Great Lakes Dredge & Dock (GLDD) - 2025 Q2 - Quarterly Report

PART I — Financial Information (Unaudited) Item 1. Financial Statements Condensed Consolidated Balance Sheets Total assets slightly decreased to $1,241,650 thousand by June 30, 2025, with liabilities decreasing and equity increasing | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total Assets | $1,241,650 | $1,255,103 | (1.1%) | | Total Liabilities | $759,781 | $806,193 | (5.7%) | | Total Equity | $481,869 | $448,910 | 7.3% | Condensed Consolidated Statements of Operations Contract revenues, gross profit, and net income significantly increased for both the three and six months ended June 30, 2025 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Contract revenues | $193,755 | $170,086 | 13.9% | $436,620 | $368,746 | 18.4% | | Costs of contract revenues | $157,189 | $140,246 | 12.1% | $330,531 | $293,332 | 12.7% | | Gross profit | $36,566 | $29,840 | 22.5% | $106,089 | $75,414 | 40.7% | | Operating income | $17,087 | $14,585 | 17.2% | $67,032 | $46,064 | 45.5% | | Net income | $9,695 | $7,673 | 26.4% | $43,111 | $28,697 | 50.2% | | Basic earnings per share | $0.15 | $0.11 | 36.4% | $0.64 | $0.43 | 48.8% | | Diluted earnings per share | $0.14 | $0.11 | 27.3% | $0.64 | $0.42 | 52.4% | Condensed Consolidated Statements of Comprehensive Income Comprehensive income increased by 23.6% for Q2 2025 and 44.2% for H1 2025, primarily due to higher net income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net income | $9,695 | $7,673 | 26.4% | $43,111 | $28,697 | 50.2% | | Net change in cash flow derivative hedges—net of tax | $(150) | $50 | (400.0%) | $212 | $1,338 | (84.2%) | | Comprehensive income | $9,545 | $7,723 | 23.6% | $43,323 | $30,035 | 44.2% | Condensed Consolidated Statements of Equity Total equity increased to $481,869 thousand by June 30, 2025, primarily due to net income, offset by share repurchases | Metric (in thousands) | January 1, 2025 | June 30, 2025 | Change | | :-------------------- | :-------------- | :------------ | :----- | | Total Equity | $448,910 | $481,869 | 7.3% | | Net Income | N/A | $43,111 | N/A | | Repurchase of common stock | N/A | $(11,594) | N/A |\ | Share-based compensation | N/A | $1,746 | N/A | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly increased for H1 2025, while investing and financing cash outflows rose due to capital investments and debt/share repurchases | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | | Net cash provided by operating activities | $117,771 | $56,809 | 107.3% | | Net cash used in investing activities | $(81,307) | $(55,230) | (47.2%) | | Net cash used in financing activities | $(43,755) | $(2,206) | (1889.8%) | | Net decrease in cash, cash equivalents and restricted cash | $(7,291) | $(627) | (1063.0%) | | Cash, cash equivalents and restricted cash at end of period | $2,925 | $23,134 | (87.4%) | Notes to Condensed Consolidated Financial Statements 1. Basis of presentation Financial statements follow SEC rules and GAAP; the Company operates in one dredging segment and approved a $50.0 million share repurchase program - The Company operates in a single reportable segment: dredging[28] - A share repurchase program of up to $50.0 million was approved on March 14, 2025, with $11.6 million of common stock repurchased by June 30, 2025[29][135] - The Company is evaluating the impact of new accounting pronouncements, ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Income Taxes), effective for fiscal years ending December 31, 2027 and after December 15, 2024, respectively[31][32][33] 2. Earnings per share Basic and diluted EPS increased significantly for both the three and six months ended June 30, 2025, reflecting higher net income | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Basic EPS | $0.15 | $0.11 | 36.4% | $0.64 | $0.43 | 48.8% | | Diluted EPS | $0.14 | $0.11 | 27.3% | $0.64 | $0.42 | 52.4% | 3. Property and equipment Net property and equipment increased to $757,924 thousand by June 30, 2025, driven by a 20.6% rise in construction in progress | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Property and equipment—net | $757,924 | $703,252 | 7.8% | | Construction in progress | $319,042 | $264,525 | 20.6% | 4. Accrued expenses Total accrued expenses decreased to $32,896 