September 28-29, 2010 D.A. Davidson & Co. 9 th Annual E&C Conference Exhibit 99.1 |
2 Safe Harbor This presentation includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 or in releases made by the SEC, all as may be amended from time to time. Such statements include declarations regarding the intent, belief, or current expectation of the Company and its management. The Company cautions that any such forward-looking statements are not guarantees of future performance, and involve a number of risks, assumptions and uncertainties that could cause actual results of the Company and its subsidiaries, or industry results, to differ materially from those expressed or implied by any forward-looking statements contained herein, including, but not limited to, as a result of the factors, risks and uncertainties described in other securities filings of the Company made with the SEC, such as the Company’s most recent Report on Form 10-K. You should not place undue reliance upon these forward-looking statements. Forward-looking statements provided herein are made only as of the date hereof or as a specified date herein and the Company does not have or undertake any obligation to update or revise them, unless required by law. |
3 Who is Great Lakes Dredge & Dock Corporation Great Lakes is the leading provider of port deepening, beach nourishment and land reclamation in the United States with a 120-year history of performance, innovation and never failing to complete a project We have significant international operations, focused on key markets that are well suited to our vessels Our Demolition business is also a dominant player in its Northeast market, providing commercial and industrial demolition services |
4 Our Intellectual Property Is a Competitive Advantage Unparalleled dredging knowledge Proprietary, robust database of dredging production records of Great Lakes and our competitors, accumulated over more than 20 years, provides us a competitive advantage in bidding new projects Knowledge and innovation in vessel and attendant plant construction/retrofitting that is very adaptable and can increase efficiencies on dredging assets Sophisticated software and technical capabilities on our vessels supports our leading position in the industry |
5 Great Lakes Highlights Significant growth since 2006 Revenue - three-year CAGR of 13.5% EBITDA - three-year CAGR of 13.8% Significant investment in PP&E of $125M since 2006 Purchased four dredging vessels in 2007 as well as built a piece of ancillary equipment Currently upgrading dredge Ohio into world-class cutter suction dredge Decreased Net Debt / EBITDA from 6.4x at 12/31/05 vs. 2.4x at 12/31/09 (1.5x June 30, 2010) Over $50M in cash on hand Over $125M of availability on revolving credit facility |
Executive Management |
7 New Executive Management Team Jonathan Berger – CEO Member of our Board since December 2006 Former Managing Director and Co-head of Corporate Finance for Navigant Consulting, Inc. and President of Navigant Capital Advisors, LLC Former partner at KPMG, LLP and past National Partner in charge of Corporate Finance at KPMG Bruce Biemeck – President and CFO Member of our Board since December 2006 Senior Vice President, Chief Financial Officer and Treasurer of Great Lakes from 1991 to 1999 |
? 8 Why Make the Change Inject new skills and discipline to management team Increase efforts to drive top line growth Develop and execute a corporate strategy Enhance operating performance Reinvigorate management Doug Mackie remaining on as a senior advisor will help execute a transition with minimal disruption to operations |
9 Strategy Historical Strategy (through Private Equity ownership) Ride the cyclical wave of domestic dredging, pay down debt and opportunistically take advantage of international markets New Strategy (in formulation stage) Must develop a risk-based growth strategy which takes advantage of our many strengths Complex engineering Maritime construction knowledge Project management Areas to explore Domestic dredging markets we do not participate in International dredging Other maritime related business Specialty construction |
Dredging |
