Great Lakes Reports First Quarter Results

  Great Lakes Reports First Quarter Results

 Dredging Segment Delivers another Outstanding Quarter with Improved Margins

                Company Maintains Over $400 Million in Backlog

Business Wire

OAK BROOK, Ill. -- May 07, 2013

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), 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 quarter ended March 31, 2013.

Commentary

Jonathan Berger, Chief Executive Officer stated, “For the three months ended
March 31, 2013, Great Lakes reported Revenue of $188.8 million, Net Income of
$0.4 million and Adjusted EBITDA of $18.1 million. Our first quarter results
reflect excellent performance in the dredging segment and challenges in the
demolition segment. We continue to strive for strong execution and growth in
all of our operations, with a particular focus on improvements required in
demolition.

“Our new Terra Contracting Services business is integrating well into Great
Lakes and is driving new opportunities. As we had planned, Terra Contracting
and our Rivers & lakes group are teaming together on a project in the Midwest
valued at approximately $25 million that will combine Terra Contracting’s
services and Rivers & lakes’ dredging abilities. This significant win should
contribute to both groups’ revenues as we mobilize late in the second quarter
and execute in the field for the reminder of the year. Also, our environmental
joint venture company, TerraSea, is in final negotiations for an environmental
project in New Jersey. ”

William Steckel, Chief Financial Officer stated, “Dredging had an outstanding
quarter with $174 million in revenue and 18% gross margin. Gross margin
improved as a result of a better mix of projects that resulted in stronger
contract margins, better execution on projects in backlog and minimal downtime
related to weather and mechanical delays.

“With regard to our demolition segment, we continue to focus on improving
execution and internal controls to deliver better results. The first quarter
was negatively impacted by delays in three projects resulting in a shift of $7
million of revenue into the remainder of 2013. In addition, another project
experienced unexpected cost overruns. We are dedicating significant corporate
resources and working with division management to improve execution and
results of this segment.

“We are making progress in discussions with our customers on the pending
change orders that we were unable to record in 2012. We were able to record
approximately $2 million of that revenue in the first quarter and continue to
work diligently to have the remaining items resolved.”

First Quarter 2013 Highlights

Total Company

  *Revenue increased 22% to $188.8 million in the first quarter of 2013
    compared to the first quarter of 2012.
  *Gross profit margin increased to 13.7% from 12.9% in the first quarter of
    2012.
  *General & Administrative expenses increased $5.9 million, year over year.
    Additional G&A expense in the quarter primarily related to the revenue
    recognition issues discovered at year-end, as well as the addition of
    Terra Contracting.
  *Net Income was $0.4 million in the quarter, versus $1.1 million in the
    prior year quarter.
  *Adjusted EBITDA increased 23.1% to $18.1 million from $14.7 million in the
    prior year quarter.
  *Operating income was $6.6 million, slightly down from $6.8 million in the
    prior year quarter.
  *Total contracted backlog at quarter end was $418 million. Excluded from
    this number is $18 million in domestic dredging low bids and options
    pending award.

Dredging

  *Dredging revenues were $174.0 million for the quarter, an increase of 41%
    from the prior year quarter, driven by coastal protection revenue as well
    as domestic and foreign capital revenue.
  *Gross profit margin was 18%, versus 13% in the same quarter last year,
    driven by an increase in revenue and more favorable weather and better
    production compared to the prior year.
  *Operating income increased 288% to $19.0 million compared to $4.9 million
    in the prior year quarter, driven by increased gross profit, partially
    offset by an increase in G&A expenses, primarily related to increases in
    payroll, legal and professional fees.
  *The Company won 52%, or $118 million, of the domestic dredging bid market
    in the quarter.