thousand by June 30, 2025, primarily due to lower payroll, benefits, and insurance | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total accrued expenses | $32,896 | $41,640 | (21.0%)| | Payroll and employee benefits | $14,777 | $20,140 | (26.6%)| | Insurance | $10,421 | $13,832 | (24.7%)| | Contract reserves | $1,779 | $148 | 1102.0%| 5. Long-term debt Long-term debt includes a $100.0 million term loan, a $330.0 million ABL facility, and $325.0 million in Senior Notes, with a 6.80% weighted average interest rate - Second Lien Credit Agreement: $100.0 million in borrowings as of June 30, 2025, with a weighted average interest rate of 12.07% for the quarter ended June 30, 2025. The $50.0 million delayed draw facility expired undrawn on April 24, 2025[40][46] - ABL Credit Agreement: Increased to $330.0 million from $300.0 million on May 2, 2025. Borrowings on the revolver were $5.0 million at June 30, 2025, down from $35.0 million at December 31, 2024[49][51][55] - Senior Notes: $325.0 million of unsecured 5.25% Senior Notes due 2029[57] | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Weighted average interest rate (adjusted for swaps) | 6.80% | 6.77% | 6. Fair value measurements The Company uses Level 2 derivative instruments for fuel and interest rate risk, with $0.5 million in fuel hedge liabilities and $109 thousand in interest rate swap liabilities - The Company uses fuel hedge contracts to hedge approximately 90% of eligible fuel requirements for dredging backlog, with 15.8 million gallons remaining on contracts through December 2026 at fixed prices from $2.03 to $2.66 per gallon[64][65] - Interest rate swaps with a total notional value of $75 million are in place, converting a portion of variable rate debt to a weighted average fixed interest rate of 11.62% through August 2026[71] | Derivative Type (in thousands) | Fair Value at June 30, 2025 (Liabilities) | Fair Value at December 31, 2024 (Liabilities) | | :----------------------------- | :---------------------------------------- | :-------------------------------------------- | | Fuel hedge contracts | $454 | $1,065 | | Interest rate swaps | $109 | $0 (Assets: $217) | - The fair value of the 2029 Notes was $312.3 million at June 30, 2025, a Level 1 fair value measurement[74] 7. Share-based compensation Shareholders approved an increase of 3,000,000 shares for the 2021 Long-Term Incentive Plan, with compensation expense rising to $5.3 million for H1 2025 - The 2021 Long-Term Incentive Plan was amended on May 8, 2025, increasing available shares by 3,000,000[75] - 538 thousand restricted stock units were granted to employees during the six months ended June 30, 2025[78] | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Compensation cost charged to expense | $3,400 | $1,800 | 88.9% | $5,300 | $2,600 | 103.8% | 8. Revenue Total dredging backlog reached $960.4 million at June 30, 2025, with capital revenues significantly increasing and maintenance revenues decreasing - Total dredging backlog was $960.4 million at June 30, 2025, with approximately 40% expected to be completed in the remainder of 2025[79] - Offshore energy contracts had $52.4 million in remaining performance obligations and $14.5 million in pending awards at June 30, 2025[79] | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Capital | $105,674 | $70,747 | 49.4% | $196,492 | $140,647 | 39.7% | | Coastal protection | $65,227 | $70,195 | (7.1%) | $185,831 | $134,121 | 38.6% | | Maintenance | $22,854 | $29,144 | (21.6%) | $54,297 | $93,978 | (42.2%) | | Total revenues | $193,755 | $170,086 | 13.9% | $436,620 | $368,746 | 18.4% | | Customer Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Federal government | $90,941 | $118,687 | $225,349 | $253,476 | | State and local government | $21,109 | $21,463 | $57,503 | $69,163 | | Private | $81,705 | $29,936 | $153,768 | $46,107 | | Total revenues | $193,755 | $170,086 | $436,620 | $368,746 | 9. Commitments and contingencies Outstanding performance bonds totaled approximately $1.3 billion, with no material impact expected from legal proceedings or environmental claims - Outstanding performance bonds totaled approximately $1.3 billion at June 30, 2025, with $651.9 million related to dredging backlog[82] - The Company is not currently a party to any