Great Lakes Reports First Quarter 2012 Results
Record Backlog Driven by Wheatstone Project and Coastal Restoration
Long Term Plan Remains on Track
OAK BROOK, Ill.--(BUSINESS WIRE)--
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest
provider of dredging services in the United States and a major provider
of commercial and industrial demolition and remediation services, today
reported financial results for the quarter ended March 31, 2012.
Commentary
Chief Executive Officer Jonathan Berger said, "We were very excited with
the number and quality of projects won in the first quarter. The
projects add significantly to backlog, provide a longer term perspective
of our operating results and expand our customer base. The win rate in
the domestic bid market was an impressive 53%, and was complemented by
adding $180 million for the Wheatstone LNG project in Australia. This
resulted in a total backlog of $584 million, setting a new record high
level. The demolition segment continues on the right track, performing
well on projects in backlog and securing larger, more complex projects
that should result in higher margins.
Mr. Berger added, "First quarter Adjusted EBITDA fell short of our
budget by 16%, which was primarily attributable to offshore weather
conditions, mainly wind that produced rough seas, during portions of
January and February that delayed and impacted margins on certain
projects. However, we remain on track for our full year expectation and
therefore are well positioned to have a solid 2012.
Mr. Berger continued, "In January 2008, our dredge New York was
hit by the Orange Sun tanker in the approach channel to Port
Newark, New Jersey, sustaining heavy damage including a large rupture in
her port side. During the first quarter of 2012, the Company received a
favorable judgment on its loss of use claim against the Orange Sun
and her owners, with a judgment to Great Lakes of $11.7 million in
damages plus interest. Judgment was rendered in the aggregate amount of
$13.2 million. While this judgment has been appealed, we believe the
judgment will ultimately be upheld."
2012 First Quarter Operating Results
|
|
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Q1 2012
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Q1 2011
|
|
Revenue
|
|
$154.9 million
|
|
$155.3 million
|
|
Decrease
|
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0.3 %
|
|
|
|
|
|
|
|
|
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Gross Profit
|
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$20.0 million
|
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$27.4 million
|
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Gross Profit Margin
|
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12.9%
|
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17.6%
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Operating Income
|
|
$6.8 million
|
|
$15.6 million
|
|
Decrease
|
|
56.4%
|
|
|
|
|
|
|
|
|
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Net Income attributable to Great Lakes
|
|
$1.1 million
|
|
$2.4 million
|
|
Per Diluted Share
|
|
$0.02
|
|
$0.04
|
|
|
|
|
|
|
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Adjusted EBITDA
|
|
$14.7 million
|
|
$24.6 million
|
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Decrease
|
|
40.2 %
|
|
|
|
|
|
|
|
|
|
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|
March 31, 2012
|
|
March 31, 2011
|
|
Net Debt*
|
|
$169.7 million
|
|
$153.2 million
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$85.6 million
|
|
$104.5 million
|
|
|
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|
|
* Net debt equals debt less cash and cash equivalents
Revenue & Gross Profit
-
Revenue was similar between quarters, although dredging revenue
declined due to weather delays on projects as well as the
non-recurring $15.7 million of Louisiana berm work included in the
2011 first quarter results. Demolition revenue increased $13.8
million, driven by continued growth in bridge demolition work.
-
Gross profit margin (gross profit divided by revenue) declined in the
quarter due to weather impacts and subsequent lower dredge utilization
that resulted in lower fixed cost coverage.
-
Demolition gross profit margin improved to 12.5% from a loss of 1.8%
in 2011. Projects that previous demolition management had entered
into, and for which loss reserves had been recorded, are now nearing
completion.
Operating Income
-
Impacted by items noted above;
-
In addition, operating income was negatively affected by increased
general and administrative expenses primarily due to legal expenses
related to litigation for the dredge New York and loss of use
claim.