Demolition

  *Demolition revenue decreased 54.2% to $14.9 million versus $32.5 million
    in the prior year quarter. The revenue in 2013 includes $6.1 million of
    Terra Contracting revenue.
  *Demolition recorded negative gross profit margin of 36.8% compared to
    gross profit margin of 12.5% in the prior year quarter, driven by the
    decrease in revenue and cost overruns on certain projects.
  *The demolition segment recorded an operating loss of $12.4 million versus
    an operating profit of $1.9 million in the prior year, a result of the
    negative gross profit and additional G&A expenses, primarily related to
    bad debt as well as the addition of Terra Contracting at the end of 2012.
  *Backlog was $56.7 million at the end of the first quarter, down slightly
    compared to year-end.

Outlook

Mr. Berger concluded, “Dredging delivered another strong quarter and we expect
to perform well in this segment going forward. Our Australia and Brazil
projects will begin dredging in the second quarter. We were awarded a $30
million New Jersey coastal protection project in April and other similar
projects are being advertised for bid.

“The domestic dredging bid market has been active throughout 2013. As noted,
we won 52% of the market in the first quarter, primarily capital work, and
added a $30 million coastal protection project in April. As a result of the
quarter win rate, dredging backlog was $361 million, only slightly down from
year-end. There continue to be numerous Superstorm Sandy related projects on
the horizon. We currently see 15-20 coastal protection projects, needed as a
result of Superstorm Sandy, expected to bid in the near term. The domestic
dredging bid market continues to be active in the second quarter. The State of
Louisiana recently announced $340 million of potential projects funded by the
initial BP settlement.

“In March of 2012 we announced we had received a favorable judgment in the
amount of $13.3 million in our pursuit of a loss of use claim after our Dredge
New York was struck by an orange juice tanker in January 2008. This ruling was
appealed and on April 30, 2013, the appellate court affirmed the trial court’s
opinion.”

“The demolition segment will require additional time and expense to improve
operations and deliver better results. We see numerous demolition and
environmental remediation opportunities on the horizon, and we will be
measured in our approach and selectively target those projects we believe that
we can execute well.

The Company will be holding a conference call at 9:00 a.m. C.D.T. today where
we will further discuss these results. Information on this conference call can
be found below.

Conference Call Information

The Company will conduct a quarterly conference call, which will be held on
Tuesday, May 7, 2013 at 9:00 a.m. C.D.T. (10:00 a.m. E.D.T.). The call in
number is 877-377-7553 and conference ID is 64173739. The conference call will
be available by replay until March 10, 2013, by calling 800-585-8367 and
providing passcode 64173739. The live call and replay can also be heard on the
Company’s website, www.gldd.com, under Events & Presentations on the investor
relations page. Information related to the conference call will also be
available on the investor relations page of the Company’s website.

Use of Adjusted EBITDA

Adjusted EBITDA, as provided herein, represents net income attributable to
Great Lakes Dredge & Dock Corporation, adjusted for net interest expense,
income taxes, depreciation and amortization expense, debt extinguishment and
accelerated maintenance expense for new international deployments. In 2012,
the Company modified the Adjusted EBITDA calculation for accelerated
maintenance expense for new international deployments that are not directly
recoverable under the related dredging contract and are therefore expensed as
incurred. The Company does not frequently incur significant accelerated
maintenance as a part of its international deployments. As such, the exclusion
of these accelerated maintenance expenses from the calculation of Adjusted
EBITDA allows users of the financial statements to more easily compare our
year-to-year results. This modification is not, however, relevant to Adjusted
EBITDA calculations for the first quarter of 2012 or the first quarter of
2013. Adjusted EBITDA is not a measure derived in accordance with accounting
principles generally accepted in the United States of America (“GAAP”). The
Company presents Adjusted EBITDA as an additional measure by which to evaluate
the Company’s operating trends. The Company believes that Adjusted EBITDA is a
measure frequently used to evaluate performance of companies with substantial
leverage and that the Company’s primary stakeholders (i.e., its stockholders,
bondholders and banks) use Adjusted EBITDA to evaluate the Company’s period to
period performance. Additionally, management believes that Adjusted EBITDA
provides a transparent measure of the Company’s recurring operating
performance and allows management to readily view operating trends, perform
analytical comparisons and identify strategies to improve operating
performance. For this reason, the Company uses a measure based upon Adjusted
EBITDA to assess performance for purposes of determining compensation under
the Company’s incentive plan. Adjusted EBITDA should not be considered an
alternative to, or more meaningful than, amounts determined in accordance with
GAAP including: (a) operating income as an indicator of operating performance;
or (b) cash flows from operations as a measure of liquidity. As such, the
Company’s use of Adjusted EBITDA, instead of a GAAP measure, has limitations
as an analytical tool, including the inability to determine profitability or
liquidity due to the exclusion of accelerated maintenance expense for new
international deployments, interest and income tax expense and the associated
significant cash requirements and the exclusion of depreciation and
amortization, which represent significant and unavoidable operating costs
given the level of indebtedness and capital expenditures needed to maintain
the Company’s business. For these reasons, the Company uses operating income
to measure the Company’s operating performance and uses Adjusted EBITDA only
as a supplement. Adjusted EBITDA is reconciled to net income attributable to
Great Lakes Dredge & Dock Corporation in the table of financial results. For
further explanation, please refer to the Company’s SEC filings.

