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Form 8-K

 

 

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): June 9, 2010

 

 

Great Lakes Dredge & Dock Corporation

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   001-33225   20-5336063

(State or other jurisdiction of

Incorporation or Organization)

   (Commission File Number)  

(I.R.S. Employer

Identification No.)

 

 

2122 York Road

Oak Brook, Illinois 60523

(Address of Principal Executive Offices)

(630) 574-3000

(Registrant’s telephone number, including area code)

 

 

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))

 

 

 

Item 7.01 — Regulation FD Disclosure.

On June 9, 2010, Great Lakes Dredge & Dock Corporation (the “Company”) will be participating at the Morgan Joseph 2010 Best Ideas Conference in New York City. Douglas B Mackie, President and Chief Executive Officer and Deborah A. Wensel, Senior Vice President and Chief Financial Officer, are scheduled to speak to investors. The materials to be utilized are attached as Exhibit 99.1 to this report.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01 — Financial Statements and Exhibits

(d) Exhibits

The following exhibit is furnished herewith:

 

99.1    Presentation Materials.

 

2

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
   /s/ Deborah A. Wensel
    

Date: June 9, 2010

    Deborah A. Wensel
   Senior Vice President
   and Chief Financial Officer

3

EXHIBIT INDEX

 

Number

   

Exhibit

99.1    Presentation Materials.
Presentation Materials
June 2010
Morgan Joseph
2010 Best Ideas Conference
Exhibit 99.1

2
Safe Harbor
This
presentation
includes
“forward-looking”
statements
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
Section 21E of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 or in releases
made by the SEC, all as may be amended from time to time.  Such statements include declarations regarding the intent,
belief, or current expectation of the Company and its management.  The Company cautions that any such forward-looking
statements
are
not
guarantees
of
future
performance,
and
involve
a
number
of
risks,
assumptions
and
uncertainties
that
could cause actual results of the Company and its subsidiaries, or industry results, to differ materially from those
expressed or implied by any forward-looking statements contained herein, including, but not limited to, as a result of the
factors, risks and uncertainties described in other securities filings of the Company made with the SEC, such as the
Company’s most recent Report on Form 10-K.  You should not place undue reliance upon these forward-looking
statements.  Forward-looking statements provided herein are made only as of the date hereof or as a specified date herein
and the Company does not have or undertake any obligation to update or revise them, unless required by law.

Key Investment Highlights
Douglas Mackie
President & CEO

4
Great Lakes Dredge & Dock
Foreign
16%
Demolition
8%
Beach
24%
Capital
27%
Maintenance
25%
2009 REVENUE BY WORK TYPE
$622 million
2009 BID MARKET SHARE
Bid Market: $1,137 million
Norfolk
7%
Other
9%
Great Lakes
47%
Weeks
29%
Manson
8%
Foreign
21%
Demolition
8%
Beach
10%
Capital
33%
Maintenance
28%
Q1 2010 YTD REVENUE BY WORK TYPE
$161 million
Q1 2010 YTD BID MARKET SHARE
Bid Market: $211 million
Great Lakes
16%
Weeks
36%
Other
42%
Norfolk
6%

5
Great Lakes Dredge & Dock
Largest provider of dredging, land reclamation and beach nourishment
services in the U.S.
Leader in Federally protected domestic market
Largest and most diverse U.S. dredging fleet
Only U.S. dredge operator with significant foreign presence
Technical expertise/capability to address increasingly stringent
environmental regulations and job complexity
Fleet capacity to compete for multiple projects across domestic market
sectors and internationally

6
Dredging Overview
Capital
–
deepening ports, land reclamation,
and excavation of underwater trenches
Beach
Nourishment
–
creating
and
rebuilding
beaches
Maintenance
–
maintaining depth of shipping
channels
Types of Dredging
Army Corps of Engineers is largest user of
dredging services
Foreign governments
State and local governments
Private entities (e.g., oil companies, utilities)
Customers
Capital
Beach Nourishment
Maintenance

7
Large and Flexible Fleet in U.S. and Middle East Markets
Hopper
Hydraulic Cutterhead
Mechanical
11 Vessels (7 U.S., 4 Middle
East)
Has the only two large
electric cutterhead dredges
available in the U.S. for
environmentally sensitive
regions requiring lower
emissions
10 Vessels (4 U.S., 6 Middle
East)
Highly mobile, able to
operate in rough waters
Little interference with other
ship traffic
5 Vessels (all U.S.)
Operates one of two
environmentally friendly
electric clamshell dredges in
the U.S.
Maneuverability in tight
areas such as docks and
terminals
25
material
transportation
barges
and
over
160
other
specialized
support
vessels
Estimated fleet replacement cost in excess of $1.5 billion in current market
Types of Dredges

