Great Lakes Dredge & Dock Corporation Reports Strong 2009 First Quarter ResultsOAK BROOK, Ill.--(BUSINESS WIRE)--May. 7, 2009--
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 services, today reported
financial results for the quarter ended March 31, 2009.
Commentary
Douglas B. Mackie, President and Chief Executive Officer, said, “Great
Lakes achieved record revenue this quarter as a result of solid year-end
backlog coupled with an active first quarter domestic bid market. Gross
profit margin strengthened due to increased fleet utilization and
operating efficiencies on several domestic projects. This occurred
despite a margin reduction on our Diyar contract in the Middle East
during the quarter. The success of this first quarter was a testament to
what Great Lakes can achieve when we have high utilization including
favorable weather and minimal mobilization and mechanical downtime.”
2009 First Quarter Operating Results
Total revenue for the quarter ended March 31, 2009 was $179.2 million up
32% from $135.7 million for the first quarter of 2008. Dredging revenue
of $166.3 million increased 66% compared with the 2008 first quarter as
fleet utilization was improved across all the dredging sectors. In
addition, during last year’s first quarter, utilization was negatively
impacted by the temporary loss of the dredge New York and downtime
related to the mobilization of several vessels to the Middle East. For
the 2009 quarter, domestic capital operations contributed $54.5 million
and foreign operations generated $44.3 million in revenue. Work
continued on several domestic capital projects in the Ports of New York,
New Jersey and Tampa, along the Columbia River in Oregon and for coastal
restoration in Louisiana as well as the Diyar project in Bahrain.
Maintenance work was a big contributor to the Company’s results, more
than doubling the 2008 first quarter maintenance revenue of $18.2
million. A decrease in demolition revenue to $12.9 million, from $35.5
million a year ago, partially offset the strong dredging quarter. In the
first quarter of 2008 the demolition segment was working on a large
project that contributed over $13 million in revenue for that quarter as
well as two other projects that had revenue of over $3 million each.
There were no projects of that size in the first quarter of 2009.
Gross profit increased to $27.0 million for the first quarter 2009 from
$12.0 million a year earlier. Gross profit margin (gross profit divided
by revenue) reached 15.1% versus 8.8% last year, due to increases in
fleet utilization and operating efficiencies on certain domestic
projects which more then offset the reduction in the Diyar contract
margin. Gross profit in the demolition segment was down, due to the
decrease in activity and a reduction in the price of scrap. In addition,
a reduction in margin was taken on a demolition contract related to a
large development project that has been delayed due to the economic
downturn.
General and administrative expenses were on par with the prior year as
the Company has worked to control costs throughout the organization.
Consequently, operating income reached $16.4 million, up from $1.8
million in last year’s first quarter.
Net interest expense was up $0.6 million for the 2009 quarter. The
Company terminated its interest rate swap agreements in December 2008,
which in recent quarters had contributed gains to offset interest
expense. Consequently, there was not a gain recognized during this
year’s first quarter as there had been last year. The Company recognized
a $0.6 million loss from its 50% owned joint venture, Amboy Aggregates
(“Amboy”). Amboy’s operations have been negatively impacted by the
slowdown in housing and road construction.
First quarter 2009 pretax earnings were $11.6 million, compared with a
loss of $1.7 million last year. Net income attributable to Great Lakes
Dredge & Dock Corporation for the 2009 first quarter was $7.3 million,
or $0.13 per diluted share, versus a net loss of $1.2 million, or
($0.02) per diluted share, a year ago. EBITDA (as defined below) was
$28.4 million for the 2009 quarter compared with $9.4 million in the
previous year, again driven by strong operations in the current quarter,
versus last year’s first quarter which was impacted by much lower
utilization.
As of March 31, 2009, senior and subordinated debt, net of $6.3 million
in cash and cash equivalents, was $229.4 million including $60.7 million
of borrowings under the revolving credit facility. The amount
outstanding on our revolving credit facility increased from the year end
balance of $41.5 million due to the increase in quarterly operating
activity and the continued slow payment on foreign accounts receivable.
At quarter end, outstanding performance letters of credit totaled $43.3
million, including $27.6 million outstanding on the Company’s revolving
credit facility. The Company’s $155 million revolving credit facility
matures in June 2012 and includes an $85 million sublimit for the
issuance of letters of credit. At March 31, 2009 the Company had $59.4
million of borrowings available under this facility, after giving effect
to $7.3 million of unavailable commitment due to a defaulting lender.
First Quarter 2009 Bid Market/Backlog
The first quarter domestic bid market including capital, beach and
maintenance work totaled $182 million, of which maintenance projects
accounted for 57%. The Company won 51% of the total bid market,
including 44% of the maintenance work bid and 62% of the capital work
that included new work bid and options awarded on projects in the
Company’s backlog.
Contracted dredging backlog as of March 31, 2009 was $344 million,
compared with $418 million at December 31, 2008. Included in the March
31, 2009 amount is approximately $57 million remaining on the Diyar land
reclamation project in Bahrain, after a similar amount was reclassified
from backlog to options pending status. This concession allows the
customer to control the timing of the completion of this project. The
March 31, 2009 dredging backlog does not reflect approximately $63
million of domestic low bids pending award and additional phases
(“options”) pending on projects currently in backlog and approximately
$57 million in options on the Diyar contract. The December 31, 2008
dredging backlog did not include approximately $107 million of domestic
low bids pending award and options on projects in backlog at that time.