The Company

Great Lakes Dredge & Dock Corporation is the largest provider of dredging
services in the United States and the only U.S. dredging company with
significant international operations. The Company is also one of the largest
U.S. providers of commercial and industrial demolition and remediation
services primarily in the Northeast and Midwest. The Company owns a 50%
interest in a marine sand mining operation in New Jersey that supplies sand
and aggregate for road and building construction and a 50% interest in an
environmental service operation with the ability to remediate soil and dredged
sediment treatment. Great Lakes employs over 150 degreed engineers, most
specializing in civil and mechanical engineering, which contributes to its
123-year history of never failing to complete a marine project. Great Lakes
has a disciplined training program for engineers that ensures
experienced-based performance as they advance through Company operations.
Great Lakes also owns and operates the largest and most diverse fleet in the
U.S. industry, comprised of over 200 specialized vessels.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking"
statements as defined in Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"), the Private Securities Litigation Reform Act of 1995
(the "PSLRA") or in releases made by the Securities and Exchange Commission
(the "SEC"), all as may be amended from time to time. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or achievements of
Great Lakes and its subsidiaries, or industry results, to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Statements that are not historical fact are
forward-looking statements. Forward-looking statements can be identified by,
among other things, the use of forward-looking language, such as the words
"plan," "believe," "expect," "anticipate," "intend," "estimate," "project,"
"may," "would," "could," "should," "seeks," or "scheduled to," or other
similar words, or the negative of these terms or other variations of these
terms or comparable language, or by discussion of strategy or intentions.
These cautionary statements are being made pursuant to the Exchange Act and
the PSLRA with the intention of obtaining the benefits of the "safe harbor"
provisions of such laws. Great Lakes cautions investors that any
forward-looking statements made by Great Lakes are not guarantees or
indicative of future performance. Important assumptions and other important
factors that could cause actual results to differ materially from those
forward-looking statements with respect to Great Lakes, include, but are not
limited to, risks and uncertainties that are described in Item 1A. "Risk
Factors" of Great Lakes’ Annual Report on Form 10-K for the year ended
December 31, 2012, and in other securities filings by Great Lakes with the
SEC.

Although Great Lakes believes that its plans, intentions and expectations
reflected in or suggested by such forward-looking statements are reasonable,
actual results could differ materially from a projection or assumption in any
forward-looking statements. Great Lakes' future financial condition and
results of operations, as well as any forward-looking statements, are subject
to change and inherent risks and uncertainties. The forward-looking statements
contained in this press release are made only as of the date hereof and Great
Lakes does not have or undertake any obligation to update or revise any
forward-looking statements whether as a result of new information, subsequent
events or otherwise, unless otherwise required by law.

