GLDD - Earnings call transcript Q1 2018 | Great Lakes Dredge & Dock Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Q1 2018 Great Lakes Dredge & Dock Corp Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Abby Sullivan, Manager, Investor Relations. Please go ahead.

Abby Sullivan

Thank you. to conference welcome and morning our call. quarterly Good

on this our our with of outlook quarter year. Chief me provide Financial on on Officer, then call is financial call the commentary will with Lasse the and for the Joining Mark Executive will of an the morning Lasse the results. Mark remainder Lasse Marinko. commentary overall conclude continue on the themes Officer, update the Chief our Petterson; will

be opportunity for will there comments, their Following an questions.

this earnings we will make our factors the expectations. a from risk release During in you and cause XXXX Certain in forward-looking understand risks, involve our could other of materially certain statements inherent actual SEC, help call, and filings differ Form with statements business results factors subsequent filings. are XX-K that our including to our our and set business. in number to uncertainties forth These

we also net financial this with income During the release along operations certain EBITDA continuing adjusted to in operating our EBITDA other reconciliation non-GAAP including data. adjusted measures, on our Relations from Investor will which explained and earnings to from certain website, continuing call, operations, are attached refer posted to

non-GAAP as this operations financial compared During costs financial to to are data morning. statement will prior the in measures our user released the included quarter from from earnings exclude the measures Reconciliations restructuring we call, also certain of allow the our these this regarding to better results first year. evaluate

accrual same has as cost period used. and in for in the opposed deferral the plant previously percent company beginning account which to method XXXX, Finally, to the chosen in overhead

this call years has company the to prior accounting the Lasse. always that, turn in I by has been over guidance, as the As With place. standard required will had recast if

Lasse Petterson

safety. note Thank a you to morning. on I’d begin good special and like with

of to that great Week. am though our encouragement this week, Switching over $X in respect, celebrating recordable to the yield for quarter, I shows Safety companies pleased zero the last XX of sustained we were the zero injury see down with Lakes operations free our performance and incident for starting quarter-over-quarter. and has across are now join with possible the incidents safety EBITDA, months prior construction our worked that even is the National increasing April In million is year excellence. and Next our revenues to March quarter over months will X This in injuries worldwide. Great restructuring quarter drive I first other from excluding restructuring of results safety are adjusted seeing that to plan results million first $XX.X throughout

restructuring previously our cost. to companywide we overhead implemented to assets rationalize As last total reported, plan underperforming reduce and and our underutilized old year

their through As recognize XX December solidified In we will our to and cutting Ellis capacity. Mark that schedule new leading Mississippi track the on are actions generating position mechanical to later, the planned in as from on we in cost ongoing $XXX Island backlog market fleet we in the charges and period run-in annualized the went are is restructuring EBITDA Carolina U.S. these we but previous million the project initiatives Lakes and to this Great some design the of hopper bid domestic deliver the dredge in is challenging She believe operation protection international dredging and testament company. while would and at the the dredging international has expected million added revenue fleet the addition and contribution Coastal have undertake dredge revenues The in went see market. also to with We positions performing our the of domestic during the $XX in to we next have a coastal period to Ellis realize quarter, now programs, while the respect, dredge harbor in that first has capacity XXXX into a contributed on is started detail strong in this commitment have her deepening quarter, our at as and waiting domestic anticipated to Improvement a Island we ensure the XXXX savings. the our of recovery The to of associated and importantly, onwards. project. years first markets continued most have all during coming she to the the and

CapEx our our support expenditure our to is and XXXX. capital financial as all for we to previously continue see of revenue million and fleet $XX stated fleet, also will to expected available days expense upgrade maximize dredging our maintain We in This program keeping the results. important

which expect in our now awarded. for revenue is recovered domestic results by $XXX our the on Awards of Charleston million remainder we of profits timing the decreasing to negatively unplanned which back million XXXX. major $X.X at of fully we profit During the and dredge during the and this included options quarter one throughout first and the work be The is quarter fleet Phase delay X delay million. $XX to did XXXX project, now revenue $XX.X mechanical million impacted gross experience quarter by

on mobilized the project have and rock dredging work We is underway.

market in to bid that active add we million during have quarter second quarter. pending the was we $XXX first The expect awards and backlog to currently

of the of be the domestic channel later deepening bid program to few Tampa deepenings and Savannah, port the Christi issued Corpus phase second about the the Jacksonville, Corpus of at continue and tender deepening, in Christi optimistic XXXX next bids expect improvement for market the and for Charleston months. be coastal We expected Mississippi year. to Further are to first the phase phases this

as plan. and will award over updates, expected the the because and performed on those E&I segment always of the finished experiences a bidding for and on results the quarter first call the Mark activity. business. Turning an for this the segment the turn quarter of I to slow to This discuss update to seasonality segment, quarter With

Mark Marinko

Consistent Okay. financial charges the prior were with allow to reported this our includes than in as well The financials format excluding restructuring Thank Lasse. release a which in morning results for the this costs to noted, press financial as February, reader overhead results period the to to compared charges previously deferral financial quarters. and restructuring are have the included as opposed slightly released same Also plant chosen different used. better year, as in results you, accrual to the certain as method prior Abby evaluate our which the account as beginning in spent year. we measures

from prior was guidance, with XXX. been required always all have place. we accounting if by In as As presented recast standard Topic periods revenue the adapted in customers contracts standard XXXX,

that and near will will Our our not on more material comments. results operationally segment will have I do business. a charges. XX-Q And my I restructuring end the quarterly restructuring have and impact all the focused with form results consolidated on discussed adoption level. at charges include the detail of note and provide will the not be Please results then on does specific the commentary Overall, impact. update start the discuss

the company the The is XXXX was compared expenses a flat to quarter which to comparison, net in plan increase X.X/X%. in which In is – million $X.X million $X.X decline X.X% to contract quarter. the and decrease segment Environmental the in net contributed $X.X and offset EBITDA segment. first This of XXXX prior at loss we expense income of revenue increased Infrastructure caused of of XXXX. tax million quarter million year. $XX.X the by and the notes expense also Net a million million net the for $X.X prior company current decrease the the the the Total our million as domestic by revenues the is driven current and operations was compared benefit. construction So consolidated planned from first margin result first margin million quarter elevated the Dredging across cost or million Total million interest increased income from of one The quarter year in was year and in profit was E&I net and the prior for million $X.X two interest The year in segment. by capitalize million, on Ellis interest increase $X.X XXXX. of margins were continuing million. expense E&I of of for $XX a company in quarter lower senior includes million in benefit $XX.X gross over compared slightly prior million. income able X%, company loss Total $X.X $X.X $XX.X dredging the a million the in decrease operating quarter. increase was is secondly, an loss quarter related of reasons: were on prior to and quarter operations XX.X% revenues quarter, million, prior is income to XXXX while quarter Gross the current $XXX to first profit adjusted the tax year $X.X over interest for general was at the million quarter restructuring expense Lower $XX $XXX was to to net $XXX.X represented continuing of in year $XX.X quarter. segment first interest $X.X the included million, administrative Island;

of expense related other $X.X historical at to demolition legal million includes our quarter year current the business. Finally, costs

a a amount on fees in our interest for plus at As not do included following going the million not million we this earnings results quarter release, $XX.X stated The $XX.X we is EBITDA was the in favorable to multi-week post plus expenses jury forward. prior compared verdict in approximately quarterly this verdict and favorable trial. level year on costs $X.X million and this morning’s attorneys’ we judgment claim expect quarter. Adjusted received

were coastal capital the from Dredging the revenue decreased lower revenue lakes revenues. segment’s prior slightly in protection and to maintