GLDD Reports Net Income Of $11.1 Million For First Quarter
Great Lakes Dredge & Dock Corporation (GLDD) reported first-quarter net income of $11.1 million, up from $8.8 million for the same quarter of 2021.
Revenue for the quarter was $194.3 million, an increase of $16.7 million from the first quarter of 2021. The increase 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, the company said.
“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,” said Lasse Petterson, president and CEO, in the May 3 earnings announcement.
“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,” Petterson continued. “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 [GLDD dredge] Liberty Island was in scheduled drydock the entire first quarter, and two of our cutter dredges were partially idle during the quarter due to project start delays.”
Petterson noted the recent award of a contract to perform offshore subsea rock installation work for the Empire Wind I and II wind farms off the East Coast of the United States. “This award is significant for our entry into this new market,” he said. “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.”
Backlog, Capital Expenditures
GLDD reported a backlog of $473.5 million as of March 31, a decrease of $78.1 million from December 31, 2021. The decrease was expected as bidding activity is historically low in the first quarter of the year, the company said.
Capital expenditures for the first quarter of 2022 were $25.6 million, including $8.7 million for a new hopper dredge, $3.9 million for new scows and multicats and $0.2 million for a rock installation vessel, GLDD said.
At the end of 2021 the domestic dredging bid market reached $1.8 billion in projects bid, the company said in the earnings announcement.
“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,” GLDD said. “We ended the quarter with a 50 percent 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.
“…We continue to see strong support from the Biden administration for the dredging industry,” the company continued. “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 and 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 a conference call with analysts to discuss the results, Pettersen noted that the company has an option that expires in June to build a second large hopper dredge. “We see the dredging market as very active,” he said. “So, we are looking very keenly on whether to exercise that option or not.”