Great Lakes Reports Second Quarter Results

OAK BROOK, Ill., Aug. 01, 2018 (GLOBE NEWSWIRE) — Great Lakes Dredge & Dock Corporation (GLDD), the largest provider of dredging services in the United States and a major provider of environmental and infrastructure services, today reported financial results for the three and six months ended June 30, 2018.

For the three months ended June 30, 2018, Great Lakes reported revenue of $150.6 million, net loss from continuing operations of $1.0 million and Adjusted EBITDA from continuing operations of $21.4 million.

Second Quarter Highlights (includes restructuring)

• Adjusted EBITDA from Continuing Operations was $21.4 million, a $6.3 million increase from the prior year quarter
• Dredging segment’s gross margin percentage increased to 16.4% in the current quarter from 10.5% in the prior year quarter.
• Consolidated general and administrative expenses decreased by $2.1 million compared to the second quarter of 2017.
• Net debt decreased by $35 million as compared to year end 2017.
• Backlog increased $22 million from previous quarter. $70 million San Jacinto River project awarded subsequent to quarter end and will be added to backlog in third quarter.

Management Commentary
Chief Executive Officer Lasse Petterson commented, “Today we announced another improved quarter. June 2018 marked the beginning of our busiest time of the year including high activity on the Charleston Port Deepening project in South Carolina where we have two of our largest cutter dredges and one mechanical dredge in continuous operation. We look forward to high utilization during the remainder of 2018. During the quarter, we saw dredging margins increase over the prior year quarter and we continue to see the Ellis Island operate at her full design criteria.

During the quarter, we also continued work on our restructuring plan, recognizing a charge of $0.5 million and $1.2 million positive impact on adjusted EBITDA from continuing operations. We remain on track to recognize $20 million of cost savings during 2018, with a full run rate of $40 million expected by year end 2018 and recognized in 2019. In addition to the stronger operational results that we have seen year to date, these restructuring efforts have allowed us to achieve the planned reduction in our net debt.

In July, we announced $234 million of awards in dredging contracts for seven projects. Five of the seven projects, with a total value of $150 million, were added to backlog during the second quarter. We have commenced execution on several of these projects and have entered a heavy bidding period for additional complex port deepening and coastal protection and restoration projects in the latter half of 2018. Included in the $234 million of award announcements is the $70 million San Jacinto Emergency Flood Protection project. This project is a great fit for our rivers and lakes division but was awarded subsequent to the quarter end and is therefore not reflected in our backlog reported today.”

Consistent with our 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. 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.

Operational Update (without restructuring)

Dredging Segment

• Dredging segment revenue decreased by $17.2 million compared to the second quarter of 2017. The overall domestic market revenue, excluding rivers and lakes, was flat with the prior year quarter on decreases in the maintenance market being offset by increases in the capital market. Both rivers and lakes and the international markets had decreased revenues in the current quarter as compared to the prior year quarter.
• Dredging segment gross margin percentage improved to 17.4% in the current quarter from 10.5% in the second quarter of 2017 on better project performance and operational improvements from asset retirements, most notably in the domestic market.
• Dredging segment operating income was $12.1 million, compared to $3.0 million in the prior year quarter.
• Dredging segment backlog was $506.5 million at June 30, 2018.

Environmental & Infrastructure (“E&I”) Segment

• E&I segment revenue decreased $9.4 million compared to the second quarter of 2017. The decrease is related to the lower than expected new work. Note that the prior year quarter included a $2.5 million benefit from an approved project change order.
• E&I segment gross margin decreased from 17.3% in the prior year quarter to 0.7% in the current year quarter. The majority of the decrease is related to the $2.5 million benefit recognized in the prior year quarter.
• E&I segment operating loss was $3.4 million, compared to a $0.1 million loss in the prior year quarter.
• E&I segment backlog was $28.5 million at June 30, 2018.

Consolidated Company

• Consolidated general and administrative expenses decreased by $2.1 million when comparing to the prior year quarter primarily due to the cost saving initiatives associated with restructuring.
• Net loss for the quarter was $0.6 million compared to a loss of $3.9 million in the prior year quarter primarily as a result of better operational results in the dredging segment. The current year quarter includes interest expense of $9.0 million and tax expense of $0.2 million while the prior year quarter included interest expense of $6.4 million and a tax benefit of $3.5 million.
• Cash at June 30, 2018 was $13.5 million with total debt of $393.6 million, compared to cash of $15.9 million and total debt of $430.9 million at December 31, 2017.
• Capital expenditures were $5.8 million compared to $12.8 million in the same quarter in 2017.

Market Update
During the second quarter of 2018, GLDD was awarded 46% of the overall $360 million bid market consisting of the following types of work.

• $20.9 million or 36% of capital projects,
• $130.9 million or 75% of coastal protection projects, and
• $12.4 million or 29% of rivers and lakes projects.

Great Lakes was not awarded any maintenance projects during the quarter.

Subsequent to quarter end, the dredging segment has been awarded $84 million of projects, including the $70 million San Jacinto River project which will be added to backlog in the third quarter. The E&I segment has been awarded $7 million since the quarter end.

Overall, the domestic dredging market continues to show positive indicators. The combination of the storm supplemental appropriation, a portion of which has been allocated to the United States Army Corps of Engineers as well as the proposed WRDA 2018 bill and proposed 2019 budget will provide the domestic market with substantial funding for projects going forward. Federal, state and local governments remain focused on planning and funding for the capital port deepening projects that have been and will continue to bid later in 2018 and into 2019. We are confident in our ability to remain the leading provider of domestic dredging in this healthy market going forward.

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 is also a significant provider of environmental and remediation services on land and water. 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.