Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Great Lakes Dredge & Dock Corp (GLDD, Financial) delivered solid second quarter results with net income of $7.7 million and adjusted EBITDA of $25.8 million.
- The company has a strong dredging backlog of $807.9 million, with 85% in capital projects.
- The new hopper dredge, Galveston Island, contributed strongly to the solid project performance in the second quarter.
- The US Army Corps of Engineers budget of $8.7 billion for 2024 has created a robust bid market, supporting GLDD's operations.
- GLDD has secured additional liquidity with a $150 million second lien credit agreement to support its newbuild program and financial flexibility.
Negative Points
- Second quarter 2024 G&A expenses increased by $1.7 million compared to the same quarter last year, primarily due to higher employee benefit and incentive costs.
- Net interest expense for the second quarter 2024 increased to $4.2 million from $3.2 million in the second quarter of 2023.
- The Biden Administration's temporary pause on approving new LNG export licenses poses a potential risk to future projects.
- The company had to push some planned maintenance from Q2 to Q3, which may impact third-quarter performance.
- There is uncertainty in the offshore wind market, which could affect the utilization of the Acadia vessel in the short term.
Q & A Highlights
Q: Can you provide some market statistics for the quarter, such as your bid share and win share? Were there any unexpected wins or losses?
A: The bid market has been very strong in 2024, particularly for port deepening projects in the Gulf and beach restoration on the East Coast. We have performed well in these areas.
Q: Can you elaborate on the potential opportunities for the Acadia in markets like oil and gas, telecom, and power cable protection?
A: The Acadia can place rock for offshore wind installations, pipelines, and cables. We are exploring opportunities in the international offshore wind market, oil and gas, and cable protection. The vessel was initially targeted for the US offshore wind market but can compete internationally in various sectors.
Q: How has the Galveston Island performed in the quarter?
A: We are very pleased with the performance of the Galveston Island. Despite some delays in delivery, the vessel went through commissioning and sea trials in record time and has performed very well since.
Q: Can you discuss the demand for coastal protection and how much work is expected to be bid in the second half of 2024?
A: The coastal protection market, particularly on the East Coast, has come back strongly. We are looking at more than $500 million in coastal protection projects, with a significant portion expected to be bid in the second half of the year.
Q: How should the mix of backlog trend for the next two quarters?
A: We will start burning off quite a bit of capital projects in the second half of the year. The coastal protection segment is expected to be the strongest, but there are still a number of capital projects we are eyeing.
Q: Can you remind us how much is left on the newbuild program and when it is expected to complete?
A: We have roughly $150 million left on the newbuild program, with the Amelia Island and the Acadia expected to be delivered in the third quarter of 2025.
Q: How much white space is left in the schedule for the remainder of the year?
A: We have good utilization of the dredges with some opportunities for revenue generation on the cutter side of our fleet. The strong beach market provides good opportunities towards the fourth quarter and into next year.
Q: What was the impact of maintenance in Q2 being pushed out to Q3, and is there any planned maintenance heading into Q4?
A: We had a few vessels planned for maintenance in Q2 that will now occur in Q3. We always have planned maintenance, but nothing significant is planned between now and the end of the year.
Q: Is it reasonable to assume that you could approach Q1 earnings performance in the third and fourth quarters?
A: Q4 is shaping up to be extremely high in utilization. We have the backlog and mix of backlog to have a very solid second half of the year.
Q: Any movement in opportunities for Acadia that could fill the open window in 2026?
A: We have options that could fill out 2026 and are negotiating reservation agreements. The outlook for Acadia is good, but the situation is fluid due to the political environment in the US.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