material legal proceedings or environmental claims, and management does not expect current proceedings to have a material effect on financial condition[85] 10. Segment information The Company operates in a single dredging segment, with the CEO using net income and Adjusted EBITDA to assess performance and allocate resources - The Company has one reportable segment: dredging[87][89] - The CODM (CEO) uses net income and Adjusted EBITDA to evaluate segment performance and resource allocation[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Great Lakes, the largest U.S. dredging provider, is expanding into offshore energy with its new SRI vessel, Acadia, diversifying services amid potential U.S. offshore wind delays - Great Lakes is the largest provider of dredging services in the U.S. and is expanding into the offshore energy industry[95] - The Acadia, the first Jones Act SRI vessel, was launched in July 2025 and is expected to be operational in 2026, with secured offshore wind contracts for 2026[102][103] - The Company is diversifying the Acadia's target markets to include oil and gas pipeline protection, power and telecommunications cable protection, and international offshore wind, in anticipation of potential delays in U.S. offshore wind projects[104][105] - Federal government contracts, primarily with the U.S. Army Corps of Engineers, accounted for approximately 52% of revenues in the first six months of 2025, down from a three-year average of 65% due to increased private customer revenues[99] Results of operations Total revenue, gross profit, net income, and Adjusted EBITDA all significantly increased for both Q2 and H1 2025, driven by higher capital dredging revenues and improved margins | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Total revenues | $193,755 | $170,086 | 13.9% | $436,620 | $368,746 | 18.4% | | Capital revenues | $105,674 | $70,747 | 49.4% | $196,492 | $140,647 | 39.7% | | Coastal protection revenues | $65,227 | $70,195 | (7.1%) | $185,831 | $134,121 | 38.6% | | Maintenance revenues | $22,854 | $29,144 | (21.6%) | $54,297 | $93,978 | (42.2%) | | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Gross profit | $36,600 | $29,800 | 22.8% | $106,100 | $75,400 | 40.7% | | Gross profit margin | 18.9% | 17.5% | 1.4 pp | 24.3% | 20.5% | 3.8 pp | | Operating income | $17,100 | $14,600 | 17.1% | $67,000 | $46,100 | 45.3% | | Net income | $9,700 | $7,700 | 26.0% | $43,100 | $28,700 | 50.2% | | Diluted EPS | $0.14 | $0.11 | 27.3% | $0.64 | $0.42 | 52.4% | | Adjusted EBITDA | $28,000 | $25,800 | 8.5% | $88,100 | $68,700 | 28.2% | - The increase in gross profit and margins was driven by increased revenues, improved utilization, project performance, and a larger proportion of higher-margin capital and coastal protection projects[114] - General and administrative expenses increased due to higher incentive compensation and employee benefit expenses[115] - The "One Big Beautiful Bill Act" (OBBBA), signed July 4, 2025, includes tax reform provisions (e.g., elective R&D deduction, bonus depreciation, §163(j) modifications) whose quantitative financial impact is currently being evaluated[119] Bidding activity and backlog Total backlog decreased to $1,012.8 million by June 30, 2025, including $960.4 million in dredging and $52.4 million in offshore energy, with a lower Q2 2025 bid win rate | Backlog Type (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | Change (Dec 2024 to Jun 2025) | | :-------------------------- | :------------ | :---------------- | :------------ | :---------------------------- | | Capital | $751,350 | $799,565 | $683,131 | (6.1%) | | Coastal protection | $140,012 | $328,073 | $38,205 | (57.4%) | | Maintenance | $69,051 | $66,561 | $86,538 | 3.7% | | Total dredging backlog | $960,413 | $1,194,199 | $807,874 | (19.5%) | | Offshore energy | $52,431 | $44,945 | $44,604 | 16.7% | | Total backlog | $1,012,844 | $1,239,144 | $852,478 | (18.3%) | - Total backlog does not include $215.4 million of domestic low bids pending formal award and options, nor $14.5 million of pending offshore energy contracts[122][127] - The domestic dredging bid market for Q2 2025 was $197.5 million, a $583.5 million decrease YoY. The Company won 14% of bids, below its 31% three-year average[126] - Backlog includes three