Great Lakes Dredge & Dock Corporation
) have gone up 2% since it reported its fourth-quarter and
full-year 2013 earnings on Jan 25. 2013 earnings per share of 33
cents, increased three fold from the year-ago earnings of 11
cents, in line with the Zacks Consensus Estimate. The dredging
services provider reported earnings per share of 8 cents in the
fourth quarter, down 11% from 9 cents in the year-ago quarter,
but ahead of the Zacks Consensus Estimate of 6 cents per share.
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Sales increased 13% year over year to $216 million in the
quarter, ahead of the Zacks Consensus Estimate of $202 million.
The improvement was mainly driven by the Terra Contracting
Dredging revenues decreased 7% to $177 million, due to lower
domestic capital revenues, which offset higher coastal protection
revenues. Environmental & remediation segment's revenues were
at $41.6 million compared with a minimal $0.06 million in the
year ago quarter due to the acquisition of Terra Contracting at
the end of 2012.
In 2013, revenues increased 24% year over year to $731 million,
falling short of the Zacks Consensus Estimate of $745 million.
Benefits from the acquisition of Terra Contracting business and
increased dredging revenues led to the year-over-year
Gross profit during the quarter decreased 4% to $28 million.
Gross margin contracted 240 basis points to 12.9% in the quarter
as lower gross margins in domestic capital dredging offset higher
gross margins in the environmental & remediation segment.
General and administrative expenses surged 34% to $19 million.
Adjusted operating income was $8.6 million, down 41% from $14.7
million in the year-ago quarter. Operating margin was 4%, a 370
basis point contraction from 7.7% in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) from continuing operations were $25 million
down from $29.7 million in the fourth quarter of 2012 due to
lower operating income.
Gross margin was 10.7% in the dredging segment compared with
15.2% in the year-ago quarter. Lower gross margins on fewer
capital projects in the current quarter were pitted against the
inclusion of higher-margin port work in New York and New Jersey,
along with coastal island restoration work in Louisiana last
year, which led to contraction in gross margin.
Gross margin in the Environmental & Remediation segment was
21.8% driven by strong environment remediation projects at Terra
Contracting, a project in the Midwest U.S., that contributed
almost 62% of the segment's gross profit in the quarter.
At the end of 2013, Great Lakes Dredge & Dock had cash and
cash equivalents of $75 million, up from $24.4 million as of
2012-end. Total debt increased to $285 million at the end of 2013
from $263 million as of 2012-end. Total backlog as of 2013-end
was 543 million, up from $449 million as of 2012-end.
The dredging segment delivered a strong performance in 2013,
recording the largest yearly revenue in its history during 2013.
This was driven by coastal protection and foreign capital
projects. At the end of the fourth quarter, the company began
working on the Port Miami deepening project and has been awarded
the full contract for approximately $206 million. Great
Lakes Dredge & Dock will continue to work on this project for
approximately the next 18 months. The domestic dredging bid
market was at a record level in 2013 which bodes well for Great
Lakes Dredge & Dock.
The company will benefit from the planned sale of its
underperforming demolition business. The business has delivered
disappointing results for several quarters and has not achieved
the targeted synergies. Great Lakes Dredge & Dock continues
to evaluate several opportunities that will position it for
further growth thereby expanding its environmental &
remediation services that complement its core dredging business.
Great Lakes Dredge & Dock Corporation is the largest provider
of dredging services in the United States. It is also one of the
largest U.S. providers of commercial and industrial demolition
and remediation services, mainly in the Northeast. Great Lakes
Dredge & Dock owns and operates the largest and most diverse
fleet in the U.S. industry, comprising over 200 specialized
Rank & Peer Performance
Great Lakes Dredge & Dock currently holds a Zacks Rank #3
(Hold). A better-ranked stock in the building and heavy
construction industry is
Orion Marine Group, Inc
) with a Zacks Rank #2 (Buy).
Among Great Lakes Dredge & Dock's peers,
Chicago Bridge & Iron Company N.V.
) posted fourth-quarter adjusted earnings of $1.91 per share
(excluding the one-time items), well exceeding the Zacks
Consensus Estimate of $1.17 per share and its year-ago quarter's
earnings of 95 cents.
Tutor Perini Corporation
) reported a 3% year-over-year increase in its fourth-quarter
adjusted earnings to 68 cents per share, ahead of the Zacks
Consensus Estimate of 61 cents.