Great Lakes Reports Third Quarter Results

  Great Lakes Reports Third Quarter Results

                      Dredging Delivers a Strong Quarter
                   Backlog at a Record High of $606 Million

      Company Evaluating Strategic Alternatives for Demolition Business

Business Wire

OAK BROOK, Ill. -- November 5, 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 three and nine months ended September 30, 2013.

Commentary

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.”

Third Quarter 2013 Highlights

Total Company

  *Revenue increased 22.4% to $198.8 million in the third quarter of 2013
    compared to the third quarter of 2012, driven by the increase in coastal
    protection revenue and a joint Terra and Rivers & lakes remediation
    project.
  *Gross profit margin rose to 11.2% from 4.8% in the third quarter of 2012
    driven by an increase in revenue and higher contract margin and strong
    remediation results at Terra. The prior year quarter was negatively
    impacted by adjustments to reduce revenue and margin in the demolition
    business related to pending change orders.
  *General & Administrative expenses increased $7.6 million year over year.
    We continue to incur additional legal and consulting costs related to the
    revenue recognition issues discovered at year end. Terra G&A expense
    accounts for $2.8 million of the increase. Finally, we incurred an
    increase of $3.6 million in payroll and benefits costs for select
    headcount additions, mainly to our legal and financial teams, while the
    prior year reflected a reduction in accrued incentive pay.
  *Operating income was $6.2 million, $10.0 million better than the prior
    year quarter.  This increase was driven by improved operating results,
    partially offset by an increase in G&A expense. In addition, during the
    quarter the Company recorded a $3.2 million gain on the sale of an older,
    underutilized dredge in the Middle East.
  *Net income was $1.4 million in the quarter versus a Net loss of $5.3
    million in the prior year quarter.
  *Adjusted EBITDA was $19.6 million, a 150% increase from the prior year
    quarter as a result of the improvement in current quarter results compared
    to prior year.
  *Total contracted backlog at quarter end was $606 million. Excluded from
    this number is $94.6 million in domestic dredging low bids and options
    pending award.

Dredging

  *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.

Demolition

  *Demolition revenue nearly doubled to $47.1 million versus $23.7 million in
    the prior year quarter. This increase is due to $31.9 million of revenue
    generated by Terra Contracting in the quarter, offset by a decrease in
    other demolition revenue.
  *Demolition recorded negative gross profit margin of 0.5% compared to
    negative gross profit margin of 15.7% in the prior year quarter. The
    improvement is driven by positive results at Terra.
  *The demolition segment recorded an operating loss of $6.9 million versus
    an operating loss of $5.5 million in the prior year quarter. The loss was
    driven by negative gross margin and an increase in G&A expense primarily
    related to additional legal, consulting and bad debt expense in the
    demolition business, as well as the addition of Terra at the end of 2012.
  *Backlog was $97.1 million at the end of the third quarter, an increase
    from year end, primarily related to a large bridge project in New York, a
    brownfield development project in New Jersey, and an increase in Terra
    backlog.

Nine Months Ended September 30, 2013 Highlights

Total Company

  *Revenue increased 12.5% to $540.5 million for the nine months ended
    September 30, 2013, compared to the nine months ended September 30, 2012.
  *Gross profit margin for the nine months ended September 30, 2013 increased
    slightly to 9.9% from 9.7% in the prior year quarter, with negative
    results in the demolition segment offset by an increase in gross profit
    margin in the dredging segment.
  *General & Administrative expenses increased $20.3 million, year over year.
    Additional G&A expense was primarily for expenses related to the revenue
    recognition issues discovered at year end, severance cost, bad debt
    expense in the demolition segment and the addition of Terra.
  *Operating loss was $8.6 million, down from operating income of $10.4
    million in the prior year.  This was driven by the noncash charge of $21.5
    million for impairment of goodwill recorded in the demolition segment in
    the second quarter of 2013.
  *Net loss for the nine months ended September 30, 2013 was $23.4 million,
    versus a Net loss of $3.0 million in the prior year.
  *Adjusted EBITDA was $48.8 million for the nine months ended September 30,
    2013, an increase of 23.5% over the same period in the prior year.
    Adjusted EBITDA for 2013 includes $13.3 million in proceeds related to the
    dredge New York claim and the $3.2 million gain on the sale of an
    underutilized dredge in the Middle East.

