Great Lakes Dredge & Dock Hits 24.7% EBITDA Margin: What's Next?

Core Insights - Great Lakes Dredge & Dock Corporation (GLDD) is experiencing margin expansion, indicating its competitive strength in securing large-scale capital and coastal protection projects alongside mainstream dredging services [1] - The company's adjusted EBITDA margin increased by 230 basis points to 24.7%, and gross margin rose by 570 basis points to 28.6% in Q1 2025, driven by a new build program and robust public infrastructure spending [1][8] - GLDD's stock has risen 31.8% over the past three months, outperforming the broader construction sector and S&P 500 index [7][8] Company Developments - The new build program initiated in 2020 aims to modernize GLDD's fleet for coastal restoration and shoreline protection projects, expected to conclude by the end of 2025 or early 2026 [2] - The construction of Acadia, the first U.S.-flagged Jones Act-compliant subsea rock installation vessel, is part of this modernization effort [2] - GLDD is optimistic about the new hopper dredge, Amelia Island, designed for efficient operation in shallow and narrow waters along U.S. coastlines [2] Market Environment - Increased government funding for infrastructure projects at both state and federal levels is contributing to GLDD's top-line growth and margin expansion, reducing payment failure risks and enhancing revenue visibility [3] - Other heavy construction firms, such as Orion Group Holdings, Inc. and Granite Construction Incorporated, are also experiencing margin expansion due to favorable public infrastructure spending [4] Financial Performance - Orion Group reported an adjusted EBITDA margin of 4.3%, up 180 basis points year over year, supported by government initiatives like the Infrastructure Investment and Jobs Act [5] - Granite Construction's adjusted EBITDA margin expanded by 190 basis points to 4%, benefiting from improved project execution and higher volumes [6] - GLDD's current valuation is attractive, trading at a forward P/E ratio of 12.01X, indicating a potential entry point for investors [10] Earnings Estimates - GLDD's earnings estimates for 2025 and 2026 have increased by 39.1% to $0.96 per share and 11.8% to $0.95 per share, respectively, with 2025 showing a 14.3% year-over-year growth [12]