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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, 2012.
Chief Executive Officer Jonathan Berger said, “We were very excited with the number and quality of projects won in the first quarter. The projects add significantly to backlog, provide a longer term perspective of our operating results and expand our customer base. The win rate in the domestic bid market was an impressive 53%, and was complemented by adding $180 million for the Wheatstone LNG project in Australia. This resulted in a total backlog of $584 million, setting a new record high level. The demolition segment continues on the right track, performing well on projects in backlog and securing larger, more complex projects that should result in higher margins.
Mr. Berger added, “First quarter Adjusted EBITDA fell short of our budget by 16%, which was primarily attributable to offshore weather conditions, mainly wind that produced rough seas, during portions of January and February that delayed and impacted margins on certain projects. However, we remain on track for our full year expectation and therefore are well positioned to have a solid 2012.
Mr. Berger continued, “In January 2008, our dredge
New York was hit by the
Orange Sun tanker in the approach channel to Port Newark, New Jersey, sustaining heavy damage including a large rupture in her port side. During the first quarter of 2012, the Company received a favorable judgment on its loss of use claim against the
Orange Sun and her owners, with a judgment to Great Lakes of $11.7 million in damages plus interest. Judgment was rendered in the aggregate amount of $13.2 million. While this judgment has been appealed, we believe the judgment will ultimately be upheld.”
2012 First Quarter Operating Results
Gross Profit Margin
Net Income attributable to Great Lakes
Per Diluted Share
March 31, 2012
March 31, 2011
Cash and cash equivalents
* Net debt equals debt less cash and cash equivalentsRevenue & Gross Profit
Revenue was similar between quarters, although dredging revenue declined due to weather delays on projects as well as the non-recurring $15.7 million of Louisiana berm work included in the 2011 first quarter results. Demolition revenue increased $13.8 million, driven by continued growth in bridge demolition work.
Gross profit margin (gross profit divided by revenue) declined in the quarter due to weather impacts and subsequent lower dredge utilization that resulted in lower fixed cost coverage.
Demolition gross profit margin improved to 12.5% from a loss of 1.8% in 2011. Projects that previous demolition management had entered into, and for which loss reserves had been recorded, are now nearing completion.
Impacted by items noted above;
In addition, operating income was negatively affected by increased general and administrative expenses primarily due to legal expenses related to litigation for the dredge New York and loss of use claim.
Net Income Attributable to Great Lakes
First quarter net income attributable to Great Lakes was affected by lower operating earnings, while the 2011 first quarter included debt restructuring expense of $5.1 million related to the issuance of the $250 million of 7.375% senior notes.
Cash and cash equivalents
Cash and cash equivalents declined due to working capital investments for certain 2012 projects and the investment to prepare people and equipment to mobilize to Australia for the Wheatstone project.
Bid Market & Backlog
The domestic dredging bid market for the quarter ended March 31, 2012 totaled $230 million, compared to $197 million in the prior year. The Company won 53% of the overall domestic bid market, above its prior three year average of 39%. For the first quarter of 2012 Great Lakes won:
76%, or $20 million, of the beach nourishment projects awarded;
100%, or $53 million, of the capital projects awarded;
22%, or $23 million, of the maintenance projects awarded; and
56%, or $24 million, of the rivers & lakes projects awarded.
The domestic dredging bid market grew year over year largely from capital dredging and rivers & lakes dredging projects. Despite continued budget pressures at the federal, state and municipal levels, addressing infrastructure and coastal protection needs continues to gain visibility, thereby growing in importance and political momentum. As previously noted, project timing, competitive factors and equipment utilization/deployment can result in significant variability in bid results in any given period.