are the result of the dedication and hard work of our
employees as we adjusted the business and our operations for better
profitability. In addition to our restructuring plan completed in
2018, we have also made prudent improvements to our fleet and
enhanced our project planning, preparation and execution which have
resulted in better productivity of our vessels.
As expected, the first quarter bid market was
below the prior year with only $219 million awarded in the total
market, but bidding is projected to increase significantly in the
third and fourth quarters.”
Quarterly Results
- Revenue was $192.6 million, an increase of $59.0 million over
the first quarter of 2018. The first quarter of 2019 was
characterized by strong production and project performance.
Revenues in all markets increased quarter over quarter with the
exception of coastal protection projects.
- Gross margin percentage improved to 25.9% in the current
quarter from 10.6% in the first quarter of 2018 on strong project
performance combined with lower plant and overhead costs. Two dry
docks that were scheduled to begin in late first quarter were
deferred into the second quarter which also moved some plant
expense from first quarter to the second quarter of 2019.
- Operating income was $34.8 million which is a $33.5 million
increase over the prior year quarter. The increase is a result of
higher gross margin slightly offset by increased general and
administrative expenses due to incentive compensation.
- Net income from continuing operations for the quarter was $20.5
million compared to a net loss from continuing operations of $7.0
million in the prior year quarter. In addition to the increase in
operating income, interest expense in the first quarter of 2019
also decreased compared to the prior year quarter by $1.1 million
on lower revolver usage.
- At March 31, 2019, the Company had $123.0 million in cash and
total debt of $322.2 million, resulting in a net debt to adjusted
EBITDA from continuing operations of 1.53x.
- At March 31, 2019, the Company had $575.2 million in backlog, a
decrease of $131.9 million from December 31, 2018. This decrease
was expected as the Company earned significant revenue during the
first quarter of 2019 and bidding activity was low.
- Capital expenditures for the quarter were $7.7 million. This
compares to $6.9 million in capital expenditures during the first
quarter of 2018. The Company continues to expect total capital
expenditures to be $40 million for 2019.
Market UpdateAs expected, the
domestic dredging bid market was slow in the first quarter of 2019
with a total of $219 million in projects awarded, of which GLDD was
awarded $35.1 million. We continue to expect additional phases of
multiple large deepening and other capital projects to bid in the
second half of the year resulting in another strong domestic bid
market in 2019. The projects coming into the pipeline include
additional phases of work in Charleston, Savannah, Corpus Christi
and Mississippi as well as new projects in Virginia, Texas and
Louisiana. In addition to this anticipated capital work, we also
expect to bid on multiple projects funded by the $17.4 billion
supplemental hurricane funding. This supplemental federal funding
has been allocated to reduce the risk of future damage from flood
and storm events. Although we have not yet bid on any of these
projects, we do expect the projects to come into the market later
in the year.
In addition to the deepening and coastal
protection projects, several Liquefied Natural Gas petrochemical
and crude oil projects are creating the need for port development
in support of energy exports. We believe several of these private
client projects are progressing to bid in 2019. Great Lakes’
fleet and safety performance position the Company well to perform
in this growing segment of the market.
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, April 30, 2019 at 9:00 a.m.
C.D.T (10:00 a.m. E.D.T.). The call in number is (877) 377-7553 and
Conference ID is 1999758. The conference call will be available by
replay until Thursday, May 2, 2019 by calling (855)
859-2056 and providing Conference ID 1999758. 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.
Classification of Environmental and
Infrastructure Business
As of December 31, 2018, the Company concluded
that it intends to sell the Environmental and Infrastructure
(“E&I”) business during the first half of 2019. Based on this
decision, this business has been classified as an asset held for
sale and all results of this business have been reflected as
discontinued operations as of December 31, 2018. Consequently, the
financial results for continuing operations reported within this
earnings release do not include the E&I business.
Use of Non-GAAP measures
Adjusted EBITDA from continuing operations, as
provided herein, represents net income attributable to common
stockholders of Great Lakes Dredge & Dock Corporation, 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 from continuing operations is not a measure derived in
accordance with GAAP. The Company presents Adjusted EBITDA from
continuing operations as an additional measure by which to evaluate
the Company's operating trends. The Company believes that Adjusted
EBITDA from continuing operations 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 from continuing
operations to evaluate the Company's period to period performance.
