Great Lakes Dredge & Dock Corporation
Great Lakes Dredge & Dock CORP (Form: 10-Q, Received: 11/04/2015 18:04:22)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number: 001-33225

 

Great Lakes Dredge & Dock Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-5336063

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2122 York Road, Oak Brook, IL

 

60523

(Address of principal executive offices)

 

(Zip Code)

(630) 574-3000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer

 

¨

 

Accelerated Filer

 

x

 

 

 

 

 

 

 

Non-Accelerated Filer

 

¨   (Do not check if a smaller reporting company)

 

Smaller reporting company

 

¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

As of October 30, 2015, 60,446,628 shares of the Registrant’s Common Stock, par value $.0001 per share, were outstanding.

 

 

 

 


Great Lakes Dredge & Dock Corporation and Subsidiaries

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly Period ended September 30, 2015

INDEX

 

 

 

 

 

Page

 

 

Part I Financial Information (Unaudited)

 

3

 

 

 

 

 

Item 1

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets at September 30, 2015 and December 31, 2014

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2015 and 2014

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2015 and 2014

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2015 and 2014

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

 

 

Item 4

 

Controls and Procedures

 

38

 

 

 

 

 

 

 

Part II Other Information

 

39

 

 

 

 

 

Item 1

 

Legal Proceedings

 

39

 

 

 

 

 

Item 1A

 

Risk Factors

 

39

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

 

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

 

40

 

 

 

 

 

Item 4

 

Mine Safety Disclosures

 

40

 

 

 

 

 

Item 5

 

Other Information

 

40

 

 

 

 

 

Item 6

 

Exhibits

 

41

 

 

 

 

 

 

 

Signature

 

42

 

 

 

 

 

 

 

Exhibit Index

 

43

 

 

 

2


P ART I — Financial Information

Item 1.

Financial Statements.

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)  

 

 

 

September 30,

 

 

December 31,

 

 

 

2015

 

 

2014

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,421

 

 

$

42,389

 

Accounts receivable—net

 

 

143,884

 

 

 

113,188

 

Contract revenues in excess of billings

 

 

66,759

 

 

 

82,557

 

Inventories

 

 

37,250

 

 

 

34,735

 

Prepaid expenses and other current assets

 

 

76,871

 

 

 

69,375

 

Total current assets

 

 

334,185

 

 

 

342,244

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT—Net

 

 

423,157

 

 

 

399,445

 

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

 

 

86,900

 

 

 

95,289

 

INVENTORIES—Noncurrent

 

 

37,508

 

 

 

36,262

 

INVESTMENTS IN JOINT VENTURES

 

 

12,319

 

 

 

7,889

 

OTHER

 

 

11,902

 

 

 

12,105

 

TOTAL

 

$

905,971

 

 

$

893,234

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

109,961

 

 

$

119,971

 

Accrued expenses

 

 

63,978

 

 

 

70,041

 

Billings in excess of contract revenues

 

 

6,451

 

 

 

4,639

 

Current portion of long term debt

 

 

8,369

 

 

 

5,859

 

Total current liabilities

 

 

188,759

 

 

 

200,510

 

 

 

 

 

 

 

 

 

 

7 3/8% SENIOR NOTES

 

 

274,902

 

 

 

274,880

 

REVOLVING CREDIT FACILITY

 

 

28,000

 

 

 

 

NOTES PAYABLE

 

 

52,108

 

 

 

49,497

 

DEFERRED INCOME TAXES

 

 

89,255

 

 

 

92,007

 

OTHER

 

 

20,864

 

 

 

20,377

 

Total liabilities

 

 

653,888

 

 

 

637,271

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

Common stock—$.0001 par value; 90,000 authorized, 60,447 and 60,170 shares

   issued and outstanding at September 30, 2015 and December 31, 2014, respectively.

 

 

6

 

 

 

6

 

Treasury stock, at cost

 

 

(1,107

)

 

 

 

Additional paid-in capital

 

 

282,141

 

 

 

278,166

 

Accumulated deficit

 

 

(26,829

)

 

 

(21,475

)

Accumulated other comprehensive loss

 

 

(2,128

)

 

 

(734

)

Total equity

 

 

252,083

 

 

 

255,963

 

TOTAL

 

$

905,971

 

 

$

893,234

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

3


Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Contract revenues

 

$

220,802

 

 

$

202,198

 

 

$

634,236

 

 

$

561,289

 

Costs of contract revenues

 

 

196,717

 

 

 

177,739

 

 

 

567,182

 

 

 

489,720

 

Gross profit

 

 

24,085

 

 

 

24,459

 

 

 

67,054

 

 

 

71,569

 

General and administrative expenses

 