                                                                
Great Lakes Dredge & Dock Corporation
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except per share amounts)
                                                                     
                                                     Three Months Ended
                                                     March 31,
                                                     2013          2012
                                                                     
Contract revenues                                    $ 188,847     $ 154,907
                                                                     
Gross profit                                           25,783        20,022
                                                                     
General and administrative expenses                    19,187        13,267
(Gain) loss on sale of assets—net                     2           (31     )
                                                                     
Operating income                                       6,594         6,786
                                                                     
Other income (expense)
Interest expense—net                                   (5,733  )     (5,259  )
Equity in loss of joint ventures                       (590    )     (16     )
Gain on foreign currency transactions—net             36          6       
                                                                     
Income before income taxes                             307           1,517
                                                                     
Income tax (provision) benefit                        104         (564    )
                                                                     
Net income                                             411           953
                                                                     
Net loss attributable to noncontrolling interests     22          115     
                                                                     
Net income attributable to Great Lakes Dredge &      $ 433        $ 1,068   
Dock Corporation
                                                                     
                                                                     
                                                                     
Basic earnings per share attributable to Great       $ 0.01        $ 0.02
Lakes Dredge & Dock Corporation
Basic weighted average shares                          59,369        59,038
                                                                     
                                                                     
Diluted earnings per share attributable to Great     $ 0.01        $ 0.02
Lakes Dredge & Dock Corporation
Diluted weighted average shares                        60,017        59,434

                                                                
Great Lakes Dredge & Dock Corporation
Reconciliation of Net Income attributable to Great Lakes Dredge & Dock
Corporation to Adjusted EBITDA
(Unaudited and in thousands)
                                                                       
                                                   Three Months Ended
                                                   March 31,
                                                   2013             2012
                                                      
                                                                       
Net income attributable to Great Lakes Dredge &    $  433           $  1,068
Dock Corporation
Adjusted for:
Interest expense—net                                  5,733            5,259
Income tax provision (benefit)                        (104    )        564
Depreciation and amortization                        12,075         7,764
                                                                       
Adjusted EBITDA                                    $  18,137       $  14,655

                                     
Great Lakes Dredge & Dock Corporation
Selected Balance Sheet Information
(Unaudited and in thousands)
                                            
                            Period Ended
                            March 31,   December 31,
                            2013        2012
                              
Cash and cash equivalents   $ 6,643     $   24,440
Total current assets          288,917       313,690
Total assets                  801,013       826,395
Total short-term debt         2,526         13,098
Total current liabilities     141,240       185,950
Long-term debt                271,500       250,000
Total equity                  274,585       273,425

                                                 
Great Lakes Dredge & Dock Corporation
Revenue and Backlog Data
(Unaudited and in thousands)
                                                      
                            Three Months Ended
                            March 31,
Revenues (in thousands)     2013       2012
Dredging:
Capital - U.S.            $ 45,508   $  26,907
Capital - foreign           38,385      18,025
Coastal protection          56,921      31,183
Maintenance                 27,764      40,545
Rivers & lakes             5,381      7,013   
Total dredging revenues     173,959     123,673
Demolition                  14,888      32,546
Intersegment revenue       -          (1,312  )
Total revenues            $ 188,847  $  154,907 
                                                      

                                                      
                          As of
                          March 31,  December 31,   March 31,
Backlog (in thousands)    2013       2012           2012
Dredging:
Capital - U.S.            $ 103,061  $  43,177      $ 151,479
Capital - foreign           195,292     218,953       247,257
Coastal protection          33,978      80,245        70,767
Maintenance                 2,211       22,406        22,166
Rivers & lakes             26,339     24,510      32,273
Total dredging backlog      360,881     389,291       523,942
Demolition                 56,651     60,148      60,427
Total backlog             $ 417,532  $  449,439    $ 584,369

Contact:

Great Lakes Dredge & Dock Corporation
Katie Hayes, Investor Relations
630-574-3012
 
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