Great Lakes Reports Second Quarter 2012 Results
Results Meet 2012 First Half Internal Expectations
Reaffirms EBITDA Guidance of
Commentary
Chief Executive Officer
2012 Second Quarter Operating Results & Highlights
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Q2 2012 |
Q2 2011 |
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| Revenue |
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| Increase | 7.4% | |||
| Gross Profit |
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| Gross Profit Margin | 14.4% | 12.8% | ||
| Operating Income |
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| Increase | 43.7% | |||
| Net Income attributable to Great Lakes |
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| Per Diluted Share |
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| Adjusted EBITDA |
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| Increase | 20.8% | |||
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| Total Debt |
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| Net Debt (Debt less cash) |
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| Cash and cash equivalents |
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Revenue & Gross Profit
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Revenue increases included:
- 43% increase in beach nourishment dredging revenue;
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Demolition revenue increase of 6%, from bridge demolition work and
a large site development project in
New York ; - Rivers & lakes posted a 17% improvement in revenue compared to the second quarter of 2011 on a larger number of active projects.
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Gross profit margin (gross profit divided by revenue) improved due to:
- Increased utilization resulting in higher fixed cost coverage;
- Improved demolition results
Operating Income
- Impacted by items noted above;
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$1.3 million of Demolition legal expense related to the two subpoenas received in April of 2011 impacted prior year second quarter results; -
The prior year also benefited from
$2.5 million of gains related to assets sales, which did not reoccur in 2012.
Cash and cash equivalents
- Cash and cash equivalents declined due to continued investments in working capital on long term projects.
Six Months Ended
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YTD |
YTD |
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| Revenue |
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| Increase | 3.6% | |||
| Gross Profit |
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| Gross Profit Margin | 13.7% | 15.2% | ||
| Operating Income |
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| Decrease | 20.6% | |||
| Net Income attributable to Great Lakes |
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| Per Diluted Share |
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| Adjusted EBITDA |
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| Decrease | 15.0% | |||
Revenue & Gross Profit
- Year to date revenue increased primarily due to the increase in second quarter revenue; however, gross profit margin was down due to weather impacts and lower dredge utilization during the 2012 first quarter.
Operating Income
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Operating income was down in the first half of 2012, due to lower
gross profit. In addition, in the second quarter of 2011 the Company
sold an outdated, underutilized hopper dredge, which generated cash
proceeds of
$6.6 million and resulted in a gain of$2.1 million .
Net Income Attributable to Great Lakes
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Net income attributable to Great Lakes for the first six months of
2012 increased despite lower operating profit. The first half of 2011
included debt restructuring expense of
$5.1 million resulting from the issuance of the$250 million of 7.375% senior notes.
Bid Market & Backlog
The domestic dredging bid market for the six months ended
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76%, or
$20 million , of the beach nourishment projects awarded; -
96%, or
$53 million , of the capital projects awarded; -
16%, or
$34 million , of the maintenance projects awarded; and -
42%, or
$24 million , of the rivers & lakes projects awarded.
Similar to the prior year, second quarter bidding activity slowed, but
has picked up significantly since
Great Lakes' backlog remains at a high level, despite the slower bidding
activity in the second quarter. Dredging backlog and pending domestic
awards at
Demolition segment backlog was
Commentary
"We were pleased with the passage of the RESTORE Act included in the
MAP-21 (Moving Ahead for Progress in the 21st Century)
transportation bill. The RESTORE Act will ensure that 80% of the fines
paid by BP as a result of the Deepwater Horizon Oil Spill will be spent
on coastal restoration in the five states impacted by the spill. We
expect a significant amount of the restoration will involve dredging,
and this could add well over
"In July the Administration followed with an announcement that the Corps
will accelerate the approval process by at least nine months for
deepening projects in five key
"With the passage of the transportation bill and the Administration's
announcement regarding
President and Chief Financial Officer
"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
"The demolition business had a strong start to the year, demonstrating that sound project estimating and execution improve results. 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 an important component 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 businesses collaborating with our TerraSea joint venture on new prospects adds to the list of opportunities."