Dredging

  *Revenue increased 17.1% to $465.9 million for the nine months ended
    September 30, 2013, compared to the nine months ended September 30, 2012,
    driven by an increase in domestic and foreign capital and coastal
    protection revenue, offset by decreases in maintenance and rivers & lakes
    revenue.
  *Gross profit margin for the nine months ended September 30, 2013 increased
    to 14.2% from 12.4% for the nine months ended September 30, 2012, due to
    stronger contract margin and better fixed cost coverage.
  *General & Administrative expenses increased $4.9 million, year over year.
    Additional G&A primarily related to additional payroll expense and
    severance cost.
  *Operating income was $46.7 million, an increase from $18.4 million in the
    prior year. Operating income for 2013 includes $13.3 million in proceeds
    related to the dredge New York claim.

Demolition

  *Revenue decreased 6.6% to $78.6 million for the nine months ended
    September 30, 2013, compared to the nine months ended September 30, 2012,
    driven by a decrease in the number of large projects worked on during the
    year, offset by $48.1 million of revenue from Terra.
  *Gross profit margin for the nine months ended September 30, 2013 decreased
    to a negative 16.5% from negative gross profit margin of 3.3% for the nine
    months ended September 30, 2012. This was primarily due to the decrease in
    revenue in 2013, along with cost overruns on projects and a decline in
    contract margin, offset by positive results at Terra.
  *General & Administrative expenses increased $15.5 million, year over year.
    Additional G&A expense primarily related to the revenue recognition issues
    discovered at year end and bad debt expense, as well as $7.8 million
    related to Terra.
  *Demolition generated an operating loss of $55.3 million for the nine
    months ended September 30, 2013, compared to an operating loss of $8.0
    million in the prior year, driven by the write down of goodwill in this
    segment and the operating losses described above.

Outlook

Mr. Berger concluded, “We are pleased with the performance our dredging
segment and Terra remediation business this quarter and expect this to
continue in the fourth quarter. Backlog is at a record high and short term
bidding activity remains strong, which will drive results for the next several
quarters. As I mentioned, we are evaluating strategic alternatives for our
historical demolition business.

“In October, the House passed the Water Resources Reform and Development Act
of 2013by an overwhelming majority. This bill includes language that will
require more money from the Harbor Maintenance Trust Fund be spent on
maintenance dredging over time. The Senate passed its version of the bill
earlier this year. We expect the Senate and the House bills to be reconciled
in conference soon and the White House has already indicated support for the
legislation. We were very pleased that the first piece of legislation passed
after the Federal Government shutdown was an infrastructure bill that will
help drive funding to our markets.

“The third quarter was active again for bidding, bringing the year-to-date
domestic dredging bid market total to $1.1 billion for the year, of which
Great Lakes won 55%. The 2013 market has been driven by over $400 million in
coastal protection work, primarily in response to Superstorm Sandy, as well as
an increase in capital projects. We had previously announced that we were low
bidder on an $81 million coastal restoration project that was subsequently
rebid at the end of October. We were not successful on this rebid. Although
disappointed we did not win this rebid, there are several other coastal
restoration projects on the horizon for which Great Lakes is well positioned.
We also expect more Sandy work will be bid in 2014 for long term coastal
protection projects. Finally, our TerraSea joint venture was awarded its first
contaminated sediment remediation dredging project on the Passaic River in New
Jersey and operations ramped up in the third quarter.

“We continue to actively look for projects in the Middle East and other
international markets. We are continuing negotiations on a $100 million
project in that region, which has been a slow process. It is important that we
book work internationally to utilize our fleet of vessels.

“We are currently in final negotiations with two shipyards to build our new
ATB dredge. Although we anticipate incurring increased costs to complete the
ATB, our analysis shows the vessel remains a good economic investment that
will provide strong returns to the Company.

“We will determine our course of action for the historical demolition business
in the fourth quarter. We will continue to be measured in our approach and
selectively target those demolition and environmental remediation projects we
believe that we can execute well.”

