Great Lakes Dredge & Dock Corporation (GLDD) today reported financial results for the quarter ended June 30, 2016.
For the three months ended June 30, 2016, Great Lakes reported revenue of $192.2 million, net loss of $1.7 million and Adjusted EBITDA of $18.3 million.
Chief Executive Officer Jonathan Berger stated, “The Dredging segment performed well on several domestic projects during the second quarter, which partially offset the loss of the high margin foreign capital deepening work in the Suez Canal performed in the prior year quarter.“
“Due to the slowdown in the international market and as part of our strategy to optimize our fleet, the company sold the Reem Island, an older, foreign-flagged hopper dredge, during the quarter resulting in net cash proceeds of $10 million.”
“There was a $0.7 million loss recorded on the income statement associated with the sale of this vessel. However, we will save approximately $1.6 million in costs related to its operation in the second half of the year.”
Mark Marinko, Chief Financial Officer, added, “Through the first six months of the year, we invested $11.3 million of our free cash flow to finance the construction cost of our ATB hopper dredge. As stated previously, we expect to continue to deploy our free cash flow for the remainder of the year to complete construction on this vessel.”
Revenue in the second quarter of 2016 decreased over the prior year period primarily due to lower foreign and domestic capital revenue, partially offset by higher coastal protection, rivers & lakes and maintenance revenues.
Gross profit margin in the second quarter of 2016 was essentially flat compared to the second quarter of 2015, with strong execution on several domestic projects, particularly coastal protection and rivers & lakes work, offsetting lower foreign margin.
Operating income decreased 41.4% in the second quarter of 2016 compared to the prior year quarter primarily due to lower gross profit on lower revenue. The second quarter or 2016 includes a $0.7 million loss on sale of assets related to the sale of the Reem Island, a dredge that was a part of the foreign fleet.
Dredging backlog was $622.6 million at the end of the second quarter, which is a decrease of $55.1 million compared to backlog at December 31, 2015.
Mr. Berger said, “The domestic dredging bid market totaled $222 million during the second quarter of 2016. Our dredging segment won 27% of our addressable bid market, which is below the average combined dredging bid market share over the prior three years. The $39 million Dare County Beaches project is a significant portion of our awards for the second quarter.”
“Subsequent to the quarter end, we were awarded approximately $93 million in additional work, including four coastal protection awards totaling $85 million and a rivers & lakes award valued at $8 million, with an additional $6 million in options that could be awarded. With our backlog in place, we continue to expect to have a strong year in the domestic dredging market and will be safely executing on our projects.”
“We expect several large Superstorm Sandy-related coastal protection projects along the New Jersey and Long Island, New York shoreline to bid in the second half of the year, in addition to a deepening project in Philadelphia and coastal restoration projects in the Gulf of Mexico.”
“Internationally, work commenced during the second quarter on two subcontracts in the Middle East valued at approximately $55 million. We are pursuing additional opportunities in the region and also assessing sales or retirements of several older vessels in our fleet based outside of the United States,” Mr. Berger concluded.