Great Lakes Dredge & Dock Company Reports Third Quarter Increases
Great Lakes Dredge & Dock Corporation, the largest provider of dredging services in the United States and a major provider of environmental and infrastructure services, reported improved financial results November 6 for the quarter ending September 30.
Great Lakes reported revenues of $204.3 million, net income from continuing operations of $11.7 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations of $35.9 million.
Net income from continuing operations was $11.7 million, a $14.9 million increase over the prior year quarter. Adjusted EBITDA from continuing operations was $35.9 million, a $22.8 million increase from the prior year quarter. The company recognized a restructuring charge of $4.5 million in the third quarter that reduced adjusted EBITDA from continuing operations by $3.2 million.
Dredging segment gross margin percentage improved to 23.3 percent in the current quarter from 14.8 percent in the third quarter of 2017 on what the company said was “strong project performance combined with lower plant and overhead costs resulting from operational improvements and higher utilization.”
Dredging segment operating income was $29.1 million, an increase of 289 percent compared to $7.5 million in the prior year quarter. The dredging segment’s gross margin percentage increased to 22.2 percent in the current quarter from 14.6 percent in the prior year quarter.
Environmental and infrastructure gross margin percentage increased to 9.9 percent in the current quarter, up from 0.9 percent in the prior year quarter.
Consolidated operating income increased to $23.4 million, a $21.3 million increase over the prior year quarter. Dredging operating income increased by 329 percent, and E&I operating income loss improved by 55 percent compared to the prior year quarter.
CEO Lasse Petterson said, “Today we announced continued strong performance including a record quarter for Great Lakes’ Adjusted EBITDA from continuing operations. During the quarter, we saw strong results from our dredging operations, in particular on our Charleston II project where three of the largest dredges in the United States produced at expectations despite delays caused by Hurricanes Florence and Michael. The third quarter also benefited from high equipment utilization, solid project execution and savings from our restructuring plan. In addition to excellent results in the third quarter, we also made significant progress on our goal to de-lever and reduce our net debt. Compared to year end 2017, we have decreased net debt by $85 million and we plan to continue to delever throughout the fourth quarter and beyond.”
During the quarter, Great Lakes announced two significant awards for capital deepening work in the ports of Jacksonville and Tampa, Fla. The Jacksonville deepening award was $210 million, comprised of a base contract of $113 million and options of $97 million expected to be awarded in the third quarter of 2019. “We are commencing operations on this project in November and expect the project with all options to be completed in the second quarter of 2021,” said Patterson.
The Tampa deepening award was $74 million divided into a $48 million base contract and $26 million of options which are expected to be awarded by year end 2018. Operations commenced on this project in October and are expected to finish in the third quarter of 2019.
Net income for the quarter was $15.0 million compared to a loss of $2.0 million in the prior year quarter, primarily as a result of better operational results in the dredging segment.
The company said the domestic market “continues to be driven by large scale port deepening projects” and said it expects “a strong future with multiple deepenings scheduled for bid over the next 12-18 months.”
In Washington, D.C., the budget for the Corps of Engineers was passed at another record level and the Water Resources Development Act of 2018 was signed into law in October. “These positive developments, combined with the supplemental appropriations from Hurricanes Harvey, Irma, Maria and Florence, should provide for a strong pipeline of domestic project opportunities going forward,” the company said.