The Company will be holding a conference call at 9:00 a.m. C.S.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, November 5, 2013 at 9:00 a.m. C.S.T (10:00 a.m. E.S.T.). The call in
number is 877-377-7553 and Conference ID is 86455898. The conference call will
be available by replay until Wednesday, November 6, 2013, by calling
800-585-8367 and providing Conference ID 86455898. 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,
accelerated maintenance expense for new international deployments and goodwill
impairment. 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. 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, goodwill
impairment, 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          Nine Months Ended
                         September 30,               September 30,
                         2013          2012          2013          2012
Contract revenues        $ 198,826     $ 162,484     $ 540,536     $ 480,498
Gross profit               22,316        7,820         53,280        46,548
General and
administrative             19,219        11,667        56,717        36,390
expenses
Proceeds from loss of      -             -             (13,272 )     -
use claim
Impairment of goodwill     -             -             21,474        -
Gain on sale of           (3,146  )    (108    )    (3,086  )    (232    )
assets—net
Operating income           6,243         (3,739  )     (8,553  )     10,390
(loss)
Other income (expense)
Interest expense—net       (5,542  )     (5,105  )     (16,671 )     (15,747 )
Equity in earnings of      1,427         177           452           153
joint ventures
Loss on foreign
currency                  (178    )    (40     )    (403    )    (55     )
transactions—net
Income (loss) before       1,950         (8,707  )     (25,175 )     (5,259  )
income taxes
Income tax (provision)    (684    )    3,351       1,664       2,036   
benefit
Net income (loss)          1,266         (5,356  )     (23,511 )     (3,223  )
Net loss attributable
to noncontrolling         182         20          151         226     
interests
Net income (loss)
attributable to Great    $ 1,448      $ (5,336  )   $ (23,360 )   $ (2,997  )
Lakes Dredge & Dock
Corporation
Basic earnings (loss)
per share attributable   $ 0.02        $ (0.09   )   $ (0.39   )   $ (0.05   )
to Great Lakes Dredge
& Dock Corporation
Basic weighted average     59,526        59,253        59,444        59,154
shares
Diluted earnings
(loss) per share
attributable to Great    $ 0.02        $ (0.09   )   $ (0.39   )   $ (0.05   )
Lakes Dredge & Dock
Corporation
Diluted weighted           60,082        59,253        59,444        59,154
average shares

                                                               
Great Lakes Dredge & Dock Corporation
Reconciliation of Net Income (Loss) attributable to Great Lakes Dredge & Dock
Corporation to Adjusted EBITDA
(Unaudited and in thousands)
                                                                      
                              Three Months Ended      Nine Months Ended
                              September 30,           September 30,
                              2013       2012         2013          2012
Net income (loss)
attributable to Great Lakes   $ 1,448    $ (5,336 )   $ (23,360 )   $ (2,997 )
Dredge & Dock Corporation
Adjusted for:
Accelerated maintenance         -          922          -             2,198
expenses
Impairment of goodwill          -          -            21,474        -
Interest expense—net            5,542      5,105        16,671        15,747
Income tax provision            684        (3,351 )     (1,664  )     (2,036 )
(benefit)
Depreciation and               11,972    10,514     35,707      26,637 
amortization
Adjusted EBITDA               $ 19,646   $ 7,854     $ 48,828     $ 39,549 

                                         
Great Lakes Dredge & Dock Corporation
Selected Balance Sheet Information
(Unaudited and in thousands)
                                                
                            Period Ended
                            September 30,   December 31,
                            2013            2012
Cash and cash equivalents   $   41,322      $   24,440
Total current assets            357,706         313,690
Total assets                    856,423         826,395
Total short-term debt           2,509           13,098
Total current liabilities       179,326         185,950
Long-term debt                  295,000         250,000
Total equity                    252,519         273,425

                                                              
Great Lakes Dredge & Dock Corporation
Revenue and Backlog Data
(Unaudited and in thousands)
                                                                     
                  Three Months Ended               Nine Months Ended
                  September 30,                    September 30,
Revenues          2013            2012             2013            2012
Dredging:
Capital - U.S.    $  43,045       $   45,456       $  128,027      $ 117,547
Capital -            32,651           36,329          104,384        75,202
foreign
Coastal              54,398           20,935          163,546        92,576
protection
Maintenance          12,687           26,060          47,090         86,673
Rivers & lakes      12,688         10,031         22,868       25,801  
Total dredging       155,469          138,811         465,915        397,799
revenues
Demolition           47,078           23,673          78,611         84,148
Intersegment        (3,721   )      -              (3,990   )    (1,449  )
revenue
Total revenues    $  198,826     $   162,484      $  540,536     $ 480,498 
                                                                     
                                                                     
                  As of
                  September 30,   December 31,     September 30,
Backlog           2013            2012             2012
Dredging:
Capital - U.S.    $  149,071      $   43,177       $  96,354
Capital -            108,458          218,953         243,542
foreign
Coastal              157,782          80,245          41,875
protection
Maintenance          76,592           22,406          46,555
Rivers & lakes      16,885         24,510         34,827   
Total dredging       508,788          389,291         463,153
backlog
Demolition          97,098         60,148   *     42,574   
Total backlog     $  605,886     $   449,439      $  505,727  

* December 31, 2012 demolition backlog includes backlog acquired by the
Company on December 31, 2012 in connection with the Terra acquisition.

Contact:

For further information contact:
Great Lakes Dredge & Dock Corporation
Katie Hayes, Investor Relations
630-574-3012