Form 8-K
0001372020 False 0001372020 2020-08-04 2020-08-04 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

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):  August 4, 2020

_______________________________

Great Lakes Dredge & Dock Corporation

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-3322520-5336063
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock (Par Value $0.0001)GLDDNasdaq Stock Market, LLC

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

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 August 4, 2020 Great Lakes Dredge & Dock Corporation issued an earnings release announcing its financial results for the three and six months ended June 30, 2020 and announcing a conference call and webcast to be held at 9:00 a.m. (C.D.T.) on Tuesday, August 4, 2020 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 August 4, 2020 announcing financial results for the three and six months ended June 30, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

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: August 4, 2020By: /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 August 4, 2020 announcing financial results for the three and six months ended June 30, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

EdgarFiling

EXHIBIT 99.1

Great Lakes Reports Second Quarter Results

Second quarter income from continuing operations of $9.0 million
Year to date income from continuing operations of $42.9 million
Second quarter adjusted EBITDA from continuing operations of $28.1 million
Year to date adjusted EBITDA from continuing operations of $89.5 million
Cash position of $233.5 million at June 30, 2020

OAK BROOK, Ill., Aug. 04, 2020 (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 ended June 30, 2020.

Second Quarter 2020 Highlights

Management Commentary

Lasse Petterson, Chief Executive Officer and President commented, “At GLDD we have been fortunate to be able to continue working as a federally-designated “Critical Infrastructure” company. As such, during this unprecedented COVID-19 pandemic, we have remained focused on strong project performance while ensuring the safety and continued protection of our crew members and employees.

Taking into account current circumstances, the Company’s financial results in the second quarter of 2020 were lower than prior year, but Great Lakes had an active and solid first half of the year, resulting in income from continuing operations of $42.9 million, a $10.9 million or a 34% increase over the prior year. Year to date adjusted EBITDA from continuing operations was $89.5 million, a $13.6 million or 17.9% increase over 2019. As we noted in our last earnings release, planned dry dockings of certain vessels had an expected impact on second quarter results. In addition, the Company also pushed drydock days from the first quarter into the second quarter. The effects of the drydocks were offset with better than anticipated productivity on the West of Shinnecock Inlet project, the Jacksonville deepening, and additional work on the Delaware River Reach B deepening project.

The Company ended the second quarter with a strong net cash position, balance sheet and substantial liquidity. Great Lakes continues to be well positioned for changes in the current economic environment and to strategically invest in our fleet. In June, we announced the execution of a contract with Conrad Shipyard in Louisiana, to build a 6,500 cubic yard hopper dredge, with expected delivery in the first quarter of 2023. This highly automated new build vessel will increase the capabilities of our hopper fleet in the coastal protection and maintenance markets as well as address specific needs in the growing offshore wind market. 

Through the first half of 2020, our project work has remained largely uninterrupted by the pandemic, and the U.S. Army Corps of Engineers is continuing to advertise new projects. We remain confident in our 2020 outlook, however, we continue to actively investigate safety and operational contingency plans to be able to respond to potential changes to the evolving pandemic and economic environment.”

Quarterly Results

Market Update

As our country is still facing the challenges of COVID-19, the dredging industry, deemed an essential service, continues to operate and work on critical and needed infrastructure projects. These projects include continued port deepening projects, as well as coastal protection and restoration projects. The U.S. Army Corps of Engineers oversees the majority of these infrastructure projects and in this capacity has continued to follow their bid schedule and prioritize all types of dredging including port maintenance and expansion and coastal protection projects that are necessary to avoid potential storm damage during the upcoming hurricane season.

GLDD remains committed to maintaining the health and safety of our team members through an Incident and Injury Free® (IIF®) safety management program. This value-based approach has allowed us to respond quickly and effectively to the COVID-19 pandemic and any challenges as a result of the pandemic.

During the second quarter of 2020, the domestic bid market was greater than the prior year with $428.6 million in total project bids of which Great Lakes won $92.5 million during the quarter, comprised of capital, maintenance and coastal protection projects. Subsequent to the quarter end, Great Lakes was awarded $63.4 million in project work and an additional $32 million in low bids pending award. We continue to be confident in the market for the remainder of the year and expect it to be as strong as 2019. We have seen support for the dredging industry in the CARES Act, which includes a provision that lifts caps on the Harbor Maintenance Trust Fund, and the 2021 House Appropriations Bill, introduced in July 2020, showed an increase of $1.7 billion above the President’s budget request for the U.S. Army Corps of Engineers. Projects coming into the market pipeline include additional phases of Charleston, Jacksonville and Corpus Christi deepenings, as well as new deepenings for ports in Mobile, Alabama and the Sabine-Neches in Texas.

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, August 4, 2020 at 9:00 a.m. C.D.T (10:00 a.m. E.S.T.). The call in number is (877) 377-7553 and Conference ID is 1658815. The conference call will be available by replay until Thursday, August 6, 2020 by calling (855) 859-2056 and providing Conference ID 1658815. 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.

