Earnings Reports

Great Lakes Dredge & Dock Reports Mixed Second Quarter, Says Outlook Is Encouraging

Great Lakes Dredge & Dock Company, the largest provider of dredging services in the United States, reported a mixed second financial quarter, with revenues and operating income down due to the impact of the coronavirus and to several vessels in drydock.

During the second quarter of 2020, the company had the Ellis Island, Dodge Island, Illinois and Dredge 58 in drydock. It expects that the Ellis Island, Dodge Island and Dredge 58 will all  return to work in the third quarter and expects the Illinois to return in the fourth quarter. In addition, the Ohio returned to the U.S. from Bahrain and will work in the third quarter as well.

The effects of the drydocks were offset by better-than-anticipated productivity on the West of Shinnecock Inlet project, the Jacksonville deepening and additional work on the Delaware River Reach B deepening project, the company said.

Considering the impacts from the virus and these drydockings, the first half of its year was solid, with steady work and a new hopper dredge on order, according to Lasse Petterson, GLDD’s CEO and president. “Great Lakes had an active and solid first half of the year, resulting in income from continuing operations of $42.9 million, a $10.9 million or a 34 percent increase over the prior year. Year to date adjusted EBITDA from continuing operations was $89.5 million, a $13.6 million or 17.9 percent increase over 2019,” he said.

Second Quarter 2020 Highlights

• GLDD reported revenue of $167.9 million in the second quarter, a $16.9 million or 9.1 percent decrease over the prior year quarter.

• Gross margin percentage was 19.7 percent in the second quarter, compared with 20.3 percent in the prior year quarter.

• Total operating income from continuing operations was $18.3 million, a $4.5 million decrease over the prior year quarter.

• Adjusted EBITDA from continuing operations was $28.1 million as compared to $32.0 million in the prior year quarter.

The report said the company ended the second quarter with a strong net cash position, balance sheet and substantial liquidity. “Great Lakes continues to be well positioned for changes in the current economic environment and to strategically invest in our fleet,” Patterson said.

New Hopper Dredge

In June, the company announced the execution of a contract with Conrad Shipyard in Louisiana to build a 6,500cubic-yard hopper dredge, with expected delivery in the first quarter of 2023. This highly automated new build vessel will increase the capabilities of GLDD’s hopper fleet in the coastal protection and maintenance markets as well as address specific needs in the growing offshore wind market, the company said.

“We remain confident in our 2020 outlook; however, we continue to actively investigate safety and operational contingency plans to be able to respond to potential changes to the evolving pandemic and economic environment,”  Petterson said.

Domestic Bids Up, Outlook Strong

Dredging has been declared an essential industry, and during the second quarter of 2020, the domestic bid market was greater than the prior year, the company said, with $428.6 million in total project bids, of which Great Lakes won $92.5 million during the quarter, comprised of capital, maintenance and coastal protection projects.

After the quarter ended, Great Lakes was awarded $63.4 million in project work and has an additional $32 million in low bids pending award.

“We continue to be confident in the market for the remainder of the year and expect it to be as strong as 2019,” the company said. “We have seen support for the dredging industry in the CARES Act, which includes a provision that lifts caps on the Harbor Maintenance Trust Fund, and the 2021 House Appropriations Bill, introduced in July 2020, showed an increase of $1.7 billion above the president’s budget request for the U.S. Army Corps of Engineers.”Projects coming into the market pipeline include additional phases of Charleston, Jacksonville and Corpus Christi deepenings, as well as new deepenings for ports in Mobile, Ala., and the Sabine-Neches in Texas.