Record Backlog of $741 Million
Provides Adjusted EBITDA Guidance of $97 to $107 Million for Fiscal
Year 2015
OAK BROOK, Ill.--(BUSINESS WIRE)--
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 March 31, 2015.
For the quarter ended March 31, 2015, Great Lakes reported Revenue of
$174.6 million, Net loss of $8.4 million, and Adjusted EBITDA from
continuing operations of $4.4 million.
In the first quarter of 2015, we were awarded $208 million, or 84% of
the domestic dredging bidding market, with the $135 million Savannah
project accounting for a significant portion of our awards. The Savannah
project will commence this summer and is expected to be completed by
summer 2018. We were also awarded a $23 million coastal protection
project in New York and $46 million in maintenance dredging awards.
Chief Executive Officer Jonathan Berger commented, "Our first quarter
performance was impacted by expected business cyclicality losses in the
environmental & remediation segment. The expected operating loss was
further negatively impacted by pending change orders and claims. Change
orders are being negotiated, and we are confident that their resolution
will result in revenues and net income in subsequent quarters that will
partially offset first quarter losses.
"We do not expect the first quarter results to be indicative of the
Company's annual results. Dredging activity has picked up in the second
quarter, with more of our year-end backlog expected to be worked off
compared to the first quarter, and our environmental & remediation
segment is beginning to enter its busy season."
First Quarter 2015 Highlights
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Great Lakes Dredge & Dock Corporation
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Select Income Statement Results
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(Unaudited in 000)
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Three Months Ended
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March 31,
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2015
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2014
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Total
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Envir. &
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Total
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Envir. &
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Total
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Consol.
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Dredging
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Remed.
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Consolidated
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Dredging
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Remed.
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Consolidated
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Variance
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Revenue
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$
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154,128
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$
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21,552
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$
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174,557
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$
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161,960
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$
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12,730
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$
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174,382
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$
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175
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Gross Profit
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18,264
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(7,582
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)
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10,682
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20,856
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51
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20,907
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(10,225
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)
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Gross Profit Margin
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11.8
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%
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-35.2
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%
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6.1
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%
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12.9
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%
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0.4
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%
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12.0
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%
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Operating Income (Loss)
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7,874
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(15,132
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)
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(7,258
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)
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7,429
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(4,544
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)
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2,885
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(10,143
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Note: As a result of intersegment eliminations, the segment
financial information will not sum to the total consolidated results.
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Dredging
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Dredging revenues decreased in the first quarter compared to the first
quarter of the prior year, with lower costal protection and rivers &
lakes dredging revenue partially offset by higher foreign, domestic
capital and maintenance dredging.
-
Gross profit margin decreased slightly during the first quarter 2015
compared to the same quarter last year, primarily as a result of
project mix.
-
Operating income was slightly higher in the first quarter 2015
compared to the prior year quarter. Lower G&A expenses offset the
small decline in gross profit margin.
-
Dredging backlog was $637.0 million at the end of the first quarter,
which is an increase of $42.7 million compared to backlog at December
31, 2014.
Environmental & Remediation
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Segment revenues in the quarter increased $8.8 million over the first
quarter of the prior year.
-
Overhead costs increased $3.6 million in the first quarter compared to
the first quarter of 2014, primarily due to increased personnel costs.
A $1.4 million contract loss at a site redevelopment project further
increased the first quarter loss.
-
In addition to negative gross profit, G&A expenses are higher by $3.0
million compared to first quarter 2014, which includes $1.6 million of
intangible amortization related to the acquisition of Magnus.
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Backlog was $104.2 million at the end of the first quarter.
Total Company
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Net loss (which includes both continuing and discontinued businesses)
was $8.4 million for the first quarter 2015. Included in the current
quarter loss is $1.1 million equity loss of joint ventures related to
the aggregates joint venture that is currently being dissolved, $5.6
million in interest expense, and a $6.0 million income tax benefit.
Net loss for the first quarter last year was $5.2 million, which
includes a $2.7 million loss from discontinued operations and a $1.5
million income tax benefit.
-
Adjusted EBITDA from continuing operations was $4.4 million, down from
$12.0 million in the first quarter of 2014 on lower operating income.
-
Total contracted backlog at quarter end was a record $741.2 million.
