Great Lakes Dredge reports improved first quarter results

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

America’s largest provider of dredging services Great Lakes Dredge & Dock Corporation (Nasdaq: GLDD) reported first quarter 2023 results that included a total operating loss of $0.9 million, a net loss of $3.2 million and adjusted EBITDA of $10.2 million. Revenue was $158 million. Despite the red ink, all this was an improvement on what had gone before.

“We reported improved results in the first quarter of 2023, showing improvements in gross profit margins and adjusted EBITDA from the prior three quarters,” said GLDD president and CEO Lasse Petterson. “Despite facing continued challenges related to weather delays in the Northeast and a lower-than-normal amount of capital work, we ended the quarter with revenues of $158.0 million and adjusted EBITDA of $10.2 million. The company’s improved first quarter performance is primarily due to more project work for our vessels and adjustments we have made to the business and operations to improve profitability.

“We have taken swift and proactive action on cost reductions and fleet adjustments. Last year we retired the 42-year-old hopper dredge, the Terrapin Island, and we currently have cold stacked two major dredges and support equipment as we continue to watch the bid market. Correspondingly, we are adjusting our general and administrative, overhead cost structures and dredging fleet to reflect the changed market conditions, which have already led to substantially reduced costs in 2023.”

“In the first quarter of 2023, Great Lakes’ total bid market reached over $300 million, which is approximately $125 million greater than the first quarter of 2022. The port deepening and widening projects that were delayed in 2022 are starting to enter the market. The first quarter saw one capital project bid, and April 2023 included one more capital project.

“Great Lakes ended the quarter with $327.1 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 $516.9 million in low bids and options pending award. The company’s awarded work during the quarter represents 31.7% of the first quarter bid market. Not included in the first quarter backlog is the Freeport Capital Port Deepening project, on which Great Lakes was low bidder in April for approximately $160 million, which is the third largest domestic capital project Great Lakes has won in its history. We are also optimistic that one or two liquified natural gas projects on which we are low bidder could achieve final investment decision in 2023 with dredging to potentially start in the 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.

“Although we have seen overall improvement in results in the first quarter, and bidding has picked up, second quarter utilization is expected to be lower than the first quarter. 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, the Amelia Island, is expected to be delivered in 2025.

“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, which will be named the Acadia, 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.”

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