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 three and nine months ended September 30, 2013.
Jonathan Berger, Chief Executive Officer stated, “For the three months ended September 30, 2013, Great Lakes reported Revenue of $198.8 million, Net income of $1.4 million and Adjusted EBITDA of $19.6 million.
“Our dredging segment activity increased after a slow second quarter, driven by $54.4 million of coastal protection revenue primarily related to Superstorm Sandy work in New Jersey, New York and Delaware. Coastal protection revenue increased by more than 150% compared to third quarter last year when activity was more in line with the normal seasonal activity for this type of work. Our Terra Contracting (“Terra”) and Rivers & lakes teams worked together throughout the quarter on a project in the Midwest valued at approximately $30 million and this work will continue through the rest of 2013. This remediation project and the increase in coastal protection revenue combined with solid results in domestic capital and foreign dredging helped drive third quarter results.
“Our dredging segment won $580 million, or 55%, of the domestic dredging bid market through the first nine months of 2013. Year-to-date in 2013, over $400 million of coastal protection work has been bid, nearly double the amount bid in all of 2012. Great Lakes has been awarded over 56% of these projects. Much of this work was funded by a special appropriations bill passed in response to Superstorm Sandy to restore miles of coastline damaged by this epic storm. Our win rate this year was also driven by the award of the first phase of the PortMiami project for $122 million.
“Throughout the third quarter, we continued to focus on our historical demolition business. We have been pleased with the strides we have made to improve our internal control environment; however, achieving profitability in this unit remains challenging. We previously stated that if we were unable to return to profitability in this business, we would examine our options. We are currently assessing strategic alternatives for our historical demolition business. We are engaging a financial advisor to help us evaluate our alternatives. The companies in this part of our historical demolition segment offer valuable services, primarily in the Northeast region, but they may be better served under a different ownership structure.”
William Steckel, Chief Financial Officer stated, “As expected, dredging activity in the third quarter picked up after a slow second quarter. Our dredging business continues to book high levels of work, and we are executing well in that segment. In addition, our focus on working capital improved our net cash position by nearly $20 million and decreased our investment in working capital by $23 million.
“Second quarter results included an estimated noncash charge of $21.5 million, which represented all the goodwill associated with our NASDI and Yankee demolition subsidiaries. In the third quarter we finalized our annual goodwill assessment and determined that no further adjustments were necessary.
“We continue to work diligently on the pending change orders that have been outstanding since last year in our demolition business. As we have previously noted, this is an involved process that requires negotiation with our customers and at times the ultimate client. We feel confident we will collect a portion of the change order revenue, but we can provide no assurance as to the amount and timing.”
• Dredging revenues were $155.5 million for the quarter, a 12.0% increase over the prior year. Coastal protection revenue increased significantly over prior year, while maintenance revenue was down and all other markets were in line with the prior year quarter.
• Gross profit margin was 14.5%, versus 8.3% in the same quarter last year. Gross margin increased due to improved contract margin and higher revenue that resulted in better fixed cost coverage. In addition, in the prior year quarter additional plant expense was incurred for work performed on vessels moving to our project in Australia.
• Operating income increased $11.3 million to $13.1 million compared to $1.8 million in the prior year quarter, driven by improved revenue and contract margin, as well as a $3.2 million gain on the sale of an underutilized dredge in the Middle East.
• The Company won approximately 55%, or $580 million, of the domestic dredging bid market in the first nine months of 2013.