Great Lakes Dredge & Dock (GLDD) - 2024 Q3 - Quarterly Results

Third Quarter 2024 Performance Overview Great Lakes reported strong third-quarter 2024 results with significant net income and Adjusted EBITDA, achieving a record dredging backlog of $1.21 billion driven by new project wins and strategic initiatives Third Quarter 2024 Highlights Great Lakes reported strong third-quarter 2024 results, with net income of $8.9 million and Adjusted EBITDA of $27.0 million, achieving a record dredging backlog of $1.21 billion, driven by significant new project wins Q3 2024 Key Financial Metrics | Metric | Value (USD) | | :--- | :--- | | Revenue | $191.2 million | | Total operating income | $16.7 million | | Net income | $8.9 million | | Adjusted EBITDA | $27.0 million | | Record dredging backlog | $1.21 billion | Management Commentary Management highlighted a solid third quarter with strong project performance and substantial new work, resulting in a record backlog of $1.21 billion, with key strategic initiatives including progress on the new build program and securing contracts in the U.S. offshore wind market, while strengthening the company's financial position - Awarded $543.0 million of new work in Q3, including the $235 million Sabine-Neches Contract 6 Deepening project[2] - Ended Q3 with a record backlog of $1.21 billion, with an additional $465.0 million in low bids and options pending, providing revenue visibility into 2026[2] - Progress continues on new vessel construction: the hopper dredge 'Amelia Island' and the subsea rock installation vessel 'Acadia' are both expected for delivery in the second half of 2025[4][5] - The company is entering the U.S. offshore wind market, having secured contracts for Equinor's Empire Wind 1 and Ørsted's Sunrise Wind projects for the 'Acadia' vessel[5] - Strengthened liquidity by entering a $150 million second-lien credit agreement and received a credit rating upgrade from S&P Global Ratings to 'B-' from 'CCC+'[8] Financial and Operational Review The company demonstrated significant operational improvements in Q3 2024, with increased revenue and profitability, supported by a strong market outlook driven by robust government funding and growth in the U.S. offshore wind sector Operational Update The company saw significant year-over-year improvement in the third quarter of 2024, with revenue increasing by $74.0 million to $191.2 million, gross profit improving by $27.2 million, and net income turning positive at $8.9 million, while the dredging backlog grew to $1.21 billion and capital expenditures for the quarter were $38.4 million primarily for new vessel construction Q3 2024 vs Q3 2023 Operational Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $191.2M | $117.2M | +$74.0M | | Gross Profit | $36.2M | $9.0M | +$27.2M | | Gross Margin | 19.0% | 7.7% | +11.3 ppt | | Operating Income | $16.7M | ($5.1M) | +$21.8M | | Net Income | $8.9M | ($6.2M) | +$15.1M | - At September 30, 2024, the company had $12.0 million in cash and cash equivalents and $412.5 million in total long-term debt, with no draws on its $300 million revolver[9] - Total capital expenditures for Q3 2024 were $38.4 million, including $19.4 million for the 'Acadia' and $13.6 million for the 'Amelia Island'[9] Market Update The market outlook remains positive, with strong government support for the dredging industry through record funding for the U.S. Army Corps of Engineers and bipartisan backing for the Water Resources Development Act (WRDA), while the U.S. offshore wind market is experiencing significant growth, presenting unique opportunities for Great Lakes' new subsea rock installation vessel - The 2024 Energy and Water Appropriations Bill provided a record $8.7 billion to the U.S. Army Corps of Engineers, supporting a strong bid market[10] - The proposed 2025 Corps' budget is expected to be another record, with the House bill at $9.96 billion and the Senate bill at $10.3 billion[11] - The U.S. offshore wind development pipeline has expanded by 53% in the past year, with a potential generating capacity of approximately 80.5 GW by 2035[16] - Great Lakes has secured rock installation contracts for the Empire Wind 1 and Sunrise Wind projects, which recently finalized power deals with New York State[15] Financial Statements and Supplementary Data This section provides detailed financial statements, including consolidated statements of operations, Adjusted EBITDA reconciliation, balance sheet highlights, and segment-wise revenue and backlog data, illustrating the company's financial performance and position Condensed Consolidated Statements of Operations The company's statement of operations shows a significant turnaround, with net income of $8.9 million (or $0.13 per diluted share) for the third quarter of 2024, compared to a net loss of $6.2 million (or -$0.09 per share) in the same period of 2023, and for the nine months ended September 30, 2024, net income was $37.5 million, a substantial improvement from a net loss of $7.7 million in the prior year period Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Contract revenues | $191,173 | $117,185 | $559,919 | $407,896 | | Gross profit | $36,233 | $9,030 | $111,647 | $39,064 | | Operating income (loss) | $16,694 | $(5,123) | $62,758 | $(2,307) | | Net income (loss) | $8,852 | $(6,154) | $37,549 | $(7,652) | | Diluted EPS | $0.13 | $(0.09) | $0.55 | $(0.12) | Reconciliation of Net Income (Loss) to Adjusted EBITDA Adjusted EBITDA for the third quarter of 2024 was $27.0 million, a significant increase from $5.3 million in the third quarter of 2023, and for the nine-month period, Adjusted EBITDA rose to $95.7 million from $32.2 million in the prior year, reflecting improved operational performance Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $8,852 | $(6,154) | $37,549 | $(7,652) | | Adjustments | $18,131 | $11,486 | $58,179 | $39,838 | | Adjusted EBITDA | $26,983 | $5,332 | $95,728 | $32,186 | Selected Balance Sheet Information As of September 30, 2024, the company's balance sheet shows total assets of $1.15 billion and total equity of $425.4 million, with cash and cash equivalents standing at $12.0 million and total long-term debt at $412.5 million Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,037 | $22,841 | | Total assets | $1,145,339 | $1,110,840 | | Total long-term debt | $412,531 | $412,070 | | Total equity | $425,409 | $385,548 | Revenue and Backlog Data Third-quarter 2024 revenue was driven by strong performance in the Capital - U.S. and Coastal protection segments, which saw significant year-over-year increases, and the total dredging backlog reached a record $1.21 billion as of September 30, 2024, up from $1.04 billion at the end of 2023, with Capital - U.S. and Coastal protection backlogs showing substantial growth Revenues by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Capital - U.S. | $108,682 | $54,602 | | Coastal protection | $43,913 | $23,567 | | Maintenance | $37,867 | $33,816 | | Rivers & lakes | $711 | $5,200 | | Total revenues | $191,173 | $117,185 | Backlog by Segment (in thousands) | Segment | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Capital - U.S. | $898,898 | $741,839 | | Coastal protection | $218,321 | $138,394 | | Maintenance | $89,050 | $152,104 | | Rivers & lakes | $6,870 | $6,765 | | Total Dredging Backlog | $1,213,139 | $1,039,102 | Other Information This section provides details on the upcoming conference call, defines non-GAAP financial measures, offers a brief company overview, and includes a cautionary note regarding forward-looking statements and associated risks Conference Call Information The company will host a conference call on Tuesday, November 5, 2024, at 9:00 a.m. C.S.T. to discuss the quarterly results, with details for pre-registration and accessing the live call and replay provided - A conference call is scheduled for Tuesday, November 5, 2024, at 9:00 a.m. C.S.T (10:00 a.m. E.S.T.)[17] Use of Non-GAAP Measures This section defines Adjusted EBITDA, a non-GAAP measure used by the company, calculated by adjusting net income for net interest expense, taxes, depreciation, amortization, and other specific items, which the company believes helps stakeholders evaluate operating trends and period-to-period performance - Adjusted EBITDA is defined as net income (loss) adjusted for net interest expense, income taxes, depreciation and amortization, and other specified items[19] Company Overview Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States and is expanding into the offshore wind energy industry, with over 134 years of history and operating the largest and most diverse fleet in the U.S. dredging industry, comprising approximately 200 specialized vessels - Great Lakes is the largest provider of dredging services in the U.S. and is expanding into the offshore wind energy sector[21] Cautionary Note Regarding Forward-Looking Statements This section contains a standard safe harbor statement, warning that forward-looking statements in the press release are subject to various risks and uncertainties, listing numerous factors that could cause actual results to differ materially from expectations, such as government funding, project delays, and costs associated with new vessel construction - The press release contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[22] - Key risks include reduction in government funding, cost over-runs, timing of contracts, and unforeseen delays and costs related to the construction of new vessels[22][23]