-
Total capital expenditures for the quarter were $33.3 million. Capital
expenditures during the first quarter include $15.6 million to
purchase a vessel that was formerly leased, $12.0 million for
supporting growth, which includes $6.8 million for the ATB, and the
remainder for improvements to the fleet. In the prior year quarter,
total capital expenditures were $22.9 million, with $17.5 million
supporting growth, which includes $12.3 million for the ATB, and the
remainder for improvements to the fleet.
-
Cash at March 31, 2015 was $30.6 million, with total debt of $365.1
million ($7.8 million short-term debt and $357.3 million long-term
debt).
Outlook
Mr. Berger stated, "Given our large backlog, we have had a busy start to
the second quarter, and we expect our dredges to be working at an
elevated level through the third quarter. Domestically, dredging is well
underway on some of the large Sandy-related coastal projection projects
in New Jersey that were in backlog at year-end. Only 10% of the $211
million in Sandy-related work was worked off during the first quarter.
In addition, we will continue to execute on the PortMiami deepening,
which is on schedule to be completed towards the end of the summer, as
well as other capital and maintenance projects. Internationally, we will
continue to execute on the Suez Canal widening and deepening project.
Looking beyond the second quarter, we have even more of our fleet
committed during the year than we did at year-end, well positioning the
dredging segment to have a strong year.
"The environmental & remediation segment has backlog of $104 million,
and we anticipate finalizing a work order for approximately $50 million
of work during the second quarter. We will be focused on rationalizing
overhead to better align these costs with anticipated performance.
Finally, we expect seasonality impacts on this segment's performance to
diminish as we move into the second quarter, with performance peaking in
the third quarter."
Guidance
Mr. Berger concluded, "Although not our typical practice, with the added
impact of the Magnus acquisition on our business cyclicality, and given
that this is the first full year of financial reporting with Magnus,
senior management has chosen to provide guidance for fiscal year 2015.
Looking forward to the rest of the year, we expect increased revenue and
earnings in the dredging segment as Sandy and deepening projects
commence and fleet utilization improves. We also expect a significant
improvement from the first quarter in the environmental & remediation
segment's performance as it moves into its busy season and several
remediation projects kick off. The Company expects 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, May 5, 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 37111091. The
conference call will be available by replay until Wednesday, May 6,
2015, by calling (855) 859-2056 and providing Conference ID 37111091.
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 attributable to common stockholders of Great Lakes
Dredge & Dock Corporation, 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) attributable to common
stockholders of Great Lakes Dredge & Dock Corporation in the table of
financial results. 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; 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. 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.
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Great Lakes Dredge & Dock Corporation
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Condensed Consolidated Statements of Operations
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(Unaudited and in thousands, except per share amounts)
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|
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Three Months Ended
|
|
|
March 31,
|
|
|
2015
|
|
2014
|
Contract revenues
|
|
$
|
174,557
|
|
|
$
|
174,382
|
Gross profit
|
|
|
10,682
|
|
|
|
20,907
|
General and administrative expenses
|
|
|
17,948
|
|
|
|
17,870
|
(Gain) loss on sale of assets—net
|
|
|
(8)
|
|
|
|
152
|
Operating income (loss)
|
|
|
(7,258)
|
|
|
|
2,885
|
Other income (expense)
|
|
|
|
|
|
|
|
Interest expense—net
|
|
|
(5,630)
|
|
|
|
(5,016)
|
Equity in loss of joint ventures
|
|
|
(1,098)
|
|
|
|
(1,843)
|
