Great Lakes Reports First Quarter Results

  Great Lakes Reports First Quarter Results                         Company Backlog of $593 Million      Rivers & Lakes and Environmental & Remediation Backlog at Record Level  Business Wire  OAK BROOK, Ill. -- May 6, 2014  Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest provider of dredging services in the United States and a major provider of environmental and remediation services, today reported financial results for the quarter ended March 31, 2014.  For the quarter ended March 31, 2014, Great Lakes reported Revenue of $174.4 million, Net loss from continuing operations of $2.5 million, and Adjusted EBITDA from continuing operations of $12.0 million.  Jon Berger, Chief Executive Officer, commented, “The dredging segment delivered $162.0 million in revenue and 12.9% gross profit margin in the first quarter of 2014. The first two months of the quarter were impacted by severe weather, which both contributed to longer project durations and equipment downtime for maintenance, resulting in reduced gross profit margin. The margin contraction also was driven by minimal dredging activity in the Middle East. Our fleet located in the Middle East was essentially idle in the quarter; however, work has begun on a project in Saudi Arabia and the Company is pursuing strong possibilities to put the fleet to work in the second half of the year. Increases in coastal protection revenue particularly along the East Coast and maintenance revenue were offset by decreases in domestic and foreign capital revenue and rivers & lakes dredging revenue.  “Despite the slow start in January and February, we have already experienced an improvement in March and are optimistic that this momentum will continue throughout the year. The severe weather delays will result in revenues to be earned in future periods as the work on the underlying projects is completed.  “Terra, which comprises our environmental & remediation segment, continues to demonstrate a solid performance, reporting a $6.5 million increase in Revenue over first quarter 2013 to $12.7 million in the first quarter of 2014, even while experiencing its own downtime due to the severe weather.”  Katie Hayes, Interim Chief Financial Officer stated, “As was previously announced, on April 23, 2014, we completed the sale of two subsidiaries that comprised the historical demolition business, NASDI, LLC and Yankee Environmental Services, LLC. Great Lakes retains the right to collect on outstanding accounts receivable and work in process at the date of close, as well as any outstanding claims.  “Despite the slow start to the year, we were able to decrease our investment in working capital, and keep debt levels fairly constant with year-end. The Company continues to focus on driving higher operating cash flows and to critically evaluate spending priorities on our investment in equipment.”  First Quarter 2014 Highlights  Total Company    *Revenue decreased to $174.4 million in the first quarter of 2014, down     3.2% from a very strong first quarter of 2013 largely related to lower     dredging revenues. Our dredging segment recorded lower revenues in the     current year quarter on lower capital dredging and rivers & lakes     revenues, partially offset by higher maintenance and coastal protection     revenues.   *Gross profit margin declined to 12.0% in the first quarter of 2014 from     17.1% in the prior year first quarter driven by tightening margins in     certain of our dredging contracts due to severe weather and equipment     downtime, partially offset by higher profit margins on our projects in the     current year within the rivers & lakes and environmental & remediation     businesses.   *Operating income was $2.9 million for the quarter, down $11.6 million from     the prior year quarter, primarily due to lower coverage of fixed costs.   *Net loss from continuing operations was $2.5 million in the quarter, down     from the prior year quarter due to the items noted above. Net loss (which     includes both continuing and discontinued businesses) was $5.2 million, on     the lower results in the dredging business and losses in our discontinued     operations compared to Net Income of $0.4 million in the comparable     quarter of the prior year.   *Adjusted EBITDA from continuing operations was $12.0 million, down from     $25.4 million in the first quarter of 2013 on lower operating income.   *Total contracted backlog at quarter end was $592.5 million.  Dredging    *Dredging earned revenues of $162.0 million in the first quarter,     decreasing from $174.0 million in the first quarter of the prior year.     Severe weather and mechanical downtime were the primary drivers of the     domestic revenue shortfall. A slowdown in the Middle East resulted in     unfavorable foreign revenue compared to the 2013 first quarter. First     quarter 2013 was an exceptionally strong quarter for dredging as the     majority of the domestic and international fleet was utilized and there     were minimal weather impacts.   *Gross profit margin was 12.9%, versus 18.0% in the same quarter last year.     As noted above, weather and mechanical delays, along with lower fixed     costs coverage drove margin down. Dredging ended the first quarter with     $515.1 million of backlog, essentially unchanged from the backlog at     year-end.  