Additionally, management believes that Adjusted EBITDA from
continuing operations 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
from continuing operations 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 from
continuing operations, 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 from continuing operations
only as a supplement. Adjusted EBITDA from continuing operations is
reconciled to net income (loss) 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 Company
Great Lakes Dredge & Dock Corporation
(“Great Lakes” or the “Company”) is the largest provider of
dredging services in the United States and the only U.S. dredging
company with significant international operations. The Company
employs experienced civil, ocean and mechanical engineering staff
in its estimating, production and project management
functions. In its over 129-year history, the Company has
never failed to complete a marine project. 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. Great
Lakes also owns and operates the largest and most diverse fleet in
the U.S. dredging industry, comprised of over 200 specialized
vessels.
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: our ability to obtain federal
government dredging and other contracts; uncertainties in federal
government budgeting; extended federal government shutdowns, which
may lead to funding issues, the incurrence of costs without payment
or reimbursement under our contracts, and delays or cancellations
of key projects; the risk that the President of the United States
may divert funds away from the Army Corps of Engineers in response
to a national emergency; our ability to qualify as an eligible
bidder under government contract criteria and to compete
successfully against other qualified bidders; risks associated with
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; significant
liabilities that could be imposed were we to fail to comply with
government contracting regulations; risks related to international
dredging operations, including 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; increased cost of certain material used in our operations
due to newly imposed tariffs; a significant negative change to
large, single customer contracts from which a significant portion
of our international revenue is derived; changes in
previous-recorded net revenue and profit as a result of the
significant estimates made in connection with our methods of
accounting for recognizing revenue; consequences of any lapse in
disclosure controls and procedures or internal control over
financial reporting; changes in the amount of our estimated
backlog; 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;
increasing costs to operate and maintain aging vessels; equipment
or mechanical failures; acquisition integration and consolidation
risks; liabilities related to our historical demolition business;
impacts of legal and regulatory proceedings; unforeseen delays and
cost overruns related to the construction of new vessels, including
potential mechanical and engineering issues; our becoming liable
for the obligations of joint ventures, partners and subcontractors;
capital and operational costs due to environmental regulations;
unionized labor force work stoppages; maintaining an adequate level
of insurance coverage; information technology security breaches;
our substantial amount of indebtedness; restrictions imposed by
financing covenants; the impact of adverse capital and credit
market conditions; limitations on our hedging strategy imposed by
new statutory and regulatory requirements for derivative
transactions; foreign exchange risks; changes in macroeconomic
indicators and the overall business climate; uncertainties of the
impact of the Tax Cuts and Jobs Act and implementation of certain
provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act; losses attributable to our investments in privately
financed projects; our ability to realize the expected benefits
from our restructuring activities; our ability to find a suitable
acquiror and consummate the disposition of our E&I segment;
uncertain risks, costs and impacts to the Company in connection
with the disposition of our E&I segment; and the loss on
disposition of assets held for sale is subject to change prior to
