Great Lakes Dredge & Dock Corporation, the largest provider of dredging services in the United States and a major provider of commercial and industrial demolition and remediation services, today reported financial results for the quarter and six months ended June 30, 2012.
Chief Executive Officer Jonathan Berger said, “The dredging division performed well this quarter, after weather impacted results in the first quarter of 2012. Backlog remained at a high level, $455 million, at June 30, 2012, despite the slow domestic bidding during the second quarter. The demolition segment continues to perform on its projects in backlog. A large portion of the demolition backlog earned in the quarter relates to new management’s focus on large complex projects with higher margins, such as bridge demolition and industrial, municipal and utility buildings.”
Mr. Berger added, “Adjusted EBITDA of $35.6 million for the first six months was in line with our internal expectations. With our current backlog and the projection of additional projects that we will win and perform this year, we feel we are well positioned to meet our Adjusted EBITDA guidance for 2012.”
Mr. Berger continued, “The last month has been very busy for us. Positive legislation was passed by Congress and signed into law by the President, bidding has been active in dredging and demolition and we announced we are building a new, world class hopper dredge. Great Lakes is well positioned to execute on our strategic plan of doubling the size of the Company in five years.”
Mr. Berger continued, “The first six months of 2012 were in line with our expectations. The dredging segment had a strong quarter, increasing revenue and experiencing favorable execution on many projects. The demolition segment continues to expand its market presence in bridge demolition work as well as other complex demolition projects. We foresee a robust second half of the year in all of our lines of business, which verifies the EBITDA guidance we announced in the first quarter. The second half results were always expected to exceed those of the first half and still require operating at an elevated level. Third quarter bidding success is key to achieving our 2012 profit plan and guidance.
“We were pleased with the passage of the RESTORE Act included in the MAP-21 (Moving Ahead for Progress in the 21st Century) transportation bill. The RESTORE Act will ensure that 80% of the fines paid by BP as a result of the Deepwater Horizon Oil Spill will be spent on coastal restoration in the five states impacted by the spill. We expect a significant amount of the restoration will involve dredging, and this could add well over one billion dollars into the dredging market over the next five years. Included in the transportation bill were provisions calling for appropriation of Harbor Maintenance Trust Fund monies to the Army Corps of Engineers (the “Corps”) so that total budget resources on harbor maintenance for a fiscal year will be equal to the level of receipts. The recognition of the need for additional investment in U.S. ports and waterways is expected to support an increase of appropriations to future Corps’ budgets for maintenance dredging.
“In July the Administration followed with an announcement that the Corps will accelerate the approval process by at least nine months for deepening projects in five key East Coast ports. The President has announced that there are 43 priority infrastructure projects in total that are expected to be expedited. The public investment in port infrastructure is necessary as the ongoing expansion of the Panama Canal and initiatives to increase exports heightens the need for the U.S. to deepen its East and Gulf Coast ports to facilitate larger draft vessels from international trade. The announced acceleration will likely streamline feasibility studies and permitting to allow the Corps to complete many of the projects on a schedule in anticipation of the increased traffic expected through the Panama Canal.
“With the passage of the transportation bill and the Administration’s announcement regarding East Coast ports, we were very excited to announce our new Articulated Tug Barge (“ATB”) Hopper dredge. As noted in our press release last week, this vessel is a game changer, bringing the ATB technology together with hopper dredging. This new vessel, with greater hopper capacity than any vessel in the U.S. market today, will be used on all types of our dredging work: capital, beach nourishment and maintenance. The time is right for the investment and this new vessel highlights Great Lakes’ continued leadership in innovation in the dredging industry.”
President and Chief Financial Officer Bruce Biemeck said, “As expected, bidding has already picked up in the second half of the year. We see some key projects on the horizon in the domestic market, specifically the deepening project in Miami that we currently expect to be released in the fourth quarter and Gulf Coast restoration projects to be let for bidding in the second half of the year. Our increased working capital investment in pipe will position Great Lakes to lead the bidding on these important projects to restore coastal areas. Finally, the Corps is expected to let to bid several projects in the second half of 2012 related to flood repair on the Mississippi River and its tributaries that rivers & lakes expects to pursue. All of these bidding opportunities in the second half of 2012 are expected to generate another year of record contracts awarded in the domestic dredging bid market.
“Internationally, we will see significant impact to our results from the Wheatstone project in 2013 and 2014. For 2012, we have identified other international dredging projects that may be a good fit for our vessels, particularly in the Middle East, and we continue to follow many opportunities in Brazil. We continue to focus on our international sales and marketing effort as we see an abundance of international opportunities ahead, which we believe can yield better results from a more aggressive approach.
“The demolition business had a strong start to the year, demonstrating that sound project estimating and execution improve results. The new management team in this business is working diligently to add opportunities leading to growth by elevating the range of professional services offered through a more capable support team. The successful partnership of our demolition and dredging businesses is an important component to our Company’s growth as evidenced by the recent focus on bridge demolition and salvage work required under some projects, which was formerly sub-contracted outside the Company. Additionally, our dredging and demolition businesses collaborating with our TerraSea joint venture on new prospects adds to the list of opportunities.”
Mr. Biemeck concluded, “Last quarter we announced 2012 full year EBITDA guidance of $93 – $100 million, which we are reaffirming. This requires strong bid and performance results for the remainder of the year, in line with our 2012 plan and current backlog, as well as the focus and dedication of our operating management throughout the organization. We believe opportunities for further growth in our financial results will appear starting in 2013. As always, we thank the Great Lakes dredging and demolition teams for their continued efforts in providing world class service and delivering strong results for our shareholders.”
Dredging Today Staff, August 7, 2012