Use of Adjusted EBITDA
Adjusted EBITDA, as provided herein, represents net income (loss)
attributable to
Conference Call Information
The Company will conduct a quarterly conference call, which will be held
on
The Company
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
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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| Condensed Consolidated Statements of Operations | ||||||||||||
| (Unaudited and in thousands, except per share amounts) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
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| 2012 | 2011 | 2012 | 2011 | |||||||||
| Contract revenues | $ | 166,532 | $ | 154,959 | $ | 321,439 | $ | 310,297 | ||||
| Gross profit | 23,889 | 19,766 | 43,911 | 47,208 | ||||||||
| General and administrative expenses | 11,456 | 13,622 | 24,723 | 25,711 | ||||||||
| Gain on sale of assets—net | (93) | (2,513) | (124) | (2,771) | ||||||||
| Operating income | 12,526 | 8,657 | 19,312 | 24,268 | ||||||||
| Other income (expense) | ||||||||||||
| Interest expense—net | (5,383) | (4,911) | (10,642) | (10,861) | ||||||||
| Equity in loss of joint ventures | (8) | (123) | (24) | (714) | ||||||||
| Loss on foreign currency transactions—net | (21) | - | (15) | - | ||||||||
| Loss on extinguishment of debt | - | - | - | (5,145) | ||||||||
| Income before income taxes | 7,114 | 3,623 | 8,631 | 7,548 | ||||||||
| Income tax provision | (2,768) | (1,455) | (3,332) | (2,982) | ||||||||
| Net income | 4,346 | 2,168 | 5,299 | 4,566 | ||||||||
| Net (income) loss attributable to noncontrolling interests | 91 | (462) | 206 | (468) | ||||||||
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Net income attributable to |
$ | 4,437 | $ | 1,706 | $ | 5,505 | $ | 4,098 | ||||
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Basic earnings per share attributable to |
$ | 0.07 | $ | 0.03 | $ | 0.09 | $ | 0.07 | ||||
| Basic weighted average shares | 59,171 | 58,875 | 59,105 | 58,830 | ||||||||
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Diluted earnings per share attributable to |
$ | 0.07 | $ | 0.03 | $ | 0.09 | $ | 0.07 | ||||
| Diluted weighted average shares | 59,534 | 59,184 | 59,493 | 59,228 | ||||||||
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Reconciliation of Net Income attributable to |
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| Three Months Ended | Six Months Ended | |||||||||||
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June 30, | |||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
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Net income attributable to |
$ | 4,437 | $ | 1,706 | $ | 5,505 | $ | 4,098 | ||||
| Adjusted for: | ||||||||||||
| Loss on extinguishment of debt | - | - | - | 5,145 | ||||||||
| Interest expense—net | 5,383 | 4,911 | 10,642 | 10,861 | ||||||||
| Income tax provision | 2,768 | 1,455 | 3,332 | 2,982 | ||||||||
| Depreciation and amortization | 8,359 | 9,238 | 16,123 | 18,804 | ||||||||
| Adjusted EBITDA | $ | 20,947 | $ | 17,310 | $ | 35,602 | $ | 41,890 | ||||
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| Selected Balance Sheet Information | ||||||
| (Unaudited and in thousands) | ||||||
| Period Ended | ||||||
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December 31, | |||||
| 2012 | 2011 | |||||
| Cash and cash equivalents | $ | 70,791 | $ | 113,288 | ||
| Total current assets | 326,205 | 325,778 | ||||
| Total assets | 789,960 | 788,460 | ||||
| Total short-term debt | 2,658 | 3,033 | ||||
| Total current liabilities | 130,786 | 130,526 | ||||
| Long-term debt | 252,500 | 252,558 | ||||
| Total equity | 295,601 | 292,537 | ||||
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| Supplementary financial data | ||||||||||||
| (Unaudited and in thousands) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
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June 30, | |||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Net cash flows provided by (used in) operating activities | $ | 3,059 | $ | (4,894) | $ | (15,185) | $ | (10,445) | ||||
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| Revenue and Backlog Data | ||||||||||||
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| Three Months Ended | Six Months Ended | |||||||||||
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| Revenues (in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||
| Dredging: | ||||||||||||
| Capital - U.S. | $ | 44,703 | $ | 44,480 | $ | 71,610 | $ | 90,509 | ||||
| Capital - foreign | 20,848 | 16,065 | 38,873 | 37,936 | ||||||||
| Beach nourishment | 40,458 | 28,376 | 71,641 | 46,233 | ||||||||
| Maintenance | 20,006 | 28,703 | 59,239 | 75,942 | ||||||||
| Rivers & lakes | 8,757 | 7,461 | 15,770 | 11,062 | ||||||||
| Total dredging revenues* | 134,772 | 125,085 | 257,133 | 261,682 | ||||||||
| Demolition | 31,760 | 29,874 | 64,306 | 48,615 | ||||||||
| Total revenues | $ | 166,532 | $ | 154,959 | $ | 321,439 | $ | 310,297 | ||||
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Note: Dredging contract revenues for the three and six months ended
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| As of | ||||||||||||
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| Backlog (in thousands) | 2012 | 2011 | 2011 | |||||||||
| Dredging: | ||||||||||||
| Capital - U.S. | $ | 104,283 | $ | 109,897 | $ | 49,086 | ||||||
| Capital - foreign | 225,999 | 78,379 | 53,941 | |||||||||
| Beach nourishment | 34,111 | 84,607 | 62,228 | |||||||||
| Maintenance | 10,907 | 31,293 | 12,935 | |||||||||
| Rivers & lakes | 23,167 | 15,256 | 18,355 | |||||||||
| Total dredging backlog | 398,467 | 319,432 | 196,545 | |||||||||
| Demolition | 56,786 | 50,672 | 74,087 | |||||||||
| Total backlog | $ | 455,253 | $ | 370,104 | $ | 270,632 | ||||||
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| Full Year Adjusted EBITDA Guidance Reconciliation to Net Income | ||||||
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For the Year Ended |
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| Lower | Upper | |||||
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Estimated Net income attributable to |
$ | 18,920 | $ | 23,225 | ||
| Adjusted for estimated: | ||||||
| Interest expense—net | 21,860 | 21,860 | ||||
| Income tax expense | 11,845 | 14,540 | ||||
| Depreciation and amortization | 40,375 | 40,375 | ||||
| Adjusted EBITDA Guidance | $ | 93,000 | $ | 100,000 | ||
630-574-3012
Source:
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