Environmental & Remediation    *The segment recorded $12.7 million of revenue in the quarter, a $6.5     million increase over the first quarter of the prior year, as a result of     working on more projects in the current quarter.   *Gross profit margin of 0.4% compared to a loss of 8.4% in the prior year     quarter. Better fixed cost coverage allowed for improvement in gross     profit, but severe weather partially offset the improvement in contract     margins.   *Backlog was $77.4 million at the end of the first quarter, primarily     related to a brownfield development project in New Jersey and several     environment remediation projects, including a new phase of remediation on     the long term Enbridge project in Michigan.  Outlook  Mr. Berger stated, “In the first quarter of 2014, our dredging segment won $140 million in dredging contracts, largely driven by the $89 million award for our rivers & lakes dredging unit’s Lake Decatur contract as well as additional capital work, including the award of the last phase of the PortMiami deepening. We were awarded 100% of the coastal protection work put out to bid during the first quarter, but this sector of the dredging market saw few opportunities in the quarter. As stated previously, we expect more coastal protection projects to be funded by special appropriations committed after Superstorm Sandy, and we continue to expect the timing of these contracts to occur later in 2014. Subsequent to the end of the quarter, the Company was low bidder on three additional contracts collectively totaling $51 million that will be included in future backlog when awarded.  “Moving into the second quarter, we will utilize our fleet on a mix of capital projects, including the PortMiami deepening, coastal protection projects and maintenance dredging. Internationally, we are pursuing several bidding opportunities, especially in the Middle East, which would allow for strong utilization of our internationally deployed fleet.  “We remain optimistic that the Senate and House will agree on a final version of the Water Resources Reform and Development Act for passage by the end of the second quarter.The bill provides for important reforms to the Harbor Maintenance Trust Fund, which will add to funding available for dredging projects, and to the Corps of Engineers planning process, which will help expedite projects. This bill also provides authorization for specific port deepening projects, such as the Port of Jacksonville, Lake Worth and Port Everglades in Florida. Clearly, this bill is positive news for the dredging industry.  “Finally, the environmental & remediation segment has a very strong backlog of $77 million, with the $35 million Enbridge job being a significant driver. Terra also will be executing a portion of the Lake Decatur project, again validating our combined service offerings’ attractiveness to the market. We expect the majority of the environmental & remediation segment’s backlog to be completed in 2014. To ensure successful execution on its expanding workload, Terra has proactively aligned its project management to the upcoming growth, and we are confident that this work will be executed 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 6, 2014 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 39800450. The conference call will be available by replay until Wednesday, May 7, 2014, by calling 800-585-8367 and providing Conference ID 39800450. 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 from Continuing Operations  Adjusted EBITDA from continuing operations, as provided herein, represents net income attributable to common stockholders of 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 or asset impairments. Adjusted EBITDA from continuing operations is not a measure derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company presents Adjusted EBITDA from continuing operations as an additional measure by which to evaluate the Company’s operating trends. The Company believes that Adjusted EBITDA from continuing operations 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 from continuing operations to evaluate the Company’s period to period performance. Additionally, management believes that Adjusted EBITDA from continuing operations 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 from continuing operations to assess performance for purposes of determining compensation under the Company’s incentive plan. Adjusted EBITDA from continuing operations 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 from continuing operations, 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 or asset impairments, 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 from continuing operations only as a supplement. Adjusted EBITDA from continuing operations is reconciled to net income (loss) attributable to common stockholders of 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 a significant provider of environmental and remediation services. 