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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): February 20, 2019  

Great Lakes Dredge & Dock Corporation
(Exact Name of Registrant as Specified in Charter)

Delaware001-3322520-5336063
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

2122 York Road, Oak Brook, Illinois 60523
(Address of Principal Executive Offices) (Zip Code)

(630) 574-3000
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On February 20, 2019, Great Lakes Dredge & Dock Corporation issued an earnings release announcing its financial results for the three and twelve months ended December 31, 2018, and announcing a conference call and webcast to be held at 9:00 a.m. (C.S.T.) on Wednesday, February 20, 2019 to discuss these results.  A copy of the earnings release is furnished as Exhibit 99.1 and incorporated herein by reference.

The information in this Form 8-K and Exhibit 99.1 are furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01. Financial Statements and Exhibits.

(d)           Exhibits

The following exhibit is furnished herewith:

99.1         Earnings Release of Great Lakes Dredge & Dock Corporation dated February 20, 2019 announcing financial results for the three and twelve months ended December 31, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Great Lakes Dredge & Dock Corporation
   
  
Date: February 20, 2019By: /s/ Mark W. Marinko        
  Mark W. Marinko
  Senior Vice President and Chief Financial Officer
  

EXHIBIT INDEX

 

Number Exhibit
   
99.1 Earnings Release of Great Lakes Dredge & Dock Corporation dated February 20, 2019 announcing financial results for the three and twelve months ended December 31, 2018.


EdgarFiling

EXHIBIT 99.1

Great Lakes Reports Strong Fourth Quarter and Full Year Results

Full year net income from continuing operations $11.0 million

Full year Adjusted EBITDA from continuing operations, excluding restructuring $109.8 million

Net debt reduction of $115 million for the full year

Backlog of over $707 million as of year-end 2018, up nearly $200 million from the prior year

Expects to divest Environmental and Infrastructure business in 2019 to focus on core dredging operations

OAK BROOK, Ill., Feb. 20, 2019 (GLOBE NEWSWIRE) -- Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest provider of dredging services in the United States, today reported financial results for the quarter and year ended December 31, 2018.

As of December 31, 2018, the Company has concluded that it intends to sell the Environmental and Infrastructure (“E&I”) business during the first half of 2019. Based on this decision, this business has been classified as an asset held for sale and all results of this business have been reflected as discontinued operations as of December 31, 2018. Consequently, the financial results for continuing operations reported within this earnings release do not include the E&I segment.

Fourth Quarter 2018 Highlights

Full Year 2018 Highlights

Balance Sheet & Capital Expenditures

Backlog

Strategic Initiatives

Management Commentary

Chief Executive Officer Lasse Petterson commented, “2018 was a transformational year at Great Lakes. We saw an increase of $26.4 million in net income from continuing operations and $65.2 million in Adjusted EBITDA from continuing operations. We also made significant progress on our goal to pay down debt with a reduction in net debt of $115 million, resulting in a net debt to Adjusted EBITDA ratio of 2.98x. These significant improvements were a result of strong domestic dredging performance as well as the success of our asset rationalization and cost reduction program. Our very strong operational performance is a validation of our positioning in the dredging marketplace as well as the tremendous efforts and focus turned in by our outstanding employees. Hand in hand with the strong operational and financial results, our drive to an Incident and Injury Free® (IIF) work  environment continued to progress with a 27% decrease in recordable injuries year-over-year.

As we finished the fourth quarter of 2018, port deepening projects in Charleston, Tampa, Jacksonville and on the Delaware River were in full operation with work continuing into 2019 and 2020. On December 31, 2018, we were awarded the Corpus Christi Port Deepening project, adding a fifth deepening project to our already strong backlog. During 2018, the Company was awarded a total of $455.5 million in capital deepening projects and ended the year with total backlog of $707.1 million. We expect this strong domestic dredging market to continue for the next three to four years as our focus remains on port deepening projects as well as coastal protection after the heavy hurricane seasons of the past two years.  We look forward to working closely with the United States Army Corps of Engineers to ensure safe and successful execution and completion of these projects that are critical to the Nation’s water infrastructure.

In order to ensure proper strategic focus and utilization of our capital resources, we initiated a strategic review to determine the best options for the E&I business and concluded that it does not align well enough with our dredging business to continue operating it under our portfolio of assets. We have hired a financial advisor to assist in the divestiture and expect to sell the E&I business during the first half of 2019.”

