Great Lakes Dredge & Dock Corporation
) dropped over 1% and closed at $7.13 after yesterday's trading
session following the release of its second-quarter 2014 results on
Aug 5. The dredging services provider reported earnings per share
of 6 cents in the quarter, flat year over year. Reported earnings
missed the Zacks Consensus Estimate of 10 cents per share.
Great Lakes Dredge & Dock Corporation -
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Sales improved 25.5% year over year to $185 million in the quarter
driven by increased activity in all domestic markets. However it
lagged the Zacks Consensus Estimate of $190 million.
Dredging revenues increased 15% to $157 million, driven by higher
maintenance and rivers & lakes revenue partially offset by
lower foreign revenue. Environmental & remediation segment's
revenues were at $29.3 million, increasing nearly three-fold from
the year ago quarter driven by the inclusion of several large-scale
Gross profit during the quarter grew 90% to $26 million from $13.8
million in the year-ago quarter. Gross margin expanded 480 basis
points to 14.2% in the quarter as a result of improved contract
margin, attributed to improved project execution on several
General and administrative expenses went up 3.7% year over year to
$15.9 million. Adjusted operating income was $10.3 million, down
from $11.6 million in the year-ago quarter. Operating margin was
5.6%, against 8% in the year-ago quarter. Adjusted earnings before
interest, taxes, depreciation, and amortization (EBITDA) from
continuing operations stood at $19.8 million, declining 9.9% from
$22 million in the second quarter of 2013.
Gross margin was 14.4% in the dredging segment compared with 9.1%
in the year-ago quarter. Gross margin increased primarily due to
strong contract margin on several jobs, somewhat offset by higher
fixed costs. Gross margin in the Environmental & Remediation
segment was 12.4% slightly increasing from 12% in the prior-year
Great Lakes Dredge & Dock ended the quarter with cash and cash
equivalents of $38.1 million versus $75.3 million as of 2013-end.
As of Jun 30, 2014, long-term debt remained flat at $285 million
compared with Dec 31, 2013. Total backlog as of Jun 30, 2014 was
$508 million, down 1% from the backlog of $514 million as of Jun
Great Lakes Dredge & Dock expects strong fleet utilization in
the second half of the year. The company will be utilizing its
fleet on the Port Miami deepening, the Delaware River deepening in
Illinois and several maintenance projects in the Gulf region. Great
Lakes Dredge & Dock expects majority of the environmental &
remediation segment's backlog to be completed in 2014. Moreover,
the company remains optimistic about increase in bidding activity,
which will add to backlog.
Further, the approval of Water Resources Reform and Development Act
is a positive catalyst for the domestic dredging industry and will
also assist in the company's long-term growth.
Four vessels of Great Lakes Dredge & Dock will be utilized for
the $35.5 million land reclamation job in the Middle East. The
company also expects the Wheatstone project in Australia to
continue into early 2015.
Great Lakes Dredge & Dock will benefit from capital projects,
including the Port Miami deepening, coastal protection projects and
maintenance dredging. The company's continuous focus on managing
working capital and free cash will also drive growth. However, the
company remains concerned about the uncertain weather conditions
and fluctuations in currency exchange rate which will affect
revenues in the future.
Great Lakes Dredge & Dock Corporation is the largest provider
of dredging services and also one of the largest providers of
commercial and industrial demolition and remediation services, in
the U.S., 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 vessels.
Great Lakes Dredge & Dock currently holds a Zacks Rank #4
(Sell). However, some better-ranked stocks in the sector include
Quanex Building Products Corporation (
), Boise Cascade Company (
) and PGT, Inc. (
). All these stocks carry a Zacks Rank #2 (Buy).
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