GLDD ends red ink year with red ink quarter

GLDD president and CEO Lasse Petterson: “As expected, 2023 was a year of positive transition from a difficult 2022.”

Shares in Houston-headquartered Great Lakes Dredge & Dock Corporation (Nasdaq: GLDD) were taking a hit this morning. The dredging giant reported a fourth quarter 2022 net loss of $31.2 million and a 2022 full year net loss of $34.1 million. The net loss included an $8.1 million charge for the retirement of the 42-year old hopper dredge Terrapin Island.

President and CEO Lasse Petterson commented, “The fourth quarter continued to be impacted by a significantly delayed bid market combined with high inflation, significant weather delays on projects in the Northeast, fewer high margin capital projects, dredging project production issues, higher than anticipated drydock costs, and the retirement of the Terrapin Island.

“We are adjusting to the current situation by taking swift and proactive action on cost reductions and fleet adjustments. We have retired the 42-year-old hopper dredge, the Terrapin Island, and we have cold stacked two major dredges as we wait for the bid market to gain momentum in 2023. Correspondingly, we are adjusting our general and administrative, and overhead cost structures to reflect the changed market conditions and dredging fleet.

“Great Lakes ended the year with $377.1 million of dredging backlog, which does not include approximately $50.0 million dollars of performance obligations related to offshore wind contracts. In addition, we ended the quarter with $584.7 million in open dredging options pending award. The company’s awarded work represents 33.1% of the fourth quarter bid market.

“Our fleet renewal program remains on budget with our mid-size hopper dredge, the Galveston Island, expected to be operational mid-year 2023 and her sistership, which will be named the Amelia Island, is expected to be delivered in 2025. The two multicats, the Cape Hatteras and the Cape Canaveral, will be operational in 2023, and we have already taken delivery of three new scows.

“We are executing on our strategy to enter the fast-growing U.S. offshore wind market. Construction of our U.S. flagged Jones Act-compliant inclined fallpipe vessel for subsea rock installation is on budget and expected to be delivered and operational in the first half of 2025. In 2022, Great Lakes was awarded rock installation contracts for the Empire Wind I and II projects by Equinor and BP, with installation windows in 2025 and 2026. We are currently bidding several other offshore wind farm projects with rock installations planned for 2025 and beyond.

“To support our newbuild program, we successfully extended our revolving credit facility until July 2027 and increased its capacity to $300 million to complement our Unsecured Notes of $325 million which do not mature until 2029. We believe our balance sheet is well equipped to complete our new build and fleet renewal strategy.”

WHAT’S AHEAD FOR GLDD?

“As we begin 2023, we expect to see the dredging bid market pick up in the first half of the year.,” said Petterson. “The port deepening and widening projects that were delayed in 2022 are expected to bid in the first and second quarters of 2023, with dredging anticipated to start in the second half of the year. We are also optimistic that one or two liquified natural gas (LNG”) projects could achieve final investment decision in 2023 with dredging to potentially start in second half of the year and continuing into 2024. We expect that the improved market conditions, combined with the fleet adjustment and cost reduction initiatives we have in place, will provide improved results in 2023 and beyond.”

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