GLDD Report Solid Q2 2014 Dredging Sector Performance

By George Backwell August 13, 2014

Great Lakes Dredge & Dock Corporation (GLDD) the largest provider of dredging services in the United States and a major provider of environmental and remediation services, has reported financial results for the quarter ended June 30, 2014, excerpted as follows:

For the three months ended June 30, 2014, Great Lakes reported Revenue of $184.7 million, Income from continuing operations of $3.9 million and Adjusted EBITDA from continuing operations of $19.8 million.

"Dredging had a solid quarter with $157.1 million in revenue, driven by increased activity in all of our domestic markets, and improved gross profit margin to 14.4%. During the second quarter, we benefited from improved weather and higher productivity as well as greater fixed cost coverage. Although foreign revenue was down from the second quarter in 2013, we worked on projects in Saudi Arabia, Brazil and Australia during the quarter and are pleased to have been recently awarded a $35.5 million land reclamation job in Bahrain that will utilize four of our vessels through the rest of the year," stated Jonathan Berger, Chief Executive Officer.

Mark Marinko, Chief Financial Officer, added, "The environmental & remediation segment continues to successfully execute on several large projects across the United States and has backlog booked to meet our 2014 expectations. Having sold our demolition business, we are looking forward to focusing on strategically and methodically growing this segment and pursuing opportunities that leverage our combined platform of expertise."

Dredging

Dredging revenues were $157.1 million for the quarter, a 15.1% increase over the prior year revenue of $136.5 million on higher maintenance and rivers & lakes revenue partially offset by lower foreign revenue.
Gross profit margin was 14.4% versus 9.1% in the same quarter last year. Gross profit margin increased primarily due to strong contract margin on several jobs, somewhat offset by higher fixed costs.
Operating income decreased to $11.0 million for the quarter from $14.6 million in the same period in the prior year. As noted above, the second quarter of 2014 had improved gross profit margin, however the prior year period benefited from the $13.3 million loss of use claim noted above.

Environmental & Remediation

Revenue increased 168.7% to $29.3 million from $10.9 million in the same period of the prior year driven by the inclusion of several large-scale projects, including a larger phase of work for Enbridge and more revenue generated at a brownfield redevelopment project in New Jersey.
Gross profit margin of 12.4% for the second quarter slightly increased from 12.0% in the prior year with overall gross profit margin higher on the increase in revenue.
Operating loss was $0.7 million, a significant improvement over the prior year period loss of $2.9 million. Higher gross margin was offset by an increase in G&A, which is attributed to additional headcount to manage the segment's substantial growth