Great Lakes Dredge & Dock Corporation
Aug 4, 2015

Great Lakes Reports Second Quarter Results

Total Company Revenue of $238.9 Million and Adjusted EBITDA of $33.4 Million in Second Quarter

OAK BROOK, Ill., Aug. 4, 2015 (GLOBE NEWSWIRE) -- Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest provider of dredging services in the United States and a major provider of environmental and remediation services, today reported financial results for the quarter ended June 30, 2015.

For the quarter ended June 30, 2015, Great Lakes reported revenue of $238.9 million, net income of $2.7 million, and adjusted EBITDA of $33.4 million. During the second quarter, Great Lakes won $121 million, or 60%, of the domestic dredging bid market, with the $77 million Shell Island West coastal restoration project in the Gulf Coast being a significant portion of the Company's awards.

"The dredging segment had an excellent quarter, delivering robust revenue, gross profit margin and operating income that was driven by an increase in fleet utilization and strong performance on several contracts. The environmental & remediation segment was impacted by a slower than anticipated escalation of its busy season, with more backlog expected to be worked off in the second half of the year. In addition, project losses, some of which are due to timing issues related to change orders and/or claims, impacted the segment's second quarter performance. We made progress realigning the two environmental businesses during the second quarter, and this process will remain a focus for the rest of the year," commented Chief Executive Officer, Jonathan Berger.

"At June 30, 2015, our balance sheet remained solid and fairly similar to the prior quarter. As a result of failing to meet performance targets set forth in the seller note associated with the Magnus Pacific acquisition, we reduced the amount owed to the sellers under the note by $7 million during the second quarter. The note has been fully written off," added Chief Financial Officer, Mark Marinko.

Second Quarter 2015 Highlights

Great Lakes Dredge & Dock Corporation
Select Income Statement Results
(Unaudited in 000)
               
  Three Months Ended
June 30,
 
  2015 2014  
 

Dredging

Envir. &
Remed.

Total
Consolidated


Dredging

Envir. &
Remed.

Total
Consolidated
Total
Consol.
Variance
Revenue  $ 190,046  $ 49,926  $ 238,877  $ 157,114  $ 29,311  $ 184,709  $ 54,168
               
Gross Profit  30,384  1,903  32,287  22,569  3,634  26,203  6,084
Gross Profit Margin 16.0% 3.8% 13.5% 14.4% 12.4% 14.2%  
               
Operating Income (Loss)  18,115  (4,126)  13,989  10,995  (726)  10,269  3,720
               
Note: As a result of intersegment eliminations, the segment financial information will not sum to the total consolidated results.
 

Dredging

Environmental & Remediation

Total Company

Six Months Ended June 30, 2015 Highlights

Great Lakes Dredge & Dock Corporation
Select Income Statement Results
(Unaudited in 000)
               
  Six Months Ended
June 30,
 
  2015 2014  
 

Dredging

Envir. &
Remed.

Total
Consolidated


Dredging

Envir. &
Remed.

Total
Consolidated
Total
Consol.
Variance
Revenue  $ 344,174  $ 71,478  $ 413,434  $ 319,074  $ 42,042  $ 359,091  $ 54,343
               
Gross Profit  48,648  (5,679)  42,969  43,425  3,685  47,110  (4,141)
Gross Profit Margin 14.1% -7.9% 10.4% 13.6% 8.8% 13.1%  
               
Operating Income (Loss)  25,989  (19,258)  6,731  18,424  (5,270)  13,154  (6,426)
               
Note: As a result of intersegment eliminations, the segment financial information will not sum to the total consolidated results.
 

Dredging

Environmental & Remediation

Total Company

Outlook

Mr. Berger stated, "We are proud of the excellent quarter our dredging segment delivered and are confident it remains well positioned to have a strong year. The additional domestic dredging contracts awarded during the second quarter help maintain our strong level of dredging backlog, and we continue to expect our dredges to be working at an elevated level through the remainder of the year. Domestically, we will commence work on the $135 million Savannah Harbor deepening project and the $77 million Shell Island West project in the Gulf Coast while also continuing to work on the large Sandy-related coastal projection projects in New Jersey and New York, as well as on other capital and maintenance projects. The PortMiami and Suez Canal deepenings remain on schedule to be completed over the summer. We expect the domestic bid market to accelerate in the third quarter, with a mix of project type anticipated. Internationally, we are actively pursuing several opportunities in the Middle East and hope to have a contract in place later this year. 

"The environmental & remediation segment added to its backlog during the second quarter, securing an $84 million work order for a multi-year project that we anticipated would be started earlier in the quarter.  Approximately $66 million remains on this contract, of which we expect approximately $40 million to be worked off in 2015.  Throughout the remainder of the year, we will be focused on project execution and aligning costs with the anticipated revenue of this segment. We remain committed to our diversification strategy in the environmental & remediation segment and are committed to improving performance as we move into the second half of the year."