 

15,277

 

 

 

16,062

 

 

 

48,768

 

 

 

49,850

 

Impairment of goodwill

 

 

 

 

 

 

 

 

2,750

 

 

 

 

(Gain) loss on sale of assets—net

 

 

(884

)

 

 

390

 

 

 

(887

)

 

 

558

 

Operating income

 

 

9,692

 

 

 

8,007

 

 

 

16,423

 

 

 

21,161

 

Interest expense—net

 

 

(7,293

)

 

 

(4,702

)

 

 

(18,490

)

 

 

(14,730

)

Equity in loss of joint ventures

 

 

(2,051

)

 

 

(5,785

)

 

 

(5,765

)

 

 

(9,063

)

Gain on bargain purchase acquisition

 

 

 

 

 

 

 

 

 

 

 

2,197

 

Other income (expense)

 

 

706

 

 

 

384

 

 

 

(353

)

 

 

410

 

Income (loss) from continuing operations before income taxes

 

 

1,054

 

 

 

(2,096

)

 

 

(8,185

)

 

 

(25

)

Income tax (provision) benefit

 

 

(742

)

 

 

1,069

 

 

 

2,831

 

 

 

425

 

Income (loss) from continuing operations

 

 

312

 

 

 

(1,027

)

 

 

(5,354

)

 

 

400

 

Loss from discontinued operations, net of income taxes

 

 

 

 

 

(1,059

)

 

 

 

 

 

(9,118

)

Net income (loss)

 

$

312

 

 

$

(2,086

)

 

$

(5,354

)

 

$

(8,718

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share attributable to continuing

   operations

 

 

 

 

 

(0.01

)

 

 

(0.09

)

 

 

0.01

 

Basic loss per share attributable to discontinued operations, net of tax

 

 

 

 

 

(0.02

)

 

 

 

 

 

(0.15

)

Basic loss per share

 

$

 

 

$

(0.03

)

 

$

(0.09

)

 

$

(0.14

)

Basic weighted average shares

 

 

60,496

 

 

 

60,040

 

 

 

60,411

 

 

 

59,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share attributable to continuing operations

 

 

 

 

 

(0.01

)

 

 

(0.09

)

 

 

0.01

 

Diluted loss per share attributable to discontinued operations, net

   of tax

 

 

 

 

 

(0.02

)

 

 

 

 

 

(0.15

)

Diluted loss per share

 

$

 

 

$

(0.03

)

 

$

(0.09

)

 

$

(0.14

)

Diluted weighted average shares

 

 

60,841

 

 

 

60,040

 

 

 

60,411

 

 

 

60,491

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

4


Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

312

 

 

$

(2,086

)

 

$

(5,354

)

 

$

(8,718

)

Currency translation adjustment—net of tax (1)

 

 

(639

)

 

 

(416

)

 

 

(1,394

)

 

 

(389

)

Net unrealized gain on derivatives—net of tax (2)

 

 

 

 

 

(169

)

 

 

 

 

 

(199

)

Other comprehensive loss—net of tax

 

 

(639

)

 

 

(585

)

 

 

(1,394

)

 

 

(588

)

Comprehensive loss

 

$

(327

)

 

$

(2,671

)

 

$

(6,748

)

 

$

(9,306

)

 

(1)

Net of income tax benefit of $422 and $276 for the three months ended September 30, 2015 and 2014, respectively and $922 and $259 for nine months ended September 30, 2015 and 2014, respectively.

(2)

Net of income tax expense of $111 and $132 for the three and nine months ended September 30, 2014, respectively.

See notes to unaudited condensed consolidated financial statements.

 

 

5


Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands)

 

 

 

Great Lakes Dredge & Dock Corporation shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Shares   of

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Interests

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2015

 

 

60,170

 

 

$

6

 

 

$

 

 

$

278,166

 

 

$

(21,475

)

 

$

(734

)

 

$

 

 

$

255,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

124

 

 

 

 

 

 

 

 

 

2,897

 

 

 

 

 

 

 

 

 

 

 

 

2,897

 

Vesting of restricted stock units,

   including impact of shares withheld

   for taxes

 

 

98

 

 

 

 

 

 

 

 

 

(265

)

 

 

 

 

 

 

 

 

 

 

 

(265

)

Exercise of options and purchases

   from employee stock plans

 

 

268

 

 

 

 

 

 

 

 

 

1,356

 

 

 

 

 

 

 

 

 

 

 

 

1,356

 

Excess income tax benefit from

   share-based compensation

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

(13

)

Purchase of treasury stock

 

 

(213

)

 

 

 

 

 

 

(1,107

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,107

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,354

)

 

 

 

 

 

 

 

 

(5,354

)

Other comprehensive loss—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,394

)

 

 

 

 

 

(1,394

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—September 30, 2015

 

 

60,447

 

 

$

6

 

 

$

(1,107

)

 

$

282,141

 

 

$

(26,829

)

 

$

(2,128

)

 

$

 

 

$

252,083

 

 

 

 

Great Lakes Dredge & Dock Corporation shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Interests

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2014

 

 

59,670

 

 

$

6

 

 

$

 

 

$

275,183

 

 

$

(31,770

)

 

$

(473

)

 

$

(845

)

 

$

242,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

94

 

 

 

 

 

 

 

 

 

1,816

 

 

 

 

 

 

 

 

 

 

 

 

1,816

 

Vesting of restricted stock units,

   including impact of shares withheld

   for taxes

 

 

107

 

 

 

 

 

 

 

 

 

(501

)

 

 

 

 

 

 

 

 

 

 

 

(501

)

Exercise of options and purchases

   from employee stock plans

 

 

265

 

 

 

 

 

 

 

 

 

1,542

 

 

 

 

 

 

 

 

 

 

 

 

1,542

 

Excess income tax benefit from

   share-based compensation

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

45

 

Purchase of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(988

)

 

 

 

 

 

 

 

 

845

 

 

 

(143

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,718

)

 

 

 

 

 

 

 

 

(8,718

)

Other comprehensive loss—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(588

)

 

 

 

 

 

(588

)

BALANCE—September 30, 2014

 

 

60,136

 

 

$

6

 

 

$

 

 

$

277,097

 

 

$

(40,488

)

 

$

(1,061

)

 

$

 

 

$

235,554

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

6


Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2015

 

 

2014

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(5,354

)

 

$

(8,718

)

Loss from discontinued operations, net of income taxes

 

 

 

 

 

(9,118

)

Income (loss) from continuing operations

 

 

(5,354

)

 

 

400

 

Adjustments to reconcile net income (loss) to net cash flows used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

47,747

 

 

 

32,744

 

Equity in loss of joint ventures

 

 

(3,402

)

 

 

9,063

 

Cash distributions from joint ventures

 

 

2,500

 

 

 

 

Deferred income taxes

 

 

(3,031

)

 

 

(11,034

)

(Gain) loss on sale of assets

 

 

(887

)

 

 

558

 

Impairment of goodwill

 

 

2,750

 

 

 

 

Gain on bargain purchase acquisition

 

 

 

 

 

(2,197

)

Gain on adjustment of contingent consideration

 

 

(8,444

)

 

 

 

Amortization of deferred financing fees

 

 

2,126

 

 

 

1,036

 

Unrealized net gain from mark-to-market valuations of derivatives

 

 

(1,479

)

 

 

1,051

 

Unrealized foreign currency gain

 

 

(1,076

)

 

 

(561

)

Share-based compensation expense

 

 

2,897

 

 

 

1,816

 

Excess income tax benefit from share-based compensation

 

 

13

 

 

 

(45

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(31,819

)

 

 

(3,791

)

Contract revenues in excess of billings

 

 

14,328

 

 

 

(18,292

)

Inventories

 

 

(3,761

)

 

 

504

 

Prepaid expenses and other current assets

 

 

(6,727

)

 

 

(2,743

)

Accounts payable and accrued expenses

 

 

(9,896

)

 

 

10,927

 

Billings in excess of contract revenues

 

 

1,657

 

 

 

(1,776

)

Other noncurrent assets and liabilities

 

 

(2,039

)

 

 

(2,369

)

Net cash flows provided by (used in) operating activities of continuing operations

 

 

(3,897

)

 

 

15,291

 

Net cash flows used in operating activities of discontinued operations

 

 

 

 

 

(5,024

)

Cash provided by (used in) operating activities

 

 

(3,897

)

 

 

10,267

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(53,394

)

 

 

(66,433

)

Proceeds from dispositions of property and equipment

 

 

1,167

 

 

 

1,614

 

Payments on vendor performance obligations (Note 9)

 

 

 

 

 

(3,100

)

Payments for acquisitions of businesses

 

 

 

 

 

(2,048

)

Net cash flows used in investing activities of continuing operations

 

 

(52,227

)

 

 

(69,967

)

Net cash flows provided by investing activities of discontinued operations

 

 

 

 

 

5,275

 

Cash used in investing activities

 

 

(52,227

)

 

 

(64,692

)

 

 

 

 

 

 

 

 

 


7


FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Deferred financing fees

 

 

(29

)

 

 

(845

)

Repayments of long term note payable

 

 

(488

)

 

 

 

Taxes paid on settlement of vested share awards

 

 

(265

)