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Great Lakes Dredge & Dock (NASDAQ:GLDD) Navigates Choppy Waters with Resilience and Innovation
Published on September 24, 2024 | Ticker: GLDD

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the largest provider of dredging services in the United States, with a long history of executing significant international projects. The company has also made strategic inroads into the rapidly expanding offshore wind energy industry, positioning itself for future growth.

Financials

In the fiscal year 2023, Great Lakes Dredge & Dock reported annual net income of $13,906,000, annual revenue of $589,625,000, annual operating cash flow of $47,425,000, and annual free cash flow of -$103,415,000. These financial results demonstrate the company's ability to navigate the challenges of the industry while investing in its long-term future.

First Quarter 2024 Results

For the first quarter of 2024, the company reported revenue of $198,660,000, a significant increase of 25.7% compared to the same period in the prior year. This growth was driven by a substantial increase in domestic capital and coastal protection revenues, which more than offset declines in maintenance and rivers & lakes revenues.

Gross profit for the first quarter of 2024 was $45,574,000, with a gross profit margin of 22.9%, a significant improvement from the 7.7% margin in the same period of 2023. This improvement was primarily due to better project performance, a larger number of high-margin capital projects, and the company's continued focus on cost management.

Operating income for the first quarter of 2024 was $31,479,000, a significant turnaround from the operating loss of $864,000 in the same period of the prior year. This improvement was driven by the higher gross profit, as well as a gain on the sale of assets, partially offset by an increase in general and administrative expenses.

Net income for the first quarter of 2024 was $21,024,000, a substantial increase from the net loss of $3,231,000 in the same period of 2023. This improvement was primarily due to the significant increase in operating income.

Business Overview

Great Lakes Dredge & Dock's dredging backlog remains strong, standing at $879,425,000 as of March 31, 2024, with 77% of the backlog consisting of capital projects. This backlog provides the company with a solid pipeline of work, and the company expects the bid market to remain robust in the second and third quarters of 2024, driven by increased funding for the U.S. Army Corps of Engineers and ongoing coastal protection and port deepening projects.

The company's new build program is also progressing, with the successful commissioning of the Galveston Island dredge in the first quarter of 2024 and the expected delivery of the Amelia Island dredge in 2025. Additionally, the company's offshore wind initiative, highlighted by the construction of the Acadia, the first U.S.-flagged Jones Act-compliant inclined fall pipe vessel for subsea rock installation, represents a significant growth opportunity in a rapidly expanding industry.

Liquidity

To support its new build program and provide additional liquidity, Great Lakes Dredge & Dock entered into a $150 million second-lien credit agreement in April 2024. This financing, along with the company's existing revolving credit facility, provides the necessary resources to execute its strategic initiatives while maintaining financial flexibility.

The company's liquidity position remains strong, with $22,802,000 in cash and cash equivalents as of March 31, 2024, and $152,320,000 of availability under its revolving credit facility. The company's weighted average interest rate on its total debt is 7%, with no maturities until 2029, further strengthening its financial position.

Geographic and Revenue Breakdown

Great Lakes Dredge & Dock's geographic footprint is primarily focused on the United States, with the majority of its revenue derived from domestic projects. The company's revenue breakdown by type of work includes capital dredging, coastal protection, maintenance, and rivers & lakes, with capital dredging and coastal protection projects accounting for the majority of the company's revenue in the first quarter of 2024.

Outlook

The company's outlook for the remainder of 2024 remains positive, with the expectation of a strong second half of the year. While the second quarter may see a decrease in revenue and an increase in costs due to regulatory dry dockings and planned maintenance, the company believes it is well-positioned to deliver improved year-over-year results for the full year.

Conclusion

Great Lakes Dredge & Dock's strategic initiatives, including its new build program and offshore wind investments, combined with its strong backlog, financial flexibility, and market positioning, suggest the company is poised to navigate the industry's challenges and capitalize on emerging opportunities. As the company continues to execute its growth plans, investors will be closely monitoring its ability to maintain its market leadership and deliver sustainable financial performance.

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