Great Lakes Dredge & Dock Corporation, the largest provider of dredging services in the United States and a major provider of environmental and remediation services, today reported financial results for the quarter and year ended December 31, 2013.
For the quarter ended December 31, 2013, Great Lakes reports Revenue of $216.3 million, Net loss attributable to Great Lakes of $11.0 million, Income from continuing operations of $4.7 million and Adjusted EBITDA from continuing operations of $25.0 million. For the year ended December 31, 2013, Great Lakes reports Revenue of $731.4 million, Net loss attributable to Great Lakes of $34.4 million, Income from continuing operations of $19.9 million and Adjusted EBITDA from continuing operations of $98.9 million.
Jonathan Berger, Chief Executive Officer, commented: “The dredging segment delivered strong performance in 2013 as it continues to achieve improved operating profit and revenue growth. The dredging segment recorded the largest yearly revenue in its history during 2013. Increased funding from the federal government for coastal protection and improvements in our foreign profit margin, partially offset by higher costs of operating our equipment, improved our 2013 gross profit. Northeast beaches continue to be a focus for the federal government. There are four active projects on which our people and dredges are working to rebuild beaches and protect the communities from the effect of future storm systems.
“Our Terra Contracting team has been a solid performer for the Company since it was acquired at the end of 2012. Terra significantly exceeded our first year plan and has been fully integrated into the GLDD environmental & remediation product offering. Our rivers & lakes dredging business and our TerraSea joint venture provide a comprehensive service set for a very attractive growth market for us. An environment remediation project for over $50 million in the Midwest contributed strong profit margins and validated our combined service offerings’ attractiveness to the market.
“In the fourth quarter, the management team proposed, and the Board of Directors approved, a plan to sell our historical demolition business. The business has experienced several quarters of disappointing results and has not achieved the synergies we have been working to implement. Accordingly, we feel this business has value that could be better realized under different ownership. The Company has received indications of interest and expects to finalize disposition of the demolition business in 2014. The Company continues to evaluate several opportunities that will position us for further growth options that expand upon our success in environmental & remediation services that complement our core dredging business.”
William Steckel, Chief Financial Officer, said: “With our decision to sell the historical demolition business, we have renamed the segment that holds the Terra Contracting and related business as environmental & remediation. The historical demolition business has been retrospectively presented as discontinued operations and is no longer reflected in continuing operations. The divestiture of the historical demolition business is expected to allow us to devote management attention and capital to further investment in growth opportunities.
“Cash flow was a major focus of our team this year. We reduced our net debt (debt less cash) from $238.6 million at December 31, 2012 to $209.7 million at December 31, 2013. The $28.9 million improvement comes largely from recovering the working capital investments described in previous earnings releases. The Company continues to focus on driving higher operating cash flow and to critically evaluate spending priorities on our investment in equipment. The Company remains committed to deploying capital where it drives future earnings growth, such as the Articulated Tug/Barge (ATB) trailing suction hopper dredge and the recent deployment of two new barges on the Miami deepening project.”
Fourth Quarter 2013 Highlights
– Revenue increased to $216.3 million in the last quarter of 2013, up 14% from the fourth quarter of 2012 largely related to the acquisition of the Terra Contracting business. The dredging segment recorded lower revenues in the current year quarter on lower domestic capital revenues, partially offset by higher coastal protection revenues.
– Gross profit margin declined to 12.9% in the fourth quarter of 2013 from 15.3% in the prior year fourth quarter driven by lower domestic capital dredging gross profit partially offset by higher gross profit margins from the environmental & remediation line of businesses.
– Operating income was $11.3 million for the quarter, down $3.3 million from the prior year quarter on higher equipment and G&A expense, partially offset by gains on asset sales.
– Income from continuing operations was $4.7 million in the quarter, down from the prior year quarter due to the items noted above. Net loss (which includes both continuing and discontinued businesses) was $11.5 million, compared to a loss of $0.1 million in the comparable quarter of the prior year on losses in the discontinued operations.
– Adjusted EBITDA from continuing operations was $25.0 million down from $29.7 million in the strong fourth quarter of 2012 on lower operating income.
– Total contracted backlog at quarter end was $543.4 million. In addition, there were $136.4 million in domestic dredging low bids and options pending award.
– Dredging earned revenues of $176.7 million in the fourth quarter, decreasing from $190.4 million in the strong fourth quarter of the prior year. Coastal protection revenue increased significantly over the prior year’s comparable quarter, but was offset by lower capital and maintenance revenues.
– Gross profit margin was 10.7%, versus 15.2% in the same quarter last year. Lower gross margins on fewer capital projects in the current year and the prior year inclusion of higher margin port work in New York and New Jersey, along with coastal island restoration work in Louisiana, contributed to the decrease in gross profit margin in the current period.
– Dredging ended the year with $515.1 million of backlog which is expected to be executed primarily in the next twelve months.
Environmental & Remediation
– The segment recorded $41.6 million of revenue in the quarter and had minimal revenues in the prior year’s quarter due to the acquisition of Terra Contracting at the end of 2012.
– Gross profit margin of 21.8% was driven from strong environment remediation projects at Terra Contracting, primarily a project in the Midwest U.S. that contributed 62% of the segment’s gross profit in the quarter.
– Backlog was $28.3 million at the end of the year end, primarily related to a brownfield development project in New Jersey and two environment remediation projects.
Year Ended December 31, 2013 Highlights
– Revenue increased 24% to $731.4 million, compared to $588.4 million for the prior year largely related to the acquisition of the Terra Contracting business and increased dredging revenues. The dredging segment added $54.4 million in revenues in the year on a $100 million increase in coastal protection revenues. This was partially offset by lower capital, maintenance and rivers & lakes revenues, year over year.
– Gross profit margin slightly increased to 13.7% from 13.3% on higher foreign contract margin, primarily from the Wheatstone project in Australia and a capital dredging project in Qatar as well as a higher overall gross profit margin from the environmental & remediation line of businesses.
– Operating income was $51.4 million, up 58% from $32.6 million in the prior year on higher gross margin. A loss of use claim won in the current year and gains on asset sales partially offset an increase in G&A expense, year over year. The increase in G&A from 2012 to 2013 is mostly attributable to Terra Contracting G&A expense of $10.7 million, $5.9 million in additional personnel and related costs and $3.9 million in additional legal and professional expenses.
– Net income from continuing operations was $19.9 million, up from $6.3 million in the prior year.
– Adjusted EBITDA from continuing operations was $98.9 million versus $74.7 million in the prior year.
– Revenue jumped to $642.6 million, up 9%, driven by large foreign capital and coastal protection revenues, offset by decreases in domestic capital, maintenance and rivers & lakes revenue.
– Gross profit margin was 13.3% which is consistent with prior year.
Environmental & Remediation
– Revenue in the segment was $94.8 million from strong Terra Contracting results since the acquisition at the end of 2012.
– Gross profit margin was 15.9% which was primarily generated by strong performance at two environment remediation projects during the year.
Press Release, February 25, 2014