11 Domestic Dredging Market The U.S. dredging industry is highly fragmented with approximately 250 entities in the U.S. presently operating more than 900 dredges, most of which are small and service the inland waterways We operate in the coastal waterways, a segment of the market which is comprised primarily of four key players that comprised 86% of this segment over the past three years This market is characterized by complexity, major capital asset requirements and projects which are much larger in scope and dollar amount Great Lakes’ defined market averaged approximately $840M for the last three years Great Lakes, having the largest, most diversified fleet, won an average of 46% of this market over the three year time-period |
12 Foreign Dredging Market Only U.S. dredge operator with significant foreign presence Great Lakes operates ten of its vessels (four hydraulic and six hoppers) outside the U.S. Four of those vessels remain U.S flagged and can return to the U.S. Competition in the international market is dominated by four large European dredging companies We target opportunities that are well suited to our equipment and where we can be competitive, focused primarily in the Middle East and now entering Brazil |
13 Dredging Overview Capital – deepening ports, land reclamation, and excavation of underwater trenches Beach Nourishment – creating and rebuilding beaches Maintenance – maintaining depth of shipping channels Types of Dredging Army Corps of Engineers is largest user of dredging services State and local governments Private entities (e.g., oil companies, utilities) Foreign governments Customers Capital Beach Nourishment Maintenance |
14 Large and Flexible Fleet in U.S. and Middle East Markets Hopper Hydraulic Cutterhead Mechanical 11 Vessels (7 U.S., 4 Middle East) Including the only two large electric cutterhead dredges available in the U.S. for environmentally sensitive regions requiring lower emissions 10 Vessels (4 U.S., 5 Middle East, 1 Brazil) Highly mobile, able to operate in rough waters Little interference with other ship traffic 5 Vessels (all U.S.) Operates one of two environmentally friendly electric clamshell dredges in the U.S. Maneuverability in tight areas such as docks and terminals 25 material transportation barges and over 160 other specialized support vessels Estimated fleet replacement cost in excess of $1.5 billion in current market Types of Dredges |
Industry and Company Overview |
16 Attractive Catalysts in the Dredging Market Maintenance Dredging Harbor Maintenance Trust Fund legislation passage could add $500M to the Company’s bid market Panama Canal Expansion Coastal Restoration throughout Gulf Area |
17 Domestic Dredging Industry Demand Drivers U.S. ports 5’ – 10’ shallower vs. foreign ports Domestic port development required to support larger, deeper draft ships Long-term funding for wetland and coastal marshes Other port development Capital (In millions) Three Year Average FY 2009 YTD 2010 Bid Market Size $296 $310 $124 GLDD Revenue $162 $203 $116 Note: YTD data is as of June 30, 2010. |
18 Domestic Dredging Industry Demand Drivers Storm activity/natural erosion Growing population in coastal communities 22 of the 25 most densely populated U.S. counties are coastal Importance of beach assets to local tourism industry Anticipate robust market opportunities ahead in next 12 months Beach Nourishment (In millions) Three Year Average FY 2009 YTD 2010 Bid Market Size $151 $183 $24 GLDD Revenue $72 $62 $82 Note: YTD data is as of June 30, 2010. |
19 Domestic Dredging Industry Demand Drivers Corps goal is to reach 95% of U.S. port operating capacity Naturally sedimentation and volatile weather New capital projects increase need for ongoing maintenance 57% of 2009 domestic bid market was maintenance work Maintenance (In millions) Three Year Average FY 2009 YTD 2010 Bid Market Size $395 $645 $155 GLDD Revenue $117 $175 $77 Note: YTD data is as of June 30, 2010. |
20 International projects tend to be larger/ longer duration vs. domestic projects Middle East has been a strong market historically, and is expected to provide good opportunities in the future Upgrade of the dredge Ohio expected to be completed by year end. Will allow us to meet future demand anticipated in Middle East Deepening project in Brazil began in September Negotiating more work in Brazil that could require more equipment to be deployed Great Lakes is Well Positioned to Compete Globally International (In millions) Three Year Average FY 2009 YTD 2010 GLDD Revenue $149 $134 $39 Note: YTD data is as of June 30, 2010. |