8
Favorable Competitive Dynamics
U.S. domestic dredging market is protected from international competition
Foreign Dredge Act (1906) and Merchant Marine Act (1920) effectively prohibit foreign
dredges/foreign-owned dredging companies from operating in U.S.
No new material entrants to industry in recent years
New dredges are expensive/require long construction lead times
Strict job bonding/regulatory certification requirements
Dredging projects growing increasingly complex; heightens need for specialized equipment
Recognized leader in dredging safety

Industry and Company Overview

10
Growing Bid Market
BID MARKET BY WORK TYPE
($ in millions)
$1,137
$783
$603
$714
$727
$211
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
2005
2006
2007
2008
2009
Q1 2010
Capital
Maintenance
Beach

11
Attractive Catalysts in the Dredging Market
Maintenance Dredging
The Corps goal is to reach 95% U.S. port operating capacity by 2013
The 2009 domestic bid market increased significantly to $1.1 billion from $783 million in 2008,
primarily as a result of needed maintenance projects
Coastal Restoration
Potential
berm
construction
to
mitigate
environmental
impact
of
oil
to
Louisiana
coast
Coastal restoration projects planned in 2010 and beyond (schedule may be impacted due to
current events in the Gulf region)
Plan in place for coastal work in Mississippi and other coastal states
Panama Canal Expansion
Heightens the need to maintain and deepen U.S. East and Gulf Coast ports
Jacksonville & Delaware projects, among others, moving forward
Los Angeles Port Developments
Renewed activity to maintain competitiveness

12
Funding for catalysts
Harbor Maintenance Trust Fund (HMTF)
HMTF legislation introduced in Congress in March 2010, expected to be passed in 2010
Anticipated
to
provide
$250
-
$400
million
of
additional
annual
dredging
work
2009 Stimulus
Stimulus bolstered the 2009 bid market
Majority of stimulus work has been awarded; significant amount to be completed by industry in 2010
Mississippi Coastal Improvements Program (MCIP)
Signed in June 2009 by President Obama as part of the Supplemental Appropriations Act of 2009
Includes $400 million for barrier island/ecosystem restoration of storm-damaged shorelines
Corps in the planning stages and has indicated it will start bidding projects in the first quarter of 2011

13
Domestic Dredging Industry Demand Drivers
U.S. ports 5’
–
10’
shallower vs. foreign ports
Domestic port development required to support
larger, deeper draft ships
Water Resources Development Act (“WRDA”)
Long-term funding for wetland and coastal
marshes
Other port development
Capital
$203
$310
2009
$44
$124
Q1 2010
$162
GLDD Revenue
$296
Bid Market Size
Three Year
Average
(In millions)

14
Domestic Dredging Industry Demand Drivers
Storm activity/natural erosion
Growing population in coastal communities
22 of the 25 most densely populated
U.S. counties are coastal
Importance of beach assets to local
tourism industry
Beaches along East and Gulf Coasts in
critical need of nourishment
Beach Nourishment
$62
$183
2009
$39
$10
Q1 2010
$72
GLDD Revenue
$151
Bid Market Size
Three Year
Average
(In millions)

15
Domestic Dredging Industry Demand Drivers
Corps goal is to reach 95% of U.S. port
operating capacity
Incremental funding expected from Harbor
Maintenance Trust Fund
Naturally sedimentation and volatile weather
New capital projects increase need for ongoing
maintenance
57% of 2009 domestic bid market was
maintenance work
Maintenance
$175
$645
2009
$41
$77
Q1 2010
$117
GLDD Revenue
$395
Bid Market Size
Three Year
Average
(In millions)

16
International projects tend to be larger/
longer duration vs. domestic projects
Middle East has been a strong market
historically, and is expected to provide
good opportunities in the future
Moving forward with upgrade of the dredge
Ohio to meet future demand anticipated in
Middle East
Great Lakes is Well Positioned to Compete Globally
International
$134
2009
$25
$149
GLDD Revenue
Q1 2010
Three Year
Average
(In millions)

17
Major U.S. provider of commercial and
industrial demolition services; primarily in
New England
Purchased Yankee in 2009; able to offer
removal of asbestos and hazardous
materials
Successfully gaining foothold in New York
market over last year
In early 2010, segment was awarded over
$30 million of new projects in both Boston
and New York areas
Demolition Segment
NASDI and Yankee Environmental Services
$48
2009
$12
$75
Demolition Revenue
Q1 2010
Three Year
Average
(In millions)