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 124-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, 2013, 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,                                                      2014          2013 Contract revenues                                    $ 174,382     $ 180,153 Gross profit                                           20,907        30,734 General and administrative expenses                    17,870        16,236 Loss on sale of assets—net                            152         2        Operating income                                       2,885         14,496 Other income (expense) Interest expense—net                                   (5,016  )     (5,733  ) Equity in loss of joint ventures                       (1,843  )     (591    ) Gain on foreign currency transactions—net             65          36       Income (loss) from continuing operations before        (3,909  )     8,208 income taxes Income tax (provision) benefit                        1,453       (3,456  ) Income (loss) from continuing operations               (2,456  )     4,752 Loss from discontinued operations, net of income      (2,739  )    (4,341  ) taxes Net income (loss)                                      (5,195  )     411 Net loss attributable to noncontrolling interest      -           22       Net income (loss) attributable to common stockholders of Great Lakes Dredge & Dock            $ (5,195  )   $ 433      Corporation                                                                       Basic earnings (loss) per share attributable to      $ (0.04   )   $ 0.08 continuing operations Basic loss per share attributable to discontinued     (0.05   )    (0.07   ) operations, net of tax Basic earnings (loss) per share attributable to      $ (0.09   )   $ 0.01 Great Lakes Dredge & Dock Corporation Basic weighted average shares                          59,708        59,369                                                                       Diluted earnings (loss) per share attributable to      (0.04   )     0.08 continuing operations Diluted loss per share attributable to                (0.05   )    (0.07   ) discontinued operations, net of tax Diluted earnings (loss) per share attributable to    $ (0.09   )   $ 0.01 Great Lakes Dredge & Dock Corporation Diluted weighted average shares                        59,708        60,017                                                                Great Lakes Dredge & Dock Corporation Reconciliation of Net Income (Loss) attributable to Great Lakes Dredge & Dock Corporation to Adjusted EBITDA from Continuing Operations (Unaudited and in thousands)                                                                                                                    Three Months Ended                                               March 31,                                               2014               2013 Net income (loss) attributable to common stockholders of Great Lakes Dredge & Dock     $   (5,195   )     $  433 Corporation Loss from discontinued operations, net of         (2,739   )        (4,341  ) income taxes Net loss attributable to noncontrolling          -               22       interest Income (loss) from continuing operations          (2,456   )        4,752 Adjusted for: Interest expense—net                              5,016             5,733 Income tax provision (benefit)                    (1,453   )        3,456 Depreciation and amortization                    10,885          11,451   Adjusted EBITDA from continuing               $   11,992        $  25,392   operations                                        Great Lakes Dredge & Dock Corporation Selected Balance Sheet Information (Unaudited and in thousands)                                                                          Period Ended                             March 31,   December 31,                             2014        2013 Cash and cash equivalents   $ 58,695    $   75,338 Total current assets          324,204       361,053 Total assets                  825,790       852,645 Total current liabilities     173,328       193,899 Long-term debt                287,000       285,000 Total equity                  237,700       242,101                                                                                           Great Lakes Dredge & Dock Corporation Revenue and Backlog Data (Unaudited and in thousands)                                                                              Three Months Ended                               March 31, Revenues                      2014          2013 Dredging: Capital - U.S.                $ 34,475      $ 45,508 Capital - foreign               16,470        38,385 Coastal protection              70,720        56,921 Maintenance                     36,311        27,764 Rivers & lakes                 3,984       5,381 Total dredging revenues         161,960       173,959 Environmental & remediation     12,730        6,194 Intersegment revenue           (308    )    - Total revenues                $ 174,382    $ 180,153                                                                                      As of                               March 31,   December 31,   March 31, Backlog                       2014        2013           2013 Dredging: Capital - U.S.                $ 189,450   $   176,117    $ 103,061 Capital - foreign               98,849        98,666       195,292 Coastal protection              76,583        143,498      33,978 Maintenance                     38,826        70,633       2,211 Rivers & lakes                 111,441      26,158      26,339 Total dredging backlog          515,149       515,072      360,881 Environmental & remediation    77,363       28,330      27,548 Total backlog                 $ 592,512   $   543,402    $ 388,429  Contact:  For further information contact: Great Lakes Dredge & Dock Corporation Katie Hayes Interim Chief Financial Officer 630-574-3012  
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