completion of the disposition of our E&I segment and could
differ materially from the Company’s estimate. 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, 2018, and in other securities
filings by Great Lakes with the SEC.
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, |
|
| |
|
2019 |
|
|
|
2018 |
|
| Contract revenues |
$ |
192,637 |
|
|
$ |
133,623 |
|
| Gross
profit |
|
49,877 |
|
|
|
14,130 |
|
| General and
administrative expenses |
|
14,825 |
|
|
|
13,093 |
|
| (Gain) loss on sale of
assets—net |
|
279 |
|
|
|
(199 |
) |
| Operating
income |
|
34,773 |
|
|
|
1,236 |
|
| Interest
expense—net |
|
(7,551 |
) |
|
|
(8,653 |
) |
| Other income
(expense) |
|
172 |
|
|
|
(2,065 |
) |
| Income
(loss) from continuing operations before income taxes |
|
27,394 |
|
|
|
(9,482 |
) |
| Income tax (provision)
benefit |
|
(6,846 |
) |
|
|
2,475 |
|
| Income
(loss) from continuing operations |
|
20,548 |
|
|
|
(7,007 |
) |
| Loss from
discontinued operations, net of income taxes |
|
(3,380 |
) |
|
|
(2,314 |
) |
| Net
income (loss) |
$ |
17,168 |
|
|
$ |
(9,321 |
) |
| |
|
|
|
|
|
|
|
| Basic earnings (loss) per share attributable to
continuing operations |
$ |
0.33 |
|
|
$ |
(0.11 |
) |
| Basic loss per share attributable to discontinued
operations, net of tax |
|
(0.05 |
) |
|
|
(0.04 |
) |
| Basic earnings (loss) per share |
$ |
0.28 |
|
|
$ |
(0.15 |
) |
| Basic
weighted average shares |
|
62,882 |
|
|
|
61,815 |
|
|
|
|
|
|
|
|
|
|
| Diluted earnings (loss)
per share attributable to continuing operations |
$ |
0.32 |
|
|
$ |
(0.11 |
) |
| Diluted loss per share
attributable to discontinued operations, net of tax |
|
(0.05 |
) |
|
|
(0.04 |
) |
| Diluted earnings (loss)
per share |
$ |
0.27 |
|
|
$ |
(0.15 |
) |
| Diluted
weighted average shares |
|
64,569 |
|
|
|
61,815 |
|
|
|
|
|
|
|
|
|
|
| |
| Great Lakes Dredge & Dock
Corporation |
| Reconciliation of Net Income (Loss) to Adjusted
EBITDA from Continuing Operations |
| (Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
| |
March 31, |
|
| |
|
2019 |
|
|
|
2018 |
|
| Net income (loss) |
$ |
17,168 |
|
|
$ |
(9,321 |
) |
| Loss from discontinued
operations, net of income taxes |
|
(3,380 |
) |
|
|
(2,314 |
) |
| Income (loss) from
continuing operations |
|
20,548 |
|
|
|
(7,007 |
) |
| Adjusted for: |
|
|
|
|
|
|
|
| Interest
expense—net |
|
7,551 |
|
|
|
8,653 |
|
| Income
tax provision (benefit) |
|
6,846 |
|
|
|
(2,475 |
) |
|
Depreciation and amortization |
|
8,905 |
|
|
|
14,562 |
|
| Adjusted EBITDA from
continuing operations |
$ |
43,850 |
|
|
$ |
13,733 |
|
| |
| |
| Great Lakes Dredge & Dock
Corporation |
| Selected Balance Sheet
Information |
| (Unaudited and in thousands) |
| |
|
|
|
|
|
| |
Period Ended |
| |
March 31, |
|
December 31, |
| |
2019 |
|
2018 |
| |
|
|
|
|
|
| Cash and cash
equivalents |
$ |
122,986 |
|
$ |
34,458 |
| Total current
assets |
|
250,667 |
|
|
206,698 |
| Total assets |
|
851,851 |
|
|
730,271 |
| Total current
liabilities |
|
198,086 |
|
|
163,121 |
| Current debt |
|
- |
|
|
11,500 |
| Long-term debt |
|
322,173 |
|
|
321,950 |
| Total equity |
|
239,277 |
|
|
214,928 |
| |
|
|
|
|
|
| |
| Great Lakes Dredge & Dock
Corporation |
| Revenue and Backlog Data |
| (Unaudited and in thousands) |
| |
|
| |
Three Months Ended |
| |
March 31, |
|
Revenues |
|
2019 |
|
|
2018 |
| Dredging: |
|
|
|
|
|
| Capital -
U.S. |
$ |
92,744 |
|
$ |
76,952 |
| Capital -
foreign |
|
8,329 |
|
|
5,523 |
| Coastal
protection |
|
33,743 |
|
|
41,861 |
| Maintenance |
|
29,649 |
|
|
7,803 |
| Rivers
& lakes |
|
28,172 |
|
|
1,484 |
|
Total revenues |
$ |
192,637 |
|
$ |
133,623 |
| |
|
|
|
|
|
| |
| |
As of |
| |
March 31, |
|
December 31, |
|
March 31, |
|
Backlog |
|
2019 |
|
|
2018 |
|
|
2018 |
| Dredging: |
|
|
|
|
|
|
|
|
| Capital -
U.S. |
$ |
376,114 |
|
$ |
447,139 |
|
$ |
383,132 |
| Capital -
foreign |
|
64,827 |
|
|
73,112 |
|
|
6,225 |
| Coastal
protection |
|
75,034 |
|
|
81,068 |
|
|
43,211 |
| Maintenance |
|
36,548 |
|
|
56,189 |
|
|
25,586 |
| Rivers & lakes |
|
22,666 |
|
|
49,583 |
|
|
16,734 |
| Total backlog |
$ |
575,189 |
|
$ |
707,091 |
|
$ |
474,888 |
|
|
| For
further information contact: Abby
SullivanInvestor
Relations630-574-3024asullivan@gldd.com |
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