Guidance

Mr. Berger concluded, "Looking forward to the rest of the year, we expect robust revenue and earnings in the dredging segment as fleet utilization will continue to be at an elevated level. We expect the environmental & remediation segment's performance to improve in the second half of the year, likely peaking in the third quarter, and thus we continue to expect to achieve total Company adjusted EBITDA in the range of $97 million to $107 million for the year."

The Company will be holding a conference call at 9:00 a.m. C.D.T. today where we will further discuss these results. Information on this conference call can be found below.

Conference Call Information

The Company will conduct a quarterly conference call, which will be held on Tuesday, August 4, 2015 at 9:00 a.m. C.D.T. (10:00 a.m. E.D.T.). The call in number is 877-377-7553 and Conference ID is 73322361. The conference call will be available by replay until Wednesday, August 5, 2015, by calling (855) 859-2056 and providing Conference ID 73322361. The live call and replay 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.

Use of Adjusted EBITDA from Continuing Operations

Adjusted EBITDA from continuing operations, as provided herein, represents net income adjusted for net interest expense, income taxes, depreciation and amortization expense, debt extinguishment, accelerated maintenance expense for new international deployments and goodwill or asset impairments and gains on bargain purchase acquisitions. Adjusted EBITDA from continuing operations is not a measure derived in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company presents adjusted EBITDA from continuing operations as an additional measure by which to evaluate the Company's operating trends. The Company believes that adjusted EBITDA from continuing operations is a measure frequently used to evaluate performance of companies with substantial leverage and that the Company's primary stakeholders (i.e., its stockholders, bondholders and banks) use adjusted EBITDA from continuing operations to evaluate the Company's period to period performance. Additionally, management believes that adjusted EBITDA from continuing operations provides a transparent measure of the Company's recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For this reason, the Company uses a measure based upon adjusted EBITDA from continuing operations to assess performance for purposes of determining compensation under the Company's incentive plan. adjusted EBITDA from continuing operations should not be considered an alternative to, or more meaningful than, amounts determined in accordance with 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 from continuing operations, instead of a GAAP measure, has limitations as an analytical tool, including the inability to determine profitability or liquidity due to the exclusion of accelerated maintenance expense for new international deployments, goodwill or asset impairments, gains on bargain purchase acquisitions, interest and income tax 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 the Company's operating performance and uses adjusted EBITDA from continuing operations only as a supplement. Adjusted EBITDA from continuing operations is reconciled to net income (loss). For further explanation, please refer to the Company's SEC filings.

The Company

Great Lakes Dredge & Dock Corporation ("Great Lakes" or the "Company") 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 a significant provider of environmental and remediation services on land and water. The Company employs civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its 125-year history, the Company has never failed 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. dredging 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 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 (the "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 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: our ability to obtain federal government dredging and other contracts; our ability to qualify as an eligible bidder under government contract criteria and to compete successfully against other qualified bidders; risks associated with cost over-runs, operating cost inflation and potential claims for liquidated damages, particularly with respect to our fixed cost contracts; the timing of our performance on contracts; significant liabilities that could be imposed were we to fail to comply with government contracting regulations; risks related to international dredging operations, including instability in the Middle East; a significant negative change to large, single customer contracts from which a significant portion of our international revenue is derived; changes in previously-recorded revenue and profit due to our use of the percentage-of-completion method of accounting; consequences of any lapse in disclosure controls and procedures or internal control over financial reporting; changes in the amount of our estimated backlog; our ability to obtain bonding or letters of credit; increasing costs to operate and maintain aging vessels; equipment or mechanical failures; acquisition integration and consolidation risks; liabilities related to our historical demolition business; impacts of legal and regulatory proceedings; unforeseen delays and cost overruns related to the construction of new vessels; our becoming liable for the obligations of joint ventures, partners and subcontractors; capital and operational costs due to environmental regulations; unionized labor force work stoppages; maintaining an adequate level of insurance coverage; information technology security breaches; our substantial amount of indebtedness; restrictions imposed by financing covenants; the impact of adverse capital and credit market conditions; limitations on our hedging strategy imposed by new statutory and regulatory requirements for derivative transactions; foreign exchange risks; changes in macroeconomic indicators and the overall business climate; and losses attributable to our investments in privately financed projects. Furthermore, with regard to a large mine remediation project in Washington State that has been affected by the Wolverine forest fire, the project site has been evacuated causing a delay in the work. We are not able to estimate the length of the delay, and an extensive delay has not been factored into our forecasts. For additional information on these and other risks and uncertainties, please see Item 1A. "Risk Factors" of Great Lakes' Annual Report on Form 10-K for the year ended December 31, 2014, 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.