Classification of Environmental and Infrastructure Business

During the second quarter of 2019, the Company completed the sale of its historical environmental & infrastructure business. The historical environmental & infrastructure segment has been retrospectively presented as discontinued operations, and as such is no longer reflected in continuing operations.

Use of Non-GAAP measures

Adjusted EBITDA from continuing operations, as provided herein, represents net income (loss) from continuing operations, 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 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. In addition, the Company has a long history of performing significant international projects. The Company employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its over 130-year history, the Company has never failed to complete a marine project. Great Lakes owns and operates the largest and most diverse fleet in the U.S. dredging industry, comprised of over 200 specialized vessels. 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. 

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: impacts resulting from or attributable to the COVID-19 pandemic, 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 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, 2019, Item 1A. “Risk Factors” of Great Lakes’ Quarterly Report on Form 10-Q for the quarter ended March31,2020 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 
Condensed Consolidated Statements of Operations 
(Unaudited and in thousands, except per share amounts) 
                
 Three Months Ended  Six Months Ended 
 June 30,  June 30, 
  2020   2019   2020   2019 
Contract revenues$167,920  $184,811  $385,615  $377,448 
Gross profit 33,016   37,486   101,490   87,363 
General and administrative expenses 14,804   14,613   30,375   29,438 
(Gain) loss on sale of assets—net (39)  81   (184)  360 
Operating income 18,251   22,792   71,299   57,565 
Interest expense—net (6,725)  (7,188)  (13,355)  (14,739)
Other income (expense) 565   123   (556)  295 
Income from continuing operations before income taxes 12,091   15,727   57,388   43,121 
Income tax provision (3,131)  (4,230)  (14,441)  (11,076)
Income from continuing operations 8,960   11,497   42,947   32,045 
Loss from discontinued operations, net of income taxes    (3,251)     (6,631)
Net income$8,960  $8,246  $42,947  $25,414 
                
Basic earnings per share attributable to continuing operations$0.14  $0.18  $0.66  $0.51 
Basic loss per share attributable to discontinued operations, net of tax    (0.05)     (0.10)
Basic earnings per share$0.14  $0.13  $0.66  $0.41 
Basic weighted average shares 64,864   63,605   64,659   63,243 
                
Diluted earnings per share attributable to continuing operations$0.14  $0.18  $0.65  $0.50 
Diluted loss per share attributable to discontinued operations, net of tax    (0.05)     (0.10)
Diluted earnings per share$0.14  $0.13  $0.65  $0.40 
Diluted weighted average shares 65,758   64,990   65,802   64,654 



Great Lakes Dredge & Dock Corporation 
Reconciliation of Net Income to Adjusted EBITDA from Continuing Operations 
(Unaudited and in thousands) 
                
 Three Months Ended  Six Months Ended 
 June 30,  June 30, 
  2020   2019   2020   2019 
Income from continuing operations 8,960   11,497   42,947   32,045 
Adjusted for:               
Interest expense—net 6,725   7,188   13,355   14,739 
Income tax provision 3,131   4,230   14,441   11,076 
Depreciation and amortization 9,256   9,096   18,707   18,001 
Adjusted EBITDA from continuing operations$28,072  $32,011  $89,450  $75,861 



Great Lakes Dredge & Dock Corporation 
Selected Balance Sheet Information 
(Unaudited and in thousands) 
        
 Period Ended 
 June 30,  December 31, 
 2020  2019 
        
Cash and cash equivalents$233,527  $186,995 
Total current assets 347,836   300,712 
Total assets 948,068   897,552 
Total current liabilities 196,470   203,933 
Long-term debt 323,289   322,843 
Total equity 321,002   279,399 


Great Lakes Dredge & Dock Corporation
Revenue and Backlog Data
(Unaudited and in thousands)
           
 Three Months Ended  Six Months Ended 
 June 30,  June 30, 
Revenues2020  2019  2020  2019 
Dredging:               
Capital - U.S.$63,440  $59,406  $146,989  $152,150 
Capital - foreign 3,981   18,640   10,843   26,969 
Coastal protection 56,038   58,195   135,888   91,938 
Maintenance 41,968   30,188   84,353   59,837 
Rivers & lakes 2,493   18,382   7,542   46,554 
Total revenues$167,920  $184,811  $385,615  $377,448 
                


 As of 
 June 30,  December 31,  June 30, 
Backlog2020  2019  2019 
Dredging:           
Capital - U.S.$345,901  $347,377  $311,380 
Capital - foreign 19,717   30,571   49,014 
Coastal protection 21,967   141,039   67,368 
Maintenance 25,782   60,891   39,224 
Rivers & lakes 10,036   9,528   31,103 
Total backlog$423,403  $589,406  $498,089 


For further information contact:
Tina Baginskis
Director, Investor Relations
630-574-3024