Operational Update

Consistent with the 2017 year-end earnings release, the Company has chosen to exclude restructuring charges in certain comparisons to the prior year.  As discussed in the “Use of Non-GAAP measures” disclosure, certain pieces of the discussion below remove the impact of these restructuring charges. Reconciliations to results prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") are provided within the schedules attached and the comparable GAAP measures are provided in the text above. Also, beginning in 2018, the Company chose to account for plant and overhead in the same interim period in which costs were spent as opposed to the accrual / deferral method previously used. As required by guidance, the Company has recast the prior interim period as if this accounting standard had always been in place for all periods presented.

Fourth Quarter

Full Year 2018

Market Update

The domestic dredging bid market remained strong during the fourth quarter of 2018 with a total bid market for the year of $1.8 billion. For the year, GLDD was awarded 45% of the overall bid market consisting of the following types of work:

The domestic market continues to be driven by the large scale port deepening projects along the east and gulf coasts. We expect multiple project phases of these port deepenings to bid in late 2019 and activity in this market to continue for the next three to four years. Additionally, we are just now beginning to see the impact of work that will be done to renourish the beaches which were damaged by the last two heavy hurricane seasons. We expect to bid on multiple projects under the supplemental appropriation in mid to late 2019. Both the port deepening and beach renourishment projects are imperative to protecting the environments and economies of the port and beach towns along the coasts. We are excited and honored to work with the U.S. Army Corps of Engineers to improve these areas.

In addition to the deepening and coastal protection projects, several larger Liquefied Natural Gas port development projects in support of energy exports are progressing to bid.  Great Lakes’ fleet and safety performance position the Company well to perform in this growing segment.

In the international market, mobilization began on a major land reclamation project in Bahrain with dredging operations commencing in January 2019. We continue to expect the international market to be a break-even contributor in 2019, with potential for market improvement in 2020 and beyond.

The Company will be holding a conference call at 9:00 a.m. C.S.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 Wednesday, February 20, 2019 at 9:00 a.m. C.S.T (10:00 a.m. E.S.T.). The call in number is (877) 377-7553 and Conference ID is 7459137. The conference call will be available by replay until Friday, February 22, 2019 by calling (855) 859-2056 and providing Conference ID 7459137. 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 Non-GAAP measures

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, goodwill or asset impairments and gains on bargain purchase acquisitions. Adjusted EBITDA from continuing operations is not a measure derived in accordance with 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 and investors 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 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.

Starting with our December 2017 year-end earnings release, the Company has chosen to exclude restructuring charges in certain comparisons to the prior year.  This exclusion allows the user to better evaluate the Company’s financial results from operations and drivers of variances from the prior year without the impact of this special item. Restructuring items can include costs of contract revenues (depreciation and other), general and administrative expenses and gains / losses on sale of assets. Reconciliations to results prepared in accordance with GAAP are provided within the schedules attached.

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 employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions.  In its over 128-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. The Company’s Incident-and Injury-Free (IIF®) safety management program is integrated into all aspects of the Company’s culture. The Company’s commitment to the IIF® culture promotes a work environment where employee safety is paramount.  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," “are optimistic,”  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; uncertainties in federal government budgeting; extended federal government shutdowns, which may lead to funding issues, the incurrence of costs without payment or reimbursement under our contracts, and delays or cancellations of key projects; the risk that the President of the United States may divert funds away from the Army Corps of Engineers in response to a national emergency; 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; the timing of our performance on 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 and declining relationships amongst certain governments in the Middle East and the impact this may have on infrastructure investment, asset value of such operations, and local licensing, permitting and royalty issues; increased cost of certain material used in our operations due to newly imposed tariffs; a significant negative change to large, single customer contracts from which a significant portion of our international revenue is derived; changes in previous-recorded net revenue and profit as a result of the significant estimates made in connection with our methods of accounting for recognizing revenue; 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 and risks associated with draws by the surety on outstanding bonds or calls by the beneficiary on outstanding 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, including potential mechanical and engineering issues; 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; uncertainties of the impact of the Tax Cuts and Jobs Act and implementation of certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act; losses attributable to our investments in privately financed projects and the likelihood of realizing, and amount of, expected restructuring charges to be realized in connection with the restructuring activities; our ability to realize the expected benefits from our restructuring activities; our ability to find a suitable acquiror and consummate the disposition of our E&I segment; uncertain risks, costs and impacts to the Company in connection with the disposition of our E&I segment; and the loss on disposition of assets held for sale is subject to change prior to completion of the disposition of our E&I segment and could differ materially from the Company’s estimate. 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, 2017, 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.