LNG projects, with the Brownsville Ship Channel project being the largest in Company history, and the Woodside Louisiana LNG project expected to commence operations in early 2026[127][128] Liquidity and capital resources Operating cash flow significantly increased for H1 2025, while investing and financing cash outflows rose due to capital investments and debt/share repurchases, with $140-$160 million in expected 2025 capital expenditures | Cash Flow (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :----------------------- | :--------------------------- | :--------------------------- | :--------- | | Operating Activities | $117,771 | $56,809 | 107.3% | | Investing Activities | $(81,307) | $(55,230) | (47.2%) | | Financing Activities | $(43,755) | $(2,206) | (1889.8%) | - Investing activities included $21.9 million in the Amelia Island and $32.6 million in the Acadia during H1 2025[134] - Financing activities included $30.0 million in net repayments under the revolving debt facility and $11.6 million in common stock repurchases during H1 2025[135] - Expected capital expenditures for 2025 are between $140 million and $160 million, including new build programs and maintenance[136] - The Company believes its cash, anticipated cash flows from operations, and revolving credit facility availability will be sufficient to fund operations and debt service for the next twelve months[139] Critical accounting policies and estimates Critical accounting policies and estimates remain materially unchanged since December 31, 2024, as detailed in Note 1 - No material changes in critical accounting policies or estimates since December 31, 2024[140] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's market risk profile for financial instruments has not materially changed since December 31, 2024 - No material changes in the Company's market risk profile for financial instruments as of June 30, 2025, compared to December 31, 2024[141] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of June 30, 2025[143] - No material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025[144] PART II — Other Information Item 1. Legal Proceedings Legal proceedings and contingencies are detailed in Note 9, with no material impact expected on financial position or operations - Legal proceedings and other contingencies are detailed in Note 9, with no material impact expected[146][85] Item 1A. Risk Factors No material changes to risk factors have occurred since the December 31, 2024 Annual Report on Form 10-K and March 31, 2025 Quarterly Report on Form 10-Q - No material changes to risk factors since the December 31, 2024 Annual Report on Form 10-K and March 31, 2025 Quarterly Report on Form 10-Q[147] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company repurchased 960,253 shares for $8.77 average per share during Q2 2025, as part of a $50.0 million share repurchase program | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Aggregate Dollar Value That May Yet Be Purchased Under the Plans or Programs | | :--------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 839,561 | $8.67 | $39,553,293 | | May 1, 2025 - May 31, 2025 | 120,692 | N/A | $38,406,008 | | June 1, 2025 - June 30, 2025 | 0 | N/A | $38,406,008 | | Total (Q2 2025) | 960,253 | $8.77 | $38,406,008 | - A share repurchase program of up to $50.0 million was approved on March 14, 2025, through March 14, 2026[148] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - None[149] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[150] Item 5. Other Information CFO Scott Kornblau adopted a Rule 10b5-1 trading arrangement on May 9, 2025, to sell up to 59,805 shares by May 1, 2026 - CFO Scott Kornblau adopted a Rule 10b5-1 trading arrangement on May 9, 2025, to sell up to 59,805 shares by May 1, 2026[152] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including credit agreement amendments, the incentive plan, and various certifications - Key exhibits include Amendment No. 2 to the Revolving Credit and Security Agreement (May 2, 2025) and the amended 2021 Long-Term Incentive Plan (May 12, 2025)[154] Signature The report was signed by Scott Kornblau, SVP and CFO of Great Lakes Dredge & Dock Corporation, on August 5, 2025 - Report signed by Scott Kornblau, SVP and CFO, on August 5, 2025[157]