Financial Highlights
Deborah Wensel
Senior VP & CFO

19
Financial Performance
ANNUAL EBITDA
(a)
5 year CAGR =
15%
ANNUAL REVENUE
5 year CAGR = 10%
(a)
EBITDA represents net income (loss), adjusted for net interest expense, income taxes, depreciation and amortization expense.  2005 EBITDA also excludes non-
cash write down of goodwill and intangibles of $5.7 million.  Please see reconciliation of Net Income to EBITDA at the end of this presentation.
($ in millions)
$161.4
$622.2
$586.9
$515.8
$426.0
$423.4
0
100
200
300
400
500
600
$700
2005
2006
2007
2008
2009
Q1 2010
Capital
Maintenance
Beach
Foreign
Demolition
$28.2
$45.1
$77.6
$55.9
$57.5
$52.6
10.7%
12.3%
11.1%
9.5%
17.5%
12.4%
(15)
5
25
45
65
$85
2005
2006
2007
2008
2009
Q1 2010
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
Dredging
Demolition
% Margin

20
Primary Factors that Determine Operating Profitability
Bid success and dredge employment
Revenue is generated when bids are won and projects commence
Maximize revenue by employing dredges full-time
A dredge does not earn revenue when idle
Project mix and dredge mix
Projects include capital, beach, maintenance and foreign which inherently have a range of
durations and margins
Each
dredge
has
different
production
capabilities
resulting
in
a
range
of
revenue
generating
capacity
Seek
to
maximize
mix
within
given
bid
market
(i.e.
type
of
work,
type
of
vessel,
duration)
Project execution
Goal to execute projects at the estimated margin
Numerous factors impact actual margin, both favorably and unfavorably, including:
Weather
Project conditions
Equipment downtime

21
2.0x
2.4x
3.7x
3.3x
3.6x
6.4x
1.0
2.0
3.0
4.0
5.0
6.0
7.0x
2005
2006
2007
2008
2009
Q1 2010
Net Debt / EBITDA
$3.6
$12.7
$29.8
$111.0
(a)
$44.5
$25.7
0.0
20.0
40.0
60.0
80.0
100.0
$120.0
2005
2006
2007
2008
2009
Q1 2010
Maintenance
Growth & Other
Improved Financial Flexibility
($ in millions)
(a)
Growth and other capital expenditures during the year of 2007 includes the purchase of four vessels.
LEVERAGE
CAPEX
$15.5
$21.3
$22.9

22
Backlog
BY SEGMENT
($ in millions)
$382
$385
(a)
$360
$369
$278
0.0
100.0
200.0
300.0
400.0
$500.0
2005
2006
2007
2008
2009
Q1 2010
Capital
Maintenance
Beach
Foreign
Demolition
$347
(a)
Foreign backlog at December 31, 2008 has been adjusted for the portion of the Diyar contract that became an option pending award in the first quarter of 2009

23
Investment Highlights
Attractive near and long-term catalysts in U.S dredging market
Harbor Maintenance Trust Fund secures funding for long-term maintenance demand
Other sources of dredging demand include coastal restoration, port deepening and port
development
Solid backlog of contracted revenue, strong financial performance and improved financial
flexibility
Current backlog of $346.9 million
Revenue
–
5
year
CAGR
10%,
EBITDA
–
5
year
CAGR
15%
EBITDA growth from $45.1 million in 2005 to $77.6 million in 2009 ($28m in Q1 2010)
Decreased
Net
Debt
/
EBITDA
from
6.4x
in
2005
vs.
2.4x
in
2009
(2.0x
in
Q1
2010)
International Presence
Only U.S. dredger with significant foreign presence
Flexible fleet enables repositioning of vessels as necessary
Opportunistic acquirer of dredging assets
Proven executive management team with an average of nearly 30 years of industry experience

Appendix

25
Reconciliation of Net Income to EBITDA
($ in millions)
YTD
2005
2006
2007
2008
2009
Q1 2010
Net Income Attributable to Great Lakes
      Dredge & Dock Corp
($6.9)
$2.2
$7.1
$5.0
$17.5
$9.3
Non-Cash Goodwill and Intangibles Write Down
          5.7
           -  
           -  
           -  
           -  
-
       
Interest Expense
23.1
24.3
17.5
17.0
16.1
3.2
Income Tax Expense
(1.4)
1.0
6.4
3.8
11.0
6.2
Depreciation and Amortization
24.6
25.1
26.5
30.1
33.0
9.4
EBITDA
$45.1
$52.6
$57.5
$55.9
$77.6
$28.2
FYE Ending December 31,