GLDD reports a red ink quarter

Written by Nick Blenkey
Great lakes Dredge & Dock Logo

Shares in Great Lakes Dredge & Dock Corporation (Nasdaq: GLDD) were down some 19% this morning as the largest provider of dredging services in the U.S. reported a net loss of $4.0 million for the quarter ended June 30, 2022.

Second quarter 2022 highlights
  • Revenue was $149.4 million in the second quarter
  • Total operating loss was $0.3 million in the second quarter
  • Net loss was $4.0 million in the second quarter
  • Adjusted EBITDA was $10.2 million in the second quarter

“Our second quarter results did not meet expectations as we continue to face and navigate a challenging environment driven by external factors including supply chain delays, inflationary pressures, adverse weather conditions combined with some atypical dredging project challenges,” said president and CEO Lasse Petterson.

“During the quarter, three of our larger projects encountered differing and unanticipated site conditions which negatively impacted production,” continued Petterson. “We are working to resolve the cost impact through contractual discussions with our customers, however revenue and profit recognition is delayed until these discussions are finalized.

“Supply chain delays impacted both the Liberty Island’s and Carolina’s drydockings, which caused both dredges to be delayed several weeks mobilizing to their projects. In addition, rapidly increasing inflation impacted the cost of labor, operating supplies, and drydockings in the quarter, which we are now accounting for in bids.

“We also had several projects impacted by unseasonably rough sea conditions along the east coast that caused several vessels to stop operating and seek shelter, which extended completion timelines and delayed commencement of subsequent projects.

“Finally, bids for new dredge projects did not materialize as early as in previous years, resulting in idle time for two dredges for part of the quarter. However, we expect bidding to increase substantially for the remainder of the year and July is already off to a strong start, in which Great Lakes was low bidder on 74% of the $250 million of work that bid in the month.

“As we enter the third quarter, we expect results for the second half of 2022 to be stronger than the first, however due to the issues encountered in the first half of the year, we do not anticipate meeting full year expectations.”

OUTLOOK REMAINS STRONG

Petterson said that in spite of the current short-term challenges, the outlook for GLDD remains strong.

“We continue to see increased market demand backed by strong government support and development of new LNG export facilities that we expect will benefit Great Lakes and our market position in the upcoming years,” he said. “Our newbuild program is on schedule with the new hopper dredge, the Galveston Island, expected to be ready for operations in the first half of 2023 and her sister ship expected to be ready for operations in 2025.”

“Our recently announced offshore wind award by Equinor and BP solidifies Great Lakes’ entry into the U.S. offshore wind market with a major project award for our subsea rock installation vessel currently being built for expected delivery in late 2024,” said Petterson. “Our goal is to contribute to building the U.S. offshore wind industry, which we anticipate will provide an avenue for diversification and growth for our company.”

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