Other income (expense)
|
|
|
(441)
|
|
|
|
65
|
Loss from continuing operations before income taxes
|
|
|
(14,427)
|
|
|
|
(3,909)
|
Income tax benefit
|
|
|
6,037
|
|
|
|
1,453
|
Loss from continuing operations
|
|
|
(8,390)
|
|
|
|
(2,456)
|
Loss from discontinued operations, net of income taxes
|
|
|
-
|
|
|
|
(2,739)
|
Net loss
|
|
$
|
(8,390)
|
|
|
$
|
(5,195)
|
|
|
|
|
|
|
|
|
Basic loss per share attributable to continuing operations
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|
(0.14)
|
|
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|
(0.04)
|
Basic loss per share attributable to discontinued operations, net of
tax
|
|
|
-
|
|
|
|
(0.05)
|
Basic loss
|
|
$
|
(0.14)
|
|
|
$
|
(0.09)
|
Basic weighted average shares
|
|
|
60,265
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|
59,708
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|
|
|
|
|
|
|
|
Diluted loss per share attributable to continuing operations
|
|
|
(0.14)
|
|
|
|
(0.04)
|
Diluted loss per share attributable to discontinued operations, net
of tax
|
|
|
-
|
|
|
|
(0.05)
|
Diluted loss per share
|
|
$
|
(0.14)
|
|
|
$
|
(0.09)
|
Diluted weighted average shares
|
|
|
60,265
|
|
|
|
59,708
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
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Reconciliation of Net loss attributable to Great Lakes Dredge &
Dock Corporation to Adjusted EBITDA from Continuing Operations
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2015
|
|
2014
|
Net loss
|
|
$
|
(8,390
|
)
|
|
$
|
(5,195
|
)
|
Loss from discontinued operations, net of income taxes
|
|
|
-
|
|
|
|
(2,739
|
)
|
Loss from continuing operations
|
|
|
(8,390
|
)
|
|
|
(2,456
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)
|
Adjusted for:
|
|
|
|
|
|
|
Interest expense—net
|
|
|
5,630
|
|
|
|
5,016
|
|
Income tax benefit
|
|
|
(6,037
|
)
|
|
|
(1,453
|
)
|
Depreciation and amortization
|
|
|
13,153
|
|
|
|
10,885
|
|
Adjusted EBITDA from continuing operations
|
|
$
|
4,356
|
|
|
$
|
11,992
|
|
|
|
|
|
|
|
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Great Lakes Dredge & Dock Corporation
|
Selected Balance Sheet Information
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
30,619
|
|
$
|
42,389
|
Total current assets
|
|
|
320,482
|
|
|
342,244
|
Total assets
|
|
|
889,349
|
|
|
893,234
|
Total current liabilities
|
|
|
170,830
|
|
|
200,510
|
Long-term debt
|
|
|
357,280
|
|
|
324,377
|
Total equity
|
|
|
248,553
|
|
|
255,963
|
|
|
|
|
|
|
|
Great Lakes Dredge & Dock Corporation
|
Revenue and Backlog Data
|
(Unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
Revenues
|
|
2015
|
|
2014
|
Dredging:
|
|
|
|
|
|
|
Capital - U.S.
|
|
$
|
47,357
|
|
$
|
34,475
|
Capital - foreign
|
|
|
41,699
|
|
|
16,470
|
Coastal protection
|
|
|
20,072
|
|
|
70,720
|
Maintenance
|
|
|
42,147
|
|
|
36,311
|
Rivers & lakes
|
|
|
2,853
|
|
|
3,984
|
Total dredging revenues
|
|
|
154,128
|
|
|
161,960
|
Environmental & remediation*
|
|
|
21,552
|
|
|
12,730
|
Intersegment revenue
|
|
|
(1,123)
|
|
|
(308)
|
Total revenues
|
|
$
|
174,557
|
|
$
|
174,382
|
|
|
|
|
|
|
|
*Environmental & remediation revenues in 2015 include Magnus which
did not operate as part of the Company prior to November 4, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
Backlog
|
|
2015
|
|
2014
|
|
2014
|
Dredging:
|
|
|
|
|
|
|
|
|
|
Capital - U.S.
|
|
$
|
212,662
|
|
$
|
135,801
|
|
$
|
189,450
|
Capital - foreign
|
|
|
85,851
|
|
|
131,489
|
|
|
98,849
|
Coastal protection
|
|
|
218,552
|
|
|
211,101
|
|
|
76,583
|
Maintenance
|
|
|
26,850
|
|
|
25,108
|
|
|
38,826
|
Rivers & lakes
|
|
|
93,039
|
|
|
90,708
|
|
|
111,441
|
Total dredging backlog
|
|
|
636,954
|
|
|
594,207
|
|
|
515,149
|
Environmental & remediation
|
|
|
104,235
|
|
|
75,349
|
*
|
|
77,363
|
Total backlog
|
|
$
|
741,189
|
|
$
|
669,556
|
|
$
|
592,512
|
|
|
|
|
|
|
|
|
|
|
*December 31, 2014 environmental & remediation backlog includes
backlog acquired by the Company on November 4, 2014 in connection
with the Magnus Pacific Corporation acquisition.
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GLDD FIN

Great Lakes Dredge & Dock Corporation
Mary Morrissey
Investor
Relations
630-574-3467
Source: Great Lakes Dredge & Dock Corporation
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