21 Great Lakes Dredge & Dock Foreign 23% Demolition 13% Beach 16% Capital 29% Maintenance 19% 2009 REVENUE BY WORK TYPE $622 million 2009 DOMESTIC BID MARKET SHARE Domestic Bid Market: $1,137 million Norfolk 7% Other 9% Great Lakes 47% Weeks 29% Manson 8% Foreign 21% Demolition 8% Beach 10% Capital 33% Maintenance 28% 5 YEAR AVERAGE REVENUE BY WORK TYPE Average 5 Year Revenue: $515 million 5 YEAR AVERAGE DOMESTIC BID MARKET SHARE Average 5 Year Domestic Bid Market: $793 million Manson 9% Great Lakes 42% Weeks 24% Other 15% Norfolk 5% Bean/Styv. 5% Note: YTD data is as of June 30, 2010. |
22 Major U.S. provider of commercial and industrial demolition services; primarily in New England Purchased Yankee in 2009; able to offer removal of asbestos and hazardous materials Successfully gaining foothold in New York market over last year In early 2010, segment was awarded over $30 million of new projects in both Boston and New York areas Demolition Segment NASDI and Yankee Environmental Services (In millions) Three Year Average FY 2009 YTD 2010 Demolition Revenue $75 $48 $27 Note: YTD data is as of June 30, 2010. |
Financial Highlights |
24 Financial Performance ANNUAL EBITDA (b) 3 year CAGR = 13.8% ANNUAL REVENUE (a) 3 year CAGR = 13.5% (a) Great Lakes went public in December 2006 (b) EBITDA represents net income (loss), adjusted for net interest expense, income taxes, depreciation and amortization expense. Please see reconciliation of Net Income to EBITDA at the end of this presentation. ($ in millions) $341.5 $622.2 $586.9 $515.8 $426.0 $321.7 0 100 200 300 400 500 600 $700 2006 2007 2008 2009 June 30, 2009 June 30, 2010 Capital Maintenance Beach Foreign Demolition $57.3 $51.0 $77.6 $55.9 $57.5 $52.6 12.3% 11.1% 9.5% 12.4% 16.8% 15.9% (10) 10 30 50 70 2006 2007 2008 2009 June 30, 2009 June 30, 2010 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% Dredging Demolition % EBITDA Margin |
25 Primary Factors that Determine Operating Profitability Bid success and dredge employment Revenue is generated when bids are won and projects commence Maximize revenue by employing dredges full-time A dredge does not earn revenue when idle Project mix and dredge mix Projects include capital, beach, maintenance and foreign which inherently have a range of durations and margins Each dredge has different production capabilities resulting in a range of revenue generating capacity Seek to maximize mix within given bid market (i.e. type of work, type of vessel, duration) Project execution Goal to execute projects at the estimated margin Numerous factors impact actual margin, both favorably and unfavorably, including: Weather Project conditions Equipment downtime |
26 1.5x 2.4x 3.7x 3.3x 3.6x 6.4x 1.0 2.0 3.0 4.0 5.0 6.0 7.0x 2005 2006 2007 2008 2009 June 30, 2010 Net Debt / EBITDA Improved Financial Flexibility ($ in millions) (a) Growth and other capital expenditures during the year of 2007 includes the purchase of four vessels. LEVERAGE CAPEX $15.5 $21.3 $22.9 $10.3 $12.7 $29.8 $111.0 (a) $44.5 $25.7 0.0 20.0 40.0 60.0 80.0 100.0 $120.0 2005 2006 2007 2008 2009 June 30, 2010 Maintenance Growth & Other |
27 Backlog BY SEGMENT ($ in millions) $307 $382 $385 (a) $360 $369 $278 0.0 100.0 200.0 300.0 400.0 $500.0 2005 2006 2007 2008 2009 June 30, 2010 Capital Maintenance Beach Foreign Demolition (a) Foreign backlog at December 31, 2008 has been adjusted for the portion of the Diyar contract that became an option pending award in the first quarter of 2009 |
28 Investment Highlights Attractive near and long-term catalysts in U.S dredging market Harbor Maintenance Trust Fund secures funding for long-term maintenance demand Other sources of dredging demand include coastal restoration, port deepening and port development Strong financial performance and improved financial flexibility Revenue – 3 year CAGR 13.5%, EBITDA – 3 year CAGR 13.8% EBITDA growth from $45.1 million in 2005 to $77.6 million in 2009 ($57.3m Q2 2010 YTD) Decreased Net Debt / EBITDA from 6.4x in 2005 vs. 2.4x in 2009 (1.5x June 30, 2010) International Presence Only U.S. dredger with significant foreign presence Flexible fleet enables repositioning of vessels as necessary Opportunistic acquirer of dredging assets Proven senior operational management team with an average of nearly 30 years of industry experience |
Appendix |
30 Reconciliation of Net Income to EBITDA ($ in millions) 2006 2007 2008 2009 2009 2010 Net Income Attributable to Great Lakes Dredge & Dock Corp $2.2 $7.1 $5.0 $17.5 $14.7 $20.1 Interest Expense 24.3 17.5 17.0 16.1 9.0 6.2 Income Tax Expense 1.0 6.4 3.8 11.0 9.8 13.0 Depreciation and Amortization 25.1 26.5 30.1 33.0 17.5 18.0 EBITDA $52.6 $57.5 $55.9 $77.6 $51.0 $57.3 Fiscal Year Ending December 31, Six Months Ended June 30th |
31 |