Great Lakes Dredge & Dock Corporation
) have gone up 3% since it reported on Nov 5 a year-on-year
rebound to profit in its third quarter 2013. The dredging
services provider reported earnings per share of 2 cents in the
quarter, compared to year-ago quarter's loss of 9 cents. Strong
performance in the dredging segment led to the improved earnings,
which however fell short of the Zacks Consensus Estimate of 6
Sales increased 22% year over year to $198 million in the
quarter, ahead of the Zacks Consensus Estimate of $185 million.
Dredging revenues increased 12% to $155 million, driven by an
increase in coastal protection revenue (up more than 150% year
over year) mainly related to Superstorm Sandy work in New Jersey,
New York and Delaware. In addition, a remediation project in the
Midwest along with solid results in domestic capital and foreign
dredging supported revenues in the quarter.
Demolition revenues surged 99% to $47 million in the quarter. The
improvement was driven by $31.9 million of revenues generated by
Terra Contracting in the quarter, which was partially offset by a
decrease in other demolition revenues.
Gross profit during the quarter increased 185% to $22 million.
Gross margin expanded 640 basis points to 11.2% in the quarter.
In the Dredging segment, gross margin improved to 14.5% in the
quarter from 8.3% in the last-year quarter, driven by an improved
contract margin and higher revenues. On the other hand, the
Demolition segment recorded negative gross margin of 0.5%,
narrower than the negative 15.7% in the prior-year quarter,
attributed to positive results at Terra.
General and administrative expenses surged 65% to $19 million,
primarily due to additional legal and consulting costs related to
the revenue recognition issues discovered at 2012 end, as well as
the addition of Terra Contracting. Payroll and benefits costs
also increased for select headcount additions, mainly to the
legal and financial teams.
Adjusted operating income was $3.1 million, reversing the
year-ago quarter's operating loss of $3.8 million. Including one
time items, operating income in the quarter was $6.2 million
compared to a loss of $3.7 million in the prior-year quarter.
Operating income in the dredging segment increased to an adjusted
$9.9 million from $1.8 million in the prior-year quarter, driven
by improved revenues and contract margin. The demolition segment
reported an operating loss of $6.9 million compared with an
operating loss of $5.5 million in the prior-year quarter.
Negative gross margin and an increase in G&A expense due to
additional legal, consulting and bad debt expense in the
demolition business, and the addition of Terra at the end of 2012
led to the loss in the quarter.
Adjusted EBITDA (Earnings before interest, taxes, depreciation
and amortization) was $19.6 million, up 150% from the prior-year
At the end of the third quarter, Great Lakes had cash and cash
equivalents of $41 million, down from $24.4 million as of 2012
end. Total debt increased to $297 million at the end of third
quarter from $263 million as of 2012 end.
Total backlog as of the third quarter end stood at $606 million,
up from $449 million as of 2012 end and $505 million as of the
prior-year quarter end.
CHICAGO BRIDGE (CBI): Free Stock Analysis
GREAT LAKES DRG (GLDD): Free Stock Analysis
GRANITE CONSTRU (GVA): Free Stock Analysis
JIANSU EXPWY CO (JEXYY): Get Free Report
To read this article on Zacks.com click here.
The Dredging segment performed strongly in this quarter as
compared to a slow second quarter. This momentum is expected to
continue. Bidding activity was particularly strong in the
quarter, bringing the year-to-date domestic dredging bid market
total to $1.1 billion for the year, of which Great Lakes won 55%.
Great Lakes will benefit from its record backlog and strong
short-term bidding activity in the coming quarters.
The market has seen over $400 million in coastal protection work
in 2013, primarily in response to Superstorm Sandy as well as an
increase in capital projects. Great Lakes foresees numerous
coastal restoration projects. The company expects more Sandy work
will be up for biding in 2014 for long-term coastal protection
The company is currently assessing strategic alternatives for its
demolition business. The company intends to take a measured
approach and selectively target those demolition and
environmental remediation projects that it can execute well.
Great Lakes Dredge & Dock Corporation is the largest provider
of dredging services in the United States. Great Lakes is also
one of the largest U.S. providers of commercial and industrial
demolition and remediation services, mainly in the Northeast.
Great Lakes owns and operates the largest and most diverse fleet
in the U.S. industry, comprising over 200 specialized vessels.
Rank & Peer Performance
Great Lakes currently holds a Zacks Rank #3 (Hold). Another stock
in the building and heavy construction industry with a favorable
Zacks Rank is
Jiangsu Expressway Co. Ltd.
), which carries a Zacks Rank #2 (Buy).
Among Great Lakes' peers,
Chicago Bridge & Iron Company N.V.
) reported third-quarter 2013 adjusted earnings of $1.12 per
share, in line with the Zacks Consensus Estimate. Adjusted
earnings improved 33% year over year on the back of strong
project activities during the quarter.
On the other hand, another peer
Granite Construction Incorporated
) reported third-quarter 2013 earnings of 28 cents per share, a
70% drop year over year and way behind the Zacks Consensus
Estimate of 78 cents.