GLDD Reports Solid Dredging Segment’s Performance in Q1

Great Lakes Dredge & Dock Corporation (GLDD) today announced financial results for the quarter ended March 31, 2017, reporting revenue of $170.6 million, net loss from continuing operations of $3.7 million and Adjusted EBITDA from continuing operations of $14.2 million.

“The company’s first quarter 2017 results were in line with our expectations. The Dredging segment’s performance was solid despite some softness in the international market and delays on some domestic projects. Keep in mind that the first quarter in 2016 was quite strong for the Dredging segment, driven by robust performances on several coastal protection and capital projects,” said Chief Financial Officer, Mark Marinko.

“We continued to see the benefits of our realigned and refocused Environmental & Infrastructure (E&I) segment, with a marked improvement in results compared to the first quarter of 2016, though still at a loss due to the seasonality of the business.”

Dredging

• Revenue in the first quarter 2017 increased over the prior year period primarily due to higher domestic capital and foreign capital revenue, partially offset by lower maintenance and coastal protection revenues;
• Gross profit decreased 38.0% during the first quarter compared to the same quarter 2016 primarily due to delays in domestic projects and higher plant costs associated with several dry docks;
• Operating income decreased 80.1% in the first quarter 2017 compared to the prior year quarter, primarily due to lower gross profit margin;
• Dredging backlog was $456.6 million at the end of the first quarter, which is a decrease of $11.1 million compared to backlog at December 31, 2016.

Environmental & Infrastructure

• Revenue was flat in the first quarter 2017 compared to the first quarter of 2016. The loss of revenue associated with the divested Terra services assets was offset by larger projects that were executed throughout the United States, including on the West Coast and in Florida and New Jersey;
• The 150.9% improvement in gross profit in the first quarter 2017 is a result of significantly stronger contract margin, lower overhead, primarily related to improved absorption of the downsized equipment spread, and to lower labor and benefits costs. In addition, the current quarter in 2017 benefited from the absence of non-recurring job losses that occurred in the first quarter of 2016;
• Operating loss improved 74.4% in the first quarter of 2017 due to improved gross profit margin and lower G&A, primarily related to reduced personnel costs stemming from the divested Terra services assets and other cost reduction initiatives;
• Backlog was $59.7 million at the end of the first quarter, which is an increase of $22.1 million compared to backlog at December 31, 2016.

Total Company

• Net loss from continuing operations was $3.7 million compared to net loss from continuing operations of $4.0 million in the first quarter of 2016. The loss in the current period includes income tax benefit of $2.3 million and interest expense of $5.6 million. The loss in the first quarter of 2016 includes income tax benefit of $2.7 million and interest expense of $5.7 million;
• The company recorded a $13.1 million net loss from discontinued operations during the first quarter of 2017. The loss is related to a historical demolition project for which a surety bond remained in place and a letter of credit was issued as security for the bond. The surety has informed us that they intend to draw on the letter of credit. Currently, GLDD does not expect any significant additional losses related to this project;
• Adjusted EBITDA from continuing operations was $14.2 million, a $1.2 million increase from $13.0 million in the first quarter of 2016;
• Total capital expenditures for the quarter were $19.6 million. Capital expenditures include $13.4 million for construction of new ATB hopper dredger, the Ellis Island, and the majority of the remainder for improvements to the dredging fleet. Capital expenditures during the first quarter of 2016 were $17.5 million and included $12.0 million to support growth, including $8.4 million for the ATB, with the majority of the remainder for improvements to the dredging fleet;
• Cash at March 31, 2017 was $6.9 million, with total debt of $404.1 million ($2.4 million short-term debt and $401.7 million long-term debt);
• Total company backlog at March 31, 2017 was $516.3 million.