Net Income Attributable to Great Lakes
-
First quarter net income attributable to Great Lakes was affected by
lower operating earnings, while the 2011 first quarter included debt
restructuring expense of $5.1 million related to the issuance of the
$250 million of 7.375% senior notes.
Cash and cash equivalents
-
Cash and cash equivalents declined due to working capital investments
for certain 2012 projects and the investment to prepare people and
equipment to mobilize to Australia for the Wheatstone project.
Bid Market & Backlog
The domestic dredging bid market for the quarter ended March 31, 2012
totaled $230 million, compared to $197 million in the prior year. The
Company won 53% of the overall domestic bid market, above its prior
three year average of 39%. For the first quarter of 2012 Great Lakes won:
-
76%, or $20 million, of the beach nourishment projects awarded;
-
100%, or $53 million, of the capital projects awarded;
-
22%, or $23 million, of the maintenance projects awarded; and
-
56%, or $24 million, of the rivers & lakes projects awarded.
The domestic dredging bid market grew year over year largely from
capital dredging and rivers & lakes dredging projects. Despite continued
budget pressures at the federal, state and municipal levels, addressing
infrastructure and coastal protection needs continues to gain
visibility, thereby growing in importance and political momentum. As
previously noted, project timing, competitive factors and equipment
utilization/deployment can result in significant variability in bid
results in any given period.
Great Lakes' bidding success in the first quarter, along with the
addition of the Wheatstone LNG project in Australia, resulted in record
dredging backlog and pending awards of $539 million at March 31, 2012,
which compares favorably to $355 million at December 31, 2011. Rivers &
lakes backlog and pending awards at March 31, 2012 were $43.4 million, a
record level for this division. The Company's contracted dredging
backlog was $524 million at March 31, 2012 compared to $319 million at
December 31, 2011.
Demolition segment backlog was $60 million and $51 million at March 31,
2012 and December 31, 2011, respectively.
Commentary
Mr. Berger continued, "We are excited about the prospects in all our
lines of business. The demolition segment continues solid financial
improvement related to its project execution and the rivers & lakes
division has won several new large projects giving it a healthy backlog
to execute and add on to throughout the year. While the dredging segment
experienced adverse weather in the quarter, we currently expect results
for the remainder of the year to recover any shortfall allowing us to
meet our 2012 plan.
"As we announced last week, there has been progress in the legislation
for the Harbor Maintenance Trust Fund and the Restore Act. The timing is
uncertain for the enactment into law of these legislative components of
the various transportation bills working through Congress. However, the
continued dialogue and focus on our ports is beneficial to the U.S.
economy as well as our industry. The attention to this postponed need is
clear to the many well informed officials in Congress who supported this
legislation."
President and Chief Financial Officer Bruce Biemeck said, "As we look at
the market for the remainder of 2012, we still anticipate a deepening
project in Miami to be released in the second half of the year. Florida
officials and the Army Corps of Engineers are actively working to
responsibly resolve environmental concerns related to the execution
methods and impact of this project to ensure timely execution. This
process has been dealt with responsibly, compassionately and
expeditiously, which has resulted in a minimum of project postponement.
In another important market, the Gulf Coast, we expect additional
coastal restoration projects to be let for bidding in the second half of
the year, for which we have made a working capital investment in pipe
and feel we will be well positioned to execute.
"Internationally, we will see significant impact to our results from the
Wheatstone project in 2013 and 2014. For 2012, we have identified other
international dredging projects that may be a good fit for our vessels,
particularly in the Middle East, and we continue to follow the many
opportunities in Brazil. We have recently made strategic moves to
bolster our international sales and marketing effort as we see an
abundance of international opportunities ahead, which we believe can
yield better results from a more aggressive approach.
