Great Lakes Reports Record Third Quarter Results
In a conference call with investors Great Lakes Dredge & Dock Corporation CEO Jonathan Berger and CFO William Steckel reported that the company had revenue of $198.8 million net income of $1.4 million and adjusted EBITDA of $19.6 million for the third quarter an all-time third quarter high for the company. The total company backlog including seven dredging projects worth more than $10 million each is a record $606 million excluding $94.6 million in domestic dredging low bids and options pending awards.
Katherine Hayes treasurer moderated the call.
Berger reported that the segment activity was driven by $54.4 million in coastal protection revenue related to Superstorm Sandy work in the Northeast which increased the company’s coastal protection revenue by more than 150 percent compared to the third quarter 2012.
The dredging segment won $580 million or 55 percent of the domestic dredging bid market in the first nine months of the year and year-to-date had bid more than $400 million of coastal protection work nearly double the amount for all of 2012. Great Lakes won 56 percent of this work Berger said explaining that much of the work was funded by the special appropriations bill passed in response to Superstorm Sandy to restore coastline damaged by the storm. He also explained that the company’s win rate was also driven by the award of the $122 million Port of Miami first phase deepening.
CFO Steckel reported that the company’s focus on working capital improved the net cash position by nearly $20 million and decreased the investment in working capital by $23 million.
Other highlights for the company’s dredging segment in the third quarter:
Gross profit margin was 14.5 percent versus 8.3 percent in the same quarter last year. Gross margin was increased by improved contract margin and higher revenue resulting in better fixed cost coverage. In addition in the prior year quarter additional plant expense was incurred for work performed on vessels moving to the Wheatstone project in Australia.
Operating income increased $11.3 million to $13.1 million compared to $1.8 million in the 2012 third quarter driven by improved revenue and contract margin as well as a $3.2 million gain on the sale of an under-utilized dredge in the Middle East.
• For the nine months ending on September 30 2013 dredging revenue increased 17.1 percent to $465.9 million driven by an increase in domestic and foreign capital and coastal protection revenue offset by decreases in maintenance and rivers and lakes revenue.
Other Year-to-Date Highlights:
• Gross profit margin for the nine months ended September 30 2013 increased to 14.2 percent from 12.4 percent because of stronger contract margin and better fixed cost coverage.
• General and administrative expenses increased $4.9 million year over year related to additional payroll expense and severance cost.
• Operating income was $46.7 million an increase from $18.4 million in the prior year. Operating income for 2013 includes $13.3 million in proceeds related to the dredge New York claim.
Berger said “We are pleased with the performance our dredging segment and Terra remediation business this quarter and expect this to continue in the fourth quarter. Backlog is at a record high and short-term bidding activity remains strong which will drive results for the next several quarters.”
He explained that the company is evaluating strategic alternatives for its demolition business which has been struggling.