  
Great Lakes Dredge & Dock Corporation and Subsidiaries 
Condensed Consolidated Statements of Operations 
(Unaudited and in thousands, except per share amounts) 
                
 Three Months Ended  Twelve Months Ended 
 December 31,  December 31, 
  2018  2017   2018  2017 
Contract revenues$173,231  $152,736  $620,795  $592,159 
Gross profit (loss) 35,614   (5,917)  111,460   42,730 
General and administrative expenses 15,440   13,729   55,108   57,235 
Loss on sale of assets—net 3,466   4,571   3,731   4,789 
Total operating income (loss) 16,708   (24,217)  52,621   (19,294)
Other income (expense)               
Interest expense—net (7,876)  (7,612)  (33,578)  (26,032)
Equity in loss of joint ventures —   (43)  —   (1,484)
Loss on extinguishment of debt —   —   —   (2,330)
Other income (expense) (629)  (165)  (2,590)  11 
Income (loss) from continuing operations before income taxes 8,203   (32,037)  16,453   (49,129)
Income tax (provision) benefit (3,241)  27,184   (5,437)  33,761 
Income (loss) from continuing operations$4,962  $(4,853) $11,016  $(15,368)
Income (loss) from discontinued operations, net of income taxes (12,662)  (1,683)  (17,309)  (15,892)
Net loss$(7,700) $(6,536) $(6,293) $(31,260)
                
                
Basic earnings (loss) per share attributable to income (loss) from continuing operations$0.08  $(0.08) $0.18  $(0.25)
Basic loss per share attributable to loss on discontinued operations, net of income taxes (0.20)  (0.03)  (0.28)  (0.26)
Basic loss per share$(0.12) $(0.11) $(0.10) $(0.51)
Basic weighted average shares 62,505   61,592   62,236   61,365 
                
Diluted earnings (loss) per share attributable to income (loss) from continuing operations$0.08  $(0.08) $0.17  $(0.25)
Diluted loss per share attributable to loss on discontinued operations, net of income taxes (0.20)  (0.03)  (0.27)  (0.26)
Diluted loss per share$(0.12) $(0.11) $(0.10) $(0.51)
Diluted weighted average shares 63,799   61,592   63,607   61,365 
                


  
Great Lakes Dredge & Dock Corporation and Subsidiaries 
Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations 
(Unaudited and in thousands) 
                
 Three Months Ended  Twelve Months Ended 
 December 31,  December 31, 
  2018  2017   2018  2017 
Net loss$(7,700) $(6,536) $(6,293) $(31,260)
Income (loss) from discontinued operations, net of income taxes$(12,662) $(1,683)  (17,309) $(15,892)
Income (loss) from continuing operations 4,962   (4,853)  11,016   (15,368)
Adjusted for:               
Interest expense—net 7,876   7,612   33,578   26,032 
Income tax provision (benefit) 3,241   (27,184)  5,437   (33,761)
Depreciation and amortization 12,289   20,640   50,389   55,962 
Loss on extinguishment of debt —   —   —   2,330 
Adjusted EBITDA from continuing operations$28,368  $(3,785) $100,420  $35,195 
Excluded for:               
Impact of restructuring 4,592   20,360   9,387   21,982 
Adjusted EBITDA from continuing operations, excluding restructuring$32,960  $16,575  $109,807  $57,177 
                


  
Great Lakes Dredge & Dock Corporation and Subsidiaries 
Selected Balance Sheet Information 
(Unaudited and in thousands) 
        
 Period Ended 
 December 31,  December 31, 
 2018  2017 
        
Cash and cash equivalents$34,458  $15,852 
Total current assets 206,698   262,184 
Total assets 730,271   832,357 
Total short-term debt 11,500   1,212 
Total current liabilities 163,121   150,250 
Total long-term debt 321,950   428,141 
Total equity 214,928   221,296 
        


  
Great Lakes Dredge & Dock Corporation and Subsidiaries 
Revenue and Backlog Data 
(Unaudited and in thousands) 
                
 Three Months Ended  Twelve Months Ended 
 December 31,  December 31, 
Revenues2018  2017  2018  2017 
                
  Capital - U.S.$80,500  $56,479  $333,037  $185,113 
  Capital - foreign 241   4,883   14,088   42,306 
  Coastal protection 53,250   49,705   175,923   191,070 
  Maintenance 14,966   36,391   53,427   134,923 
Rivers & lakes 24,274   5,278   44,320   38,747 
Total revenues 173,231   152,736   620,795   592,159 
                


 As of 
 December 31,  December 31, 
Backlog2018  2017 
        
  Capital - U.S.$447,139  $383,577 
  Capital - foreign 73,112   8,575 
  Coastal protection 81,068   76,460 
  Maintenance 56,189   23,662 
Rivers & lakes 49,583   19,046 
Total backlog$707,091  $511,320 


For further information contact:
Abby Sullivan
Investor Relations
630-574-3024