"The demolition business had a strong start to the year, showing that
good project execution can begin to improve those projects that had a
history of recorded loss reserves under prior management. The new
management team in this business is working diligently to add
opportunities leading to growth by elevating the range of professional
services offered through a more capable support team. The successful
partnership of our demolition and dredging businesses is key to our
Company's growth as evidenced by the recent focus on bridge demolition
and salvage work required under some projects, which was formerly
sub-contracted outside the Company. Additionally, our dredging and
demolition business collaborating with our TerraSea joint venture on new
prospects adds to the list of opportunities."
Mr. Biemeck concluded, "Over the past few years we have deferred
providing guidance until the second quarter earnings announcement. This
year, we feel due to the level and strength of our backlog that we can
provide guidance now for the full year. We currently forecast Adjusted
EBITDA from operations to be in range of $93 - $100 million for the full
year 2012. Exclusive of the gains on the sale of assets in 2011, this
would result in double digit growth over 2011. This requires strong
results for the remainder of the year, but our 2012 plan and current
backlog, as well as the focus and dedication of our leaders throughout
the organization, support our optimism for achieving these results. We
believe opportunities for further growth in our financial results will
appear starting in 2013. As always, we thank the Great Lakes dredging
and demolition teams for their continued efforts in providing world
class service and delivering strong results for our shareholders."
Use of Adjusted EBITDA
Adjusted EBITDA, as provided herein, represents net income (loss)
attributable to Great Lakes Dredge & Dock Corporation, adjusted for net
interest expense, income taxes, depreciation and amortization expense
and debt restructuring expense. Adjusted EBITDA should not be considered
an alternative to, or more meaningful than, amounts determined in
accordance with accounting principles generally accepted in the United
States of America ("GAAP") including: (a) operating income as an
indicator of operating performance; or (b) cash flows from operations as
a measure of liquidity. As such, the Company's use of Adjusted EBITDA,
instead of a GAAP measure, has limitations as an analytical tool,
including the inability to determine profitability or liquidity due to
the exclusion of interest expense and the associated significant cash
requirements and the exclusion of depreciation and amortization, which
represent significant and unavoidable operating costs given the level of
indebtedness and capital expenditures needed to maintain the Company's
business. For these reasons, the Company uses operating income to
measure its operating performance and uses Adjusted EBITDA only as a
supplement. Adjusted EBITDA is reconciled to net income (loss)
attributable to Great Lakes Dredge & Dock Corporation in the table of
financial results. (For further explanation, please refer to the
Company's SEC filings.)
Conference Call Information
The Company will conduct a quarterly conference call, which will be held
on Tuesday, May 1, 2012 at 9:00 a.m. C.D.T. The call in number is
877-377-7553 and conference ID is 72874967. The call can also be heard
on the Company's website, www.gldd.com,
under Events & Presentations on the investor relations page. Information
related to the conference call will also be available on the investor
relations page of the Company's website. The conference call will be
available by replay for two weeks, by calling 800-585-8367 and providing
passcode 72874967.
The Company
Great Lakes Dredge & Dock Corporation is the largest provider of
dredging services in the United States and the only U.S. dredging
company with significant international operations. The Company is also
one of the largest U.S. providers of commercial and industrial
demolition services primarily in the Northeast. The Company owns a 50%
interest in a marine sand mining operation in New Jersey that supplies
sand and aggregate for road and building construction and a 50% interest
in an environmental service operation with the ability to remediate soil
and dredged sediment treatment. Great Lakes employs over 150 degreed
engineers, most specializing in civil and mechanical engineering, which
contributes to its 122-year history of never failing to complete a
marine project. Great Lakes has a disciplined training program for
engineers that ensures experienced-based performance as they advance
through Company operations. Great Lakes also owns and operates the
largest and most diverse fleet in the U.S. industry, comprised of over
200 specialized vessels.