However, year end backlog did include the approximately $57 million of
the Diyar work we reclassified as an option in the first quarter of this
year.
Demolition services backlog at March 31, 2009 was $24.1 million,
compared with $23.5 million at December 31, 2008. The Demolition segment
is currently expanding into New York and other New England states.
Commentary
Doug Mackie continued, “As discussed last quarter, the American Recovery
and Reinvestment Act is a very encouraging development for the domestic
dredging market. Last week the Army Corps of Engineers published their
list of projects to be funded under the stimulus plan. Based on our
review of this list, there appears to be approximately $350 to $400
million of dredging projects that must be awarded within the next 18
months.
“With regard to our opportunities in the Middle East we are monitoring
the situation closely, recognizing that although significant long term
prospects remain, the short term is likely to be less predictable until
the economic environment stabilizes. In addition, we are looking to
other opportunities both domestically and internationally to utilize the
dredges currently situated in the Middle East.
“We are very excited about the record first quarter we achieved,
understanding there are still several unknowns that may impact this
year, either positively or negatively. Great Lakes has always excelled
at making adjustments to meet the challenges of constantly changing
market dynamics. Today is no exception. We will implement measured
actions to take full advantage of the best opportunities to employ our
fleet worldwide. Given our recent investment in upgrading the
capabilities of our dredging fleet, we feel particularly well positioned
to make the most of new and emerging opportunities for Great Lakes
Dredge & Dock Corporation in 2009.”
Use of EBITDA
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. 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 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 EBITDA
only as a supplement. 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 Thursday, May 7 at 10:00 a.m. C.D.T. The call in number is
866.383.8008 and passcode is 88196464. The call can also be heard on the
Company’s website, 0Hwww.gldd.com
under Events and 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 888-286-8010 and
providing passcode 56252492.
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, averaging 30% of its
dredging revenues over the last three years. The Company is also one of
the largest U.S. providers of commercial and industrial demolition
services primarily in the Northeast. Additionally, the Company owns a
50% interest in a marine sand mining operation in New Jersey which
supplies sand and aggregate used for road and building construction.
Great Lakes has a 119-year history of never failing to complete a marine
project and owns the largest and most diverse fleet in the industry,
comprised of over 180 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," "will," "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’
substantial leverage, fixed price contracts, dependence on government
contracts and funding, bonding requirements and obligations,
international operations, 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, 2008, 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
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Consolidated Statement of Operations
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(Unaudited and in thousands, except per share data)
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Three Months Ended
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March 31,
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2009
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2008
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Revenues
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$ 179,203
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$ 135,721
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Gross profit
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27,037
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11,972
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General and administrative
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(10,399
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)
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(10,154
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)
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Amortization of intangible assets
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(193
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)
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(66
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)
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Operating income
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16,445
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1,752
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Other income (expense)
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Interest expense- net
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(4,268
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)
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(3,621
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)
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Equity earnings (loss) in joint ventures
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(556
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)
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134
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Income (loss) before income taxes
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11,621
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(1,735
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)
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Income taxes
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(5,171
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)
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733
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Net income (loss)
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6,450
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(1,002
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)
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Net (income) loss attributable to noncontrolling interest
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864
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(178
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)
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Net income (loss) attributable to Great Lakes Dredge & Dock
Corporation
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$ 7,314
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$ (1,180
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)
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Basic & diluted net income (loss) attributable to Great Lakes Dredge
& Dock Corporation
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Earnings (loss) per share
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$ 0.13
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$ (0.02
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)
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Basic & diluted weighted average shares
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58,488
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58,460
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Great Lakes Dredge & Dock Corporation
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Reconciliation of Net Income (loss) attributable to Great Lakes
Dredge & Dock Corporation to EBITDA
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(Unaudited and in thousands)
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Three Months Ended
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March 31,
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2009
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2008
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Net income (loss) attributable to Great Lakes Dredge & Dock
Corporation
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$ 7,314
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$ (1,180
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)
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Adjusted for:
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Interest expense, net
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4,268
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3,621
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Income taxes
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5,171
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(733
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)
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Depreciation and amortization
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11,646
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7,657
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EBITDA
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$ 28,399
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$ 9,365
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Great Lakes Dredge & Dock Corporation
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Supplementary financial data
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(Unaudited and in thousands)
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Three Months Ended
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March 31,
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2009
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2008
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Net cash flows from (used in) operating activities
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$ (16,202
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)
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$ 9,588
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Great Lakes Dredge & Dock Corporation
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Selected Balance Sheet Information
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(Unaudited and in thousands)
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Period Ended
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March 31,
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December 31,
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2009
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2008
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Cash and marketable securities
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$ 6,287
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$ 10,478
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Total current assets
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260,314
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216,358
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Total assets
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707,642
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666,155
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Total short-term debt
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1,461
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1,553
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Total current liabilities
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140,646
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128,639
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Long-term debt
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235,677
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216,500
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Total equity
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236,356
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228,113
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Source: Great Lakes Dredge & Dock Corporation
Great Lakes Dredge & Dock Corporation
Deborah A.
Wensel, Chief Financial Officer
630-574-3772