         
Great Lakes Dredge & Dock Corporation
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except per share amounts)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2015 2014 2015 2014
Contract revenues  $ 238,877  $  184,709  $  413,434   $ 359,091 
Gross profit  32,287   26,203   42,969   47,110 
General and administrative expenses  15,543   15,918   33,491   33,788 
Impairment of goodwill  2,750   --  2,750   --
(Gain) loss on sale of assets—net  5   16   (3)  168 
Operating income  13,989   10,269   6,731   13,154 
Other income (expense)        
Interest expense—net  (5,567)  (5,012)  (11,197)  (10,028)
Equity in loss of joint ventures  (2,616)  (1,435)  (3,714)  (3,278)
Gain on bargain purchase acquisition  --  2,197   --  2,197 
Other income (expense)  (618)  (39)  (1,059)  26 
Income (loss) from continuing operations before income taxes  5,188   5,980   (9,239)  2,071 
Income tax (provision) benefit  (2,464)  (2,097)  3,573   (644)
Income (loss) from continuing operations  2,724   3,883   (5,666)  1,427 
Loss from discontinued operations, net of income taxes  --  (5,320)  --  (8,059)
Net income (loss) $ 2,724  $ (1,437) $ (5,666) $ (6,632)
         
Basic earnings (loss) per share attributable to continuing operations  0.05   0.06   (0.09)  0.02 
Basic loss per share attributable to discontinued operations, net of tax  --  (0.08)  --  (0.13)
Basic earnings (loss) per share $ 0.05  $ (0.02) $ (0.09) $ (0.11)
Basic weighted average shares  60,473   59,863   60,369   59,786 
         
Diluted earnings (loss) per share attributable to continuing operations  0.05   0.06  (0.09)  0.02 
Diluted loss per share attributable to discontinued operations, net of tax  --  (0.08)  --  (0.13)
Diluted earnings (loss) per share $ 0.05  $ (0.02) $ (0.09) $ (0.11)
Diluted weighted average shares  60,924   60,538   60,369   60,459 
         
Great Lakes Dredge & Dock Corporation
Reconciliation of Net income (loss) to Adjusted EBITDA from Continuing Operations
(Unaudited and in thousands)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2015 2014 2015 2014
Net income (loss) $ 2,724  $ (1,437) $ (5,666) $ (6,632)
Loss from discontinued operations, net of income taxes  --  (5,320)  --  (8,059)
Income (loss) from continuing operations  2,724   3,883   (5,666)  1,427 
Adjusted for:        
Interest expense—net  5,567   5,012   11,197   10,028 
Income tax provision (benefit)  2,464   2,097   (3,573)  644 
Depreciation and amortization  19,872   11,036   33,025   21,921 
Impairment of goodwill  2,750   --  2,750   --
Gain on bargain purchase acquisition  --  (2,197)  --  (2,197)
Adjusted EBITDA from continuing operations $ 33,377  $ 19,831  $ 37,733  $ 31,823 
     
Great Lakes Dredge & Dock Corporation
Selected Balance Sheet Information
(Unaudited and in thousands)
     
  Period Ended
  June 30, December 31,
  2015 2014
     
Cash and cash equivalents $ 14,696  $ 42,389 
Total current assets  339,775   342,244 
Total assets  902,249   893,234 
Total current liabilities  192,179   200,510 
Long-term debt  346,775   324,377 
Total equity  252,168   255,963 
         
Great Lakes Dredge & Dock Corporation
Revenue and Backlog Data
(Unaudited and in thousands)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
Revenues 2015 2014 2015 2014
Dredging:        
Capital - U.S. $ 57,742  $ 41,694  $ 105,099  $ 76,169 
Capital - foreign  47,539   29,181   89,238   45,651 
Coastal protection  51,576   55,889   71,648   126,609 
Maintenance  26,129   22,340   68,276   58,651 
Rivers & lakes  7,060   8,010   9,913   11,994 
Total dredging revenues  190,046   157,114   344,174   319,074 
Environmental & remediation*  49,926   29,312   71,478   42,042 
Intersegment revenue  (1,095)  (1,717)  (2,218)  (2,025)
Total revenues $ 238,877  $ 184,709  $ 413,434  $ 359,091 
         
*Environmental & remediation revenues in 2015 include Magnus which did not operate as part of the Company prior to November 4, 2014.
       
  As of
  June 30, December 31, June 30,
Backlog 2015 2014 2014
Dredging:      
Capital - U.S. $ 253,462  $ 135,801  $ 183,467 
Capital - foreign  55,599   131,489   68,328 
Coastal protection  178,560   211,101   56,896 
Maintenance  28,990   25,108   41,585 
Rivers & lakes  85,939   90,708   106,076 
Total dredging backlog  602,550   594,207   456,352 
Environmental & remediation  149,498   75,349  * 52,072 
Total backlog $ 752,048  $ 669,556  $ 508,424 
       
*December 31, 2014 environmental & remediation backlog includes backlog acquired by the Company on November 4, 2014 in connection with the Magnus Pacific Corporation acquisition.
CONTACT: For further information contact:

         Mary Morrissey

         Investor Relations

         630-574-3467

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Source: Great Lakes Dredge & Dock Company

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