Cautionary Note Regarding Forward-Looking
Statements
Certain statements in this press release may constitute
"forward-looking" statements as defined in Section 27A of the Securities
Act of 1933 (the "Securities Act"), Section 21E of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Private Securities
Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the
Securities and Exchange Commission ("SEC"), all as may be amended from
time to time. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of Great Lakes and its
subsidiaries, or industry results, to differ materially from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Statements that are not historical fact are
forward-looking statements. Forward-looking statements can be identified
by, among other things, the use of forward-looking language, such as the
words "plan," "believe," "expect," "anticipate," "intend," "estimate,"
"project," "may," "would," "could," "should," "seeks," or "scheduled
to," or other similar words, or the negative of these terms or other
variations of these terms or comparable language, or by discussion of
strategy or intentions. These cautionary statements are being made
pursuant to the Securities Act, the Exchange Act and the PSLRA with the
intention of obtaining the benefits of the "safe harbor" provisions of
such laws. Great Lakes cautions investors that any forward-looking
statements made by Great Lakes are not guarantees or indicative of
future performance. Important assumptions and other important factors
that could cause actual results to differ materially from those
forward-looking statements with respect to Great Lakes, include, but are
not limited to, risks associated with Great Lakes' leverage, fixed price
contracts, dependence on government contracts and funding, bonding
requirements and obligations, international operations, backlog,
government regulation, restrictive debt covenants and fluctuations in
quarterly operations, and those factors, risks and uncertainties that
are described in Item 1A of its Annual Report on Form 10-K for the year
ended December 31, 2011, and in other securities filings by Great Lakes
with the SEC.
Although Great Lakes believes that its plans, intentions and
expectations reflected in or suggested by such forward-looking
statements are reasonable, actual results could differ materially from a
projection or assumption in any forward-looking statements. Great Lakes'
future financial condition and results of operations, as well as any
forward-looking statements, are subject to change and inherent risks and
uncertainties. The forward-looking statements contained in this press
release are made only as of the date hereof and Great Lakes does not
have or undertake any obligation to update or revise any forward-looking
statements whether as a result of new information, subsequent events or
otherwise, unless otherwise required by law.
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Great Lakes Dredge & Dock Corporation
|
|
Condensed Consolidated Statements of Operations
|
|
(Unaudited and in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenues
|
|
$
|
154,907
|
|
|
$
|
155,338
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
20,022
|
|
|
|
27,442
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
13,267
|
|
|
|
12,089
|
|
|
Gain on sale of assets - net
|
|
|
(31
|
)
|
|
|
(258
|
)
|
|
|
|
|
|
|
|
Operating income
|
|
|
6,786
|
|
|
|
15,611
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
Interest expense - net
|
|
|
(5,259
|
)
|
|
|
(5,950
|
)
|
|
Equity in loss of joint ventures
|
|
|
(16
|
)
|
|
|
(591
|
)
|
|
Gain on foreign currency transactions - net
|
|
|
6
|
|
|
|
-
|
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
(5,145
|
)
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,517
|
|
|
|
3,925
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
(564
|
)
|
|
|
(1,527
|
)
|
|
|
|
|
|
|
|
Net income
|
|
|
953
|
|
|
|
2,398
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
115
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
Net income attributable to Great Lakes Dredge & Dock Corporation
|
|
$
|
1,068
|
|
|
$
|
2,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to Great Lakes Dredge & Dock
Corporation
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
Basic weighted average shares
|
|
|
59,038
|
|
|
|
58,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to Great Lakes Dredge & Dock
Corporation
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
Diluted weighted average shares
|
|
|
59,434
|
|
|
|
59,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
|
Reconciliation of Net Income attributable to Great Lakes Dredge &
Dock Corporation to Adjusted EBITDA
|
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Great Lakes Dredge & Dock Corporation
|
|
$
|
1,068
|
|
|
$
|
2,392
|
|
|
Adjusted for:
|
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
5,145
|
|
|
Interest expense, net
|
|
|
5,259
|
|
|
|
5,950
|
|
|
Income tax provision
|
|
|
564
|
|
|
|
1,527
|
|
|
Depreciation and amortization
|
|
|
7,764
|
|
|
|
9,566
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
14,655
|
|
|
$
|
24,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
|
Selected Balance Sheet Information
|
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
85,618
|
|
|
$
|
113,288
|
|
|
Total current assets
|
|
|
315,046
|
|
|
|
325,778
|
|
|
Total assets
|
|
|
779,601
|
|
|
|
788,460
|
|
|
Total short-term debt
|
|
|
2,813
|
|
|
|
3,033
|
|
|
Total current liabilities
|
|
|
120,880
|
|
|
|
130,526
|
|
|
Long-term debt
|
|
|
252,500
|
|
|
|
252,500
|
|
|
Total equity
|
|
|
293,796
|
|
|
|
292,537
|
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
|
Supplementary financial data
|
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
$
|
(18,244
|
)
|
|
$
|
(5,551
|
)
|
|
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
|
Revenue and Backlog Data
|
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
Revenues (in thousands)
|
|
2012
|
|
2011
|
|
|
|
Dredging:
|
|
|
|
|
|
|
|
Capital - U.S.
