10-K: Great Lakes Dredge & Dock Reports Strong 2024 Results, Backlog Exceeds $1.2 Billion

Great Lakes Dredge & Dock Corporation reports a significant increase in revenue and backlog for 2024, driven by strong performance in domestic capital and coastal protection projects.

Summary

• Great Lakes Dredge & Dock Corporation (GLDD) reported a total revenue of $762.7 million for 2024, a 29% increase compared to $589.6 million in 2023.
• The increase in revenue was primarily driven by significant growth in domestic capital and coastal protection revenues.
• The company's backlog reached $1.239 billion, including $1.194 billion in dredging backlog and $44.9 million in offshore energy backlog.
• Adjusted EBITDA for 2024 was $136.0 million, up 86% from $73.0 million in 2023.
• Net income for 2024 was $57.3 million, a substantial increase from $13.9 million in 2023.
• The company's average combined bid market share in the U.S. was 31% over the three-year period ended December 31, 2024.
• GLDD expects capital expenditures between $140 million and $160 million in 2025, including investments in its new build program.
• The company's new subsea rock installation (SRI) vessel, the Acadia, is expected to be operational in the first half of 2026.
• Approximately 60% of the company's dredging backlog is expected to be completed in 2025.
• The 2024 domestic dredging bid market, excluding LNG projects, totaled $2.93 billion, a 32% increase compared to 2023.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and a growing backlog. While there are risks mentioned, the overall tone is optimistic and indicates a healthy business.

Positives

• Significant increase in revenue and net income compared to the previous year.
• Strong growth in domestic capital and coastal protection revenues.
• Substantial increase in Adjusted EBITDA.
• Healthy backlog providing revenue visibility.
• High win rate in the domestic bid market.
• Strategic positioning in the offshore energy market with the Acadia vessel.
• Expected increase in funding for harbor maintenance projects.
• The company has a strong bonding capacity.

Negatives

• Decrease in maintenance and rivers & lakes revenues.
• Potential delays and cost overruns related to the construction of new vessels.
• Dependence on government funding for dredging contracts.
• The company has substantial indebtedness.
• The company is subject to foreign exchange risks.

Risks

• Reduction in government funding for dredging contracts.
• Inability to qualify as an eligible bidder for government contracts.
• Cost over-runs and operating cost inflation, particularly with respect to fixed-price contracts.
• Project delays related to climate change or unusual weather patterns.
• Equipment or mechanical failures.
• Pandemic, epidemic or outbreak of an infectious disease.
• Disruptions to the supply chain.
• Environmental regulations could force the company to incur capital and operational costs.
• Market and regulatory responses to climate change.
• Contract penalties for late project completion.
• Force majeure events, including natural disasters, war and terrorists actions.
• Changes in the amount of estimated backlog.
• Significant negative changes attributable to large, single customer contracts.
• Inability to obtain financing for the construction of new vessels.
• Inability to secure contracts to utilize the new offshore energy vessel.
• Failure to comply with Jones Act provisions on coastwise trade.
• Fluctuations in fuel prices.
• Impacts of nationwide inflation on procurement of new build and vessel maintenance materials.
• Inability to obtain bonding or letters of credit.
• Acquisition integration and consolidation risks.
• Divestitures and discontinued operations risks.
• Potential penalties and reputational damage as a result of legal and regulatory proceedings.
• Liabilities for the obligations of joint ventures and subcontractors.
• Increased costs of certain material used in operations due to newly imposed tariffs.
• Unionized labor force work stoppages.
• Liabilities for job-related claims under federal law.
• Operational hazards.
• Substantial amount of indebtedness.
• Restrictions on the operation of the business imposed by financing terms and covenants.
• Impacts of adverse capital and credit market conditions on the ability to meet liquidity needs and access capital.
• Limitations on the hedging strategy imposed by statutory and regulatory requirements for derivative transactions.
• Foreign exchange risks, in particular, related to the new offshore energy vessel build.
• Losses attributable to investments in privately financed projects.
• Restrictions on foreign ownership of common stock.
• Restrictions imposed by Delaware law and the charter on takeover transactions.
• Restrictions on the ability to declare dividends imposed by financing agreements or Delaware law.
• Significant fluctuations in the market price of common stock.
• Changes in previously recorded net revenue and profit as a result of the significant estimates made in connection with the methods of accounting for recognized revenue.
• Maintaining an adequate level of insurance coverage.
• Inability to find, attract and retain key personnel and skilled labor.
• Disruptions, failures, data corruptions, cyber-based attacks or security breaches of the information technology systems.
• Impairments of goodwill or other intangible assets.

Future Outlook

The company expects to continue to build its offshore energy capabilities, bid on SRI projects, and position itself for growth in the offshore energy markets. The company anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations, revolver availability, and possible future financing transactions. Approximately 60% of the company's dredging backlog is expected to be completed in 2025.

Management Comments

• We believe that Great Lakes has established a unique business position with our subsea rock installation (SRI) vessel, the Acadia, the first and only Jones Act SRI vessel being constructed in the United States, targeting the offshore wind, oil and gas and telecommunication industries, both domestically and internationally.
• Despite the Executive Order signed by President Trump earlier this year pausing the issuance of new wind leases and permits, we believe offshore wind remains an important part of the array of technologies required for the U.S. to achieve future energy independence.

Industry Context

The dredging industry is experiencing increased demand due to port expansion projects, coastal protection needs, and the growth of the offshore energy market. The company is well-positioned to capitalize on these trends with its diverse fleet and strategic investments.

Comparison to Industry Standards

• The company's average combined bid market share in the U.S. of 31% over the three-year period ended December 31, 2024, including 28%, 59%, 19% and 16% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively, exclusive of liquefied natural gas (LNG) projects.
• Competition in the international market is dominated by four large European dredging companies all of which operate larger equipment and fleets that are more extensive than the Company’s fleet.
• The company's fleet, which includes 16 dredges, 13 material transportation barges, one drillboat, and numerous other support vessels, is the largest and most diverse fleet of any U.S. dredging company.

Stakeholder Impact

• Shareholders: Positive impact due to increased profitability and potential for future growth.
• Employees: Potential for increased job security and career opportunities.
• Customers: Continued access to dredging services and potential for new and innovative solutions.
• Suppliers: Increased demand for materials and services.
• Creditors: Improved creditworthiness and ability to meet debt obligations.

Next Steps

• Continue to build offshore energy capabilities and bid on SRI projects.
• Focus on executing projects in backlog and converting them to revenue.
• Manage capital expenditures related to the new build program.
• Monitor market conditions and adjust strategies as needed.

Key Dates