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Great Lakes Reports Second Quarter 2012 Results

Stocks in this article: GLDD

Similar to the prior year, second quarter bidding activity slowed, but has picked up significantly since July 1 st. Several positive developments occurred in the second quarter of 2012 that the Company expects will continue to drive bidding activity for the remainder of 2012 and beyond. Congress passed legislation with provisions related to maritime issues, in particular spending provisions related to the RESTORE Act and language addressing the Harbor Maintenance Trust Fund (“HMTF”).

Great Lakes’ backlog remains at a high level, despite the slower bidding activity in the second quarter. Dredging backlog and pending domestic awards at June 30, 2012 reached $427 million, which compares favorably to $355 million at December 31, 2011. The Company’s contracted dredging backlog was $398 million at June 30, 2012 compared to $319 million at December 31, 2011.

Demolition segment backlog was $57 million and $51 million at June 30, 2012 and December 31, 2011, respectively. Similar to the dredging division, bidding activity has increased in the third quarter.

Commentary

Mr. Berger continued, “The first six months of 2012 were in line with our expectations. The dredging segment had a strong quarter, increasing revenue and experiencing favorable execution on many projects. The demolition segment continues to expand its market presence in bridge demolition work as well as other complex demolition projects. We foresee a robust second half of the year in all of our lines of business, which verifies the EBITDA guidance we announced in the first quarter. The second half results were always expected to exceed those of the first half and still require operating at an elevated level. Third quarter bidding success is key to achieving our 2012 profit plan and guidance.

“We were pleased with the passage of the RESTORE Act included in the MAP-21 (Moving Ahead for Progress in the 21 st Century) transportation bill. The RESTORE Act will ensure that 80% of the fines paid by BP as a result of the Deepwater Horizon Oil Spill will be spent on coastal restoration in the five states impacted by the spill. We expect a significant amount of the restoration will involve dredging, and this could add well over one billion dollars into the dredging market over the next five years. Included in the transportation bill were provisions calling for appropriation of Harbor Maintenance Trust Fund monies to the Army Corps of Engineers (the “Corps”) so that total budget resources on harbor maintenance for a fiscal year will be equal to the level of receipts. The recognition of the need for additional investment in U.S. ports and waterways is expected to support an increase of appropriations to future Corps’ budgets for maintenance dredging.

“In July the Administration followed with an announcement that the Corps will accelerate the approval process by at least nine months for deepening projects in five key East Coast ports. The President has announced that there are 43 priority infrastructure projects in total that are expected to be expedited. The public investment in port infrastructure is necessary as the ongoing expansion of the Panama Canal and initiatives to increase exports heightens the need for the U.S. to deepen its East and Gulf Coast ports to facilitate larger draft vessels from international trade. The announced acceleration will likely streamline feasibility studies and permitting to allow the Corps to complete many of the projects on a schedule in anticipation of the increased traffic expected through the Panama Canal.

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