|
|
$
|
26,907
|
|
$
|
46,029
|
|
|
|
Capital - foreign
|
|
|
18,025
|
|
|
21,871
|
|
|
|
Beach nourishment
|
|
|
31,183
|
|
|
17,857
|
|
|
|
Maintenance
|
|
|
39,233
|
|
|
47,239
|
|
|
|
Rivers & lakes
|
|
|
7,013
|
|
|
3,601
|
|
|
|
Total dredging revenues*
|
|
|
122,361
|
|
|
136,597
|
|
|
|
Demolition
|
|
|
32,546
|
|
|
18,741
|
|
|
|
Total revenues
|
|
$
|
154,907
|
|
$
|
155,338
|
|
|
|
|
|
|
|
|
|
|
|
*Total dredging revenues above are net of $1,312 in intersegment
revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
Backlog (in thousands)
|
|
2012
|
|
2011
|
|
2011
|
|
Dredging:
|
|
|
|
|
|
|
|
Capital - U.S.
|
|
$
|
151,479
|
|
$
|
109,897
|
|
$
|
88,404
|
|
Capital - foreign
|
|
|
247,257
|
|
|
78,379
|
|
|
54,871
|
|
Beach nourishment
|
|
|
70,767
|
|
|
84,607
|
|
|
33,008
|
|
Maintenance
|
|
|
22,166
|
|
|
31,293
|
|
|
32,789
|
|
Rivers & lakes
|
|
|
32,273
|
|
|
15,256
|
|
|
23,439
|
|
Total dredging backlog
|
|
|
523,942
|
|
|
319,432
|
|
|
232,511
|
|
Demolition
|
|
|
60,427
|
|
|
50,672
|
|
|
79,598
|
|
Total backlog
|
|
$
|
584,369
|
|
$
|
370,104
|
|
$
|
312,109
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
|
Full Year Adjusted EBITDA Guidance Reconciliation to Net Income
|
|
For the Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
Lower
|
|
Upper
|
|
|
|
|
|
|
|
Estimated Net income attributable to
Great Lakes Dredge & Dock Corporation
|
|
$
|
22,210
|
|
$
|
27,270
|
|
Adjusted for estimated:
|
|
|
|
|
|
Interest expense, net
|
|
|
21,860
|
|
|
21,860
|
|
Income taxes
|
|
|
8,555
|
|
|
10,495
|
|
Depreciation and amortization
|
|
|
40,375
|
|
|
40,375
|
|
|
|
|
|
|
|
Adjusted EBITDA Guidance
|
|
$
|
93,000
|
|
$
|
100,000
|
Great Lakes Dredge & Dock Corporation
Katie Hayes,
Investor Relations
630-574-3012
Source: Great Lakes Dredge & Dock Corporation
News Provided by Acquire Media
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