Posted on May 6, 2020
Here are the major comments, made by Great Lakes CEO Lasse Petterson and CFO Mark Marinko on their earnings call report this week, and at the annual meeting of shareholders:
- GLDD has incurred expenses from its Covid 19 safety program, but not material to its financial results
- “Outlook moving forward “
US Federal Govt has deemed Dredging to be an essential Critical service
US Army Corps bid schedule is following Corps plan despite Covid
- GLDD in Active discussion for new us hopper dredge with 2022 delivery
Expect to sign contract with a US yard in Q2
Hopper to target coastal protection and beach nourishment markets “mid size” shallow draft
Less than 3 years to build
Plus possible copy as second unit 3-4 years time predicting IRR (internal rate of return) in mid teens % from capex in new Hopper
- Overall Capex planned for 2020 of $40mm
- Increased dry docking rest of year
4 vessels in q2. Inc the Hopper Ellis
Most impact will be in q2; will be lowest quarter for utilization in 2020
- HMTF Status (Harbor Maintenance Trust Fund) has $9B now
Existing reserves and new revenues will be devoted to maintenance dredging, affirmed by Cares Act
Spend rate for HMTF has risen from 50% of revs to now 95%, and 100% going forward.
In Range of $1.7B new revenues annually for HMTF, but may be affected this year by slower port activity due to COVID-19.
- Cutter Dredge “Ohio”
Has been updated with new engines, pumps and technology
Coming back to USA to be used on East Coast beach restoration projects
- Major prospects
Range of $25mm to $400 mm for Corps projects
Houston alone over $500mm
Charleston will be $25mm-$50mm
- Private Sector prospects
LNG export project work
2 Projects
May be affected negatively by lower energy prices
$20 mm ebitda impact for 2020 if they don’t proceed
- Financial issues and Forecast
$325mm bonds due 2022
104% call premium until May 15, 2020, thereafter redeemable at par
Considering refinance and “monitoring every day” next steps
Debt down $23mm
Debt to adjusted ebitda now only 0.75x
Q1 2020 will be best quarter of the year, same as 2019
“Exceptional performance driven by all of our projects and full vessel utilization”
Forecast for 2020
Revs higher in 2020 v 2019
GM % same
SG&A expenses will be $60mm same as last year
- Low bid pending awards as of 3/31-
$160mm, with majority private clients
In Q1, GLDD won $72mm of $260mm of bids
- Cares Act (US Govt Covid Stimulus)
Financial impact
Deferred employer pay roll tax to later years
- GLDD stock rose about 10% on the news.
