GLDD Reports 3Q Loss

Great Lakes Dredge & Dock Corporation today announced results for the quarter ended September 30, 2017, reporting revenue of $163.3 million, net loss from continuing operations of $4.9 million and Adjusted EBITDA from continuing operations of $11.3 million.

Chief Executive Officer, Lasse Petterson, said: “As communicated in our recent Business Update, we have completed an extensive analysis of the overall Company focused on improving the Company’s results in both the domestic and international markets, allowing us to focus on reducing debt, improving return on capital and enhancing our fleet.”

“In the third quarter of 2017, we recognized a $2.0 million restructuring charge, related entirely to severance. We anticipate that this restructuring charge will total approximately $42-47 million with $39-44 million projected to be non-cash. As stated, we estimate that this restructuring will result in annual EBITDA cost savings of approximately $40 million to be fully realized in 2019.

“These savings are expected to be approximately $16 million of operational improvement to direct costs, approximately $9 million of asset based optimization and approximately $15 million of streamlined overhead and G&A costs.”

Chief Financial Officer, Mark Marinko, added: “During the third quarter of 2017, we experienced delays associated with Hurricanes Harvey, Irma, Maria and Jose, which caused work stoppage on our projects in the impacted areas.”

Third Quarter Highlights

Dredging

• Revenue in the third quarter of 2017 was below the prior year period on lower foreign capital, domestic capital and coastal protection revenues offset by higher maintenance revenues. Rivers and lakes revenue increased slightly quarter over quarter;
• Gross profit margin increased from 10.7% in the prior year quarter to 12.3% in the current year quarter on lower plant and overhead costs;
• Operating income decreased from $5.6 million in the prior year quarter to $2.7 million in the current quarter primarily on higher G&A costs associated with the restructuring;
• Dredging backlog was $427.8 million at the end of the third quarter, which is a decrease of $39.9 million compared to backlog at December 31, 2016. This backlog does not include the $213 million of awarded work for the Charleston 2 project, as this contract was not awarded until October 2017.

Total Company

• Total company G&A expenses were $17.5 million in the third quarter of 2017, a $10.3 million increase over the same period in 2016. This increase is primarily due to the $8.6 million benefit related to the reversal of the potential earn-out and restricted stock units in the third quarter of 2016 as well as $1.7 million of severance related to the restructuring actions taken during the third quarter of 2017;
• Net loss from continuing operations was $4.9 million compared to net income from continuing operations of $4.6 million in the third quarter of 2016. The loss from continuing operations in the current period included an income tax benefit of $2.7 million and interest expense of $6.4 million. The income in the third quarter of 2016 included an income tax expense of $2.9 million and interest expense of $4.8 million;
• Adjusted EBITDA from continuing operations was $11.3 million, $17.8 million lower than the prior year quarter driven primarily by the reduction in operating income;
• Total capital expenditures for the quarter were $12.6 million. Capital expenditures included $8.5 million for construction of the Ellis Island. A majority of the remaining expenditures were for improvements to the dredging fleet. Capital expenditures during the third quarter of 2016 were $36.9 million and included $27.4 million for the Ellis Island, with the majority of the remainder for improvements to the dredging fleet. Final payment for the Ellis Island is expected to be approximately $11 million;
• Cash at September 30, 2017 was $10.5 million, with total debt of $426.0 million ($2.8 million short-term debt and $423.2 million long-term debt);
• Total Company backlog at September 30, 2017 was $486.0 million.