Great Lakes Dredge & Dock Corporation today released its financial results for the three months ended December 31, 2016, reporting revenue of $213.4 million, net loss of $7.0 million and Adjusted EBITDA of $11.6 million.
“The following non-recurring items totaling $7.3 million negatively impacted results during the fourth quarter of 2016: a loss on an asset held for sale of $2.4 million for a vessel based in the Middle East; $2.3 million in losses related to the sale of assets in the Terra services business; and a $2.6 million loss related to the wind-down of the TerraSea joint venture,” GLDD said in its release.
Interim Chief Executive Officer and Chief Financial Officer, Mark Marinko, said: “In 2016, the Company executed well on our domestic dredging contracts, particularly on our rivers & lakes projects. Our performance was offset by a major decline in international work due to a smaller market in 2016 that impacted the entire international dredging industry as well as the absence of the Suez Canal project, which contributed robust revenue and contract margin in 2015.”
“We were pleased to have our internationally-based vessels utilized during the second half of the year, however the contracts were not at the margin of recent international projects.”
For the year ended December 31, 2016, GLDD reported revenue of $767.6 million, net loss of $8.2 million and Adjusted EBITDA of $72.0 million.
In addition to the $7.3 million non-recurring items in the fourth quarter that adversely impacted results, the Company recorded the following non-recurring items previously in the year, positively impacting results: an $8.6 million reversal of liabilities related to the estimated earn-out and restricted stock units associated with the GLEI acquisition due to the expected failure to meet performance expectations included within the stock purchase agreement and a $2.0 million reversal of variable employee compensation.
Dredging in Q4 of 2016
- Revenue in the fourth quarter of 2016 increased over the prior year period primarily due to higher foreign capital, domestic capital and rivers & lakes revenues, partially offset by lower maintenance revenue and somewhat lower coastal protection revenue;
- Gross profit margin decreased in the fourth quarter of 2016 compared to the fourth quarter of 2015, driven by lower domestic contract margin, particularly on several coastal protection projects and capital deepening projects, and lower foreign contract margin;
- Operating income decreased in the fourth quarter of 2016 compared to the prior year quarter primarily due to lower gross profit, partially offset by a $3.4 million reduction in general and administrative expense. A $2.4 million loss on a dredge held for sale in the Middle East also impacted results;
- Dredging backlog was $467.7 million at the end of the fourth quarter, a decrease of $210.0 million compared to backlog at December 31, 2015.
Dredging in 2016
- Revenue decreased in the twelve months ended December 31, 2016 compared to the prior year, primarily driven by lower foreign capital and domestic maintenance, partially offset by higher coastal protection, rivers & lakes and capital dredging revenue. International revenue decreased by $81 million due to due to a smaller market in 2016 that impacted the entire international dredging industry as well as the absence of the Suez Canal project, which contributed robust revenue and contract margin in 2015. Gross profit margin decreased in 2016 compared to 2015, primarily due to lower contract margin, with 2015 benefitting from the high margin Suez Canal project; higher overhead, primarily labor and benefit costs; and, decreased absorption of fixed costs due to lower utilization of the fleet. The decrease was partially offset by strong margins on rivers & lakes contracts;
- Operating income decreased in 2016 compared to 2015, driven by lower gross profit on lower revenues. The previously mentioned $2.0 million reversal of variable employee compensation benefit, a $2.4 million loss on the dredge held for sale, and a $0.7 million loss on the sale of a dredge earlier in the year impacted results.