Great Lakes Dredge & Dock Corporation
Great Lakes Dredge & Dock CORP (Form: 10-Q, Received: 11/07/2017 17:18:28)

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2017

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       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       No  

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

 

Large Accelerated Filer

 

 

Accelerated Filer

 

Non-Accelerated Filer

 

 (Do not check if a smaller reporting company)

 

Smaller reporting company

 

Emerging Growth Company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

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

As of November 3, 2017, 61,675,785 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, 2017

INDEX

 

 

 

 

 

Page

 

 

 

 

 

 

 

Part I Financial Information (Unaudited)

 

3

 

 

 

 

 

Item 1

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2017 and 2016

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2017 and 2016

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2017 and 2016

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2

 

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

 

29

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

40

 

 

 

 

 

Item 4

 

Controls and Procedures

 

40

 

 

 

 

 

 

 

Part II Other Information

 

41

 

 

 

 

 

Item 1

 

Legal Proceedings

 

41

 

 

 

 

 

Item 1A

 

Risk Factors

 

41

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

 

41

 

 

 

 

 

Item 4

 

Mine Safety Disclosures

 

41

 

 

 

 

 

Item 5

 

Other Information

 

41

 

 

 

 

 

Item 6

 

Exhibits

 

42

 

 

 

 

 

 

 

Signature

 

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,

 

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,469

 

 

$

11,167

 

Accounts receivable—net

 

 

79,336

 

 

 

88,091

 

Contract revenues in excess of billings

 

 

82,642

 

 

 

95,012

 

Inventories

 

 

35,540

 

 

 

37,137

 

Prepaid expenses and other current assets

 

 

47,984

 

 

 

75,819

 

Total current assets

 

 

255,971

 

 

 

307,226

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT—Net

 

 

413,612

 

 

 

413,008

 

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

 

 

84,631

 

 

 

85,075

 

INVENTORIES—Noncurrent

 

 

57,597

 

 

 

52,602

 

INVESTMENTS IN JOINT VENTURES

 

 

7,344

 

 

 

4,734

 

ASSETS HELD FOR SALE—Noncurrent

 

 

8,569

 

 

 

9,299

 

OTHER

 

 

13,967

 

 

 

21,644

 

TOTAL

 

$

841,691

 

 

$

893,588

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

67,230

 

 

$

103,185

 

Accrued expenses

 

 

51,996

 

 

 

69,043

 

Billings in excess of contract revenues

 

 

4,646

 

 

 

5,141

 

Current portion of long term debt

 

 

2,819

 

 

 

2,465

 

Total current liabilities

 

 

126,691

 

 

 

179,834

 

 

 

 

 

 

 

 

 

 

8% SENIOR NOTES

 

 

320,834

 

 

 

 

7 3/8% SENIOR NOTES

 

 

 

 

 

272,998

 

REVOLVING CREDIT FACILITY

 

 

90,000

 

 

 

104,111

 

NOTES PAYABLE

 

 

12,392

 

 

 

13,293

 

DEFERRED INCOME TAXES

 

 

54,491

 

 

 

68,449

 

OTHER

 

 

8,559

 

 

 

7,013

 

Total liabilities

 

 

612,967

 

 

 

645,698

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

Common stock—$.0001 par value; 90,000 authorized, 61,853 and 61,240 shares issued; 61,576 and 60,962 shares outstanding at September 30, 2017 and December 31, 2016, respectively.

 

 

6

 

 

 

6

 

Treasury stock, at cost

 

 

(1,433

)

 

 

(1,433

)

Additional paid-in capital

 

 

289,357

 

 

 

286,303

 

Accumulated deficit

 

 

(58,269

)

 

 

(35,841

)

Accumulated other comprehensive loss

 

 

(937

)

 

 

(1,145

)

Total equity

 

 

228,724

 

 

 

247,890

 

TOTAL

 

$

841,691

 

 

$

893,588

 

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,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract revenues

 

$

163,317

 

 

$

198,869

 

 

$

510,762

 

 

$

554,180

 

Costs of contract revenues

 

 

146,622

 

 

 

178,824

 

 

 

452,111

 

 

 

489,889

 

Gross profit

 

 

16,695

 

 

 

20,045

 

 

 

58,651

 

 

 

64,291

 

General and administrative expenses

 

 

17,522

 

 

 

7,187

 

 

 

51,584

 

 

 

47,027

 

(Gain) loss on sale of assets—net

 

 

175

 

 

 

(2

)

 

 

355

 

 

 

675

 

Operating income (loss)

 

 

(1,002

)

 

 

12,860

 

 

 

6,712

 

 

 

16,589

 

Interest expense—net

 

 

(6,417

)

 

 

(4,819

)

 

 

(18,440

)

 

 

(16,443

)

Equity in earnings (loss) of joint ventures

 

 

26

 

 

 

6

 

 

 

(1,441

)

 

 

19

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

(2,330

)

 

 

 

Other expense

 

 

(266

)

 

 

(637

)

 

 

(343

)

 

 

(1,918

)

Income (loss) from continuing operations before income taxes

 

 

(7,659

)

 

 

7,410

 

 

 

(15,842

)

 

 

(1,753

)

Income tax (provision) benefit

 

 

2,714

 

 

 

(2,850

)

 

 

6,112

 

 

 

559

 

Income (loss) from continuing operations

 

 

(4,945

)

 

 

4,560

 

 

 

(9,730

)

 

 

(1,194

)

Loss from discontinued operations, net of income taxes

 

 

 

 

 

 

 

 

(12,697

)

 

 

 

Net income (loss)

 

$

(4,945

)

 

$

4,560

 

 

$

(22,427

)

 

$

(1,194

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share attributable to continuing operations

 

$

(0.08

)

 

$

0.08

 

 

$

(0.16

)

 

$

(0.02

)

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

 

 

 

 

 

 

 

 

(0.21

)

 

 

 

Basic earnings (loss) per share

 

$

(0.08

)

 

$

0.08

 

 

$

(0.37

)

 

$

(0.02

)

Basic weighted average shares

 

 

61,462

 

 

 

60,811

 

 

 

61,290

 

 

 

60,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share attributable to continuing operations

 

$

(0.08

)

 

$

0.08

 

 

$

(0.16

)

 

$

(0.02

)

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

 

 

 

 

 

 

 

 

(0.21

)

 

 

 

Diluted earnings (loss) per share

 

$

(0.08

)

 

$

0.08

 

 

$

(0.37

)

 

$

(0.02

)

Diluted weighted average shares

 

 

61,462

 

 

 

61,526

 

 

 

61,290

 

 

 

60,676

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

4


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(4,945

)

 

$

4,560

 

 

$

(22,427

)

 

$

(1,194

)

Currency translation adjustment—net of tax (1)

 

 

(2

)

 

 

39

 

 

 

(24

)

 

 

596

 

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

 

 

1,684

 

 

 

(17

)

 

 

232

 

 

 

(17

)

Other comprehensive income (loss)—net of tax

 

 

1,682

 

 

 

22

 

 

 

208

 

 

 

579

 

Comprehensive income (loss)

 

$

(3,263

)

 

$

4,582

 

 

$

(22,219

)

 

$

(615

)

 

(1)

Net of income tax provision of $13 and $25 for the three months ended September 30, 2017 and 2016, respectively. Net of income tax (provision) benefit of $46 and $(395) for the nine months ended September 30, 2017 and 2016, respectively.

(2)

Net of income tax benefit of $1,098 and $11 for the three months ended September 30, 2017 and 2016, respectively. Net of income tax provision of $151 and $11 for the nine months ended September 30, 2017 and 2016, 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares   of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2017

 

 

61,240

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

286,303

 

 

$

(35,841

)

 

$

(1,145

)

 

$

247,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

208

 

 

 

 

 

 

 

 

 

 

 

 

2,514

 

 

 

 

 

 

 

 

 

2,514

 

Vesting of restricted stock units, including impact of shares withheld for taxes

 

 

147

 

 

 

 

 

 

 

 

 

 

 

 

(328

)

 

 

 

 

 

 

 

 

(328

)

Exercise of options and purchases from employee stock plans

 

 

258

 

 

 

 

 

 

 

 

 

 

 

 

867

 

 

 

 

 

 

 

 

 

867

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,427

)

 

 

 

 

 

(22,427

)

Other comprehensive income—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

208

 

 

 

208

 

BALANCE—September 30, 2017

 

 

61,853

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

289,357

 

 

$

(58,269

)

 

$

(937

)

 

$

228,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2016

 

 

60,709

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

283,247

 

 

$

(27,664

)

 

$

(1,983

)

 

$

252,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

126

 

 

 

 

 

 

 

 

 

 

 

 

2,276

 

 

 

 

 

 

 

 

 

2,276

 

Vesting of restricted stock units, including impact of shares withheld for taxes

 

 

71

 

 

 

 

 

 

 

 

 

 

 

 

(162

)

 

 

 

 

 

 

 

 

(162

)

Exercise of options and purchases from employee stock plans

 

 

309

 

 

 

 

 

 

 

 

 

 

 

 

905

 

 

 

 

 

 

 

 

 

905

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,194

)

 

 

 

 

 

(1,194

)

Other comprehensive income—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

579

 

 

 

579

 

BALANCE—September 30, 2016

 

 

61,215

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

286,266

 

 

$

(28,858

)

 

$

(1,404

)

 

$

254,577

 

 

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,

 

 

 

2017

 

 

2016

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(22,427

)

 

$

(1,194

)

Loss from discontinued operations, net of income taxes

 

 

(12,697

)

 

 

 

Income (loss) from continuing operations

 

$

(9,730

)

 

$

(1,194

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

38,186

 

 

 

45,692

 

Equity in earnings of joint ventures

 

 

(5,726

)

 

 

(6,313

)

Cash distributions from joint ventures

 

 

4,486

 

 

 

3,234

 

Loss on extinguishment of 7 3/8% senior notes

 

 

2,330

 

 

 

 

Deferred income taxes

 

 

(5,904

)

 

 

152

 

Loss on sale of assets

 

 

355

 

 

 

675

 

Gain on adjustment of contingent consideration

 

 

 

 

 

(8,940

)

Amortization of deferred financing fees

 

 

2,468

 

 

 

1,879

 

Unrealized net (gain) loss from mark-to-market valuations of derivatives

 

 

1,747

 

 

 

(5,285

)

Unrealized foreign currency gain

 

 

(64

)

 

 

(213

)

Share-based compensation expense

 

 

2,514

 

 

 

2,276

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

8,794

 

 

 

14,163

 

Contract revenues in excess of billings

 

 

12,409

 

 

 

5,712

 

Inventories

 

 

(3,443

)

 

 

(6,831

)

Prepaid expenses and other current assets

 

 

2,409

 

 

 

(6,839

)

Accounts payable and accrued expenses

 

 

(27,055

)

 

 

(26,317

)

Billings in excess of contract revenues

 

 

(316

)

 

 

2,593

 

Other noncurrent assets and liabilities

 

 

(482

)

 

 

(1,466

)

Net cash flows provided by operating activities of continuing operations

 

 

22,977

 

 

 

12,978

 

Net cash flows used in operating activities of discontinued operations

 

 

(20,900

)

 

 

 

Cash provided by operating activities

 

 

2,077

 

 

 

12,978

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(49,377

)

 

 

(58,842

)

Proceeds from dispositions of property and equipment

 

 

9,198

 

 

 

10,455

 

Changes in restricted cash

 

 

7,035

 

 

 

 

Cash used in investing activities

 

 

(33,144

)

 

 

(48,387

)

 

7


 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of 8% senior notes

 

 

325,000

 

 

 

 

Redemption of 7 3/8% senior notes

 

 

(275,000

)

 

 

 

7 3/8% senior notes tender premium

 

 

(744

)

 

 

 

Deferred financing fees

 

 

(4,522

)

 

 

(332

)

Repayments of long term note payable

 

 

(855

)

 

 

(803

)

Repayments of term loan facility

 

 

 

 

 

(3,750

)

Proceeds from equipment debt

 

 

1,241

 

 

 

 

Repayments of equipment debt

 

 

(1,171

)

 

 

(1,064

)

Taxes paid on settlement of vested share awards

 

 

(328

)

 

 

(162

)

Exercise of options and purchases from employee stock plans

 

 

867

 

 

 

905

 

Borrowings under revolving loans

 

 

89,425

 

 

 

133,000

 

Repayments of revolving loans

 

 

(103,536

)

 

 

(93,000

)

Cash provided by financing activities

 

 

30,377

 

 

 

34,794

 

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

(8

)

 

 

26

 

Net decrease in cash and cash equivalents

 

 

(698

)

 

 

(589

)

Cash and cash equivalents at beginning of period

 

 

11,167

 

 

 

14,184

 

Cash and cash equivalents at end of period

 

$

10,469

 

 

$

13,595

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

20,986

 

 

$

23,846

 

Cash paid (refunded) for income taxes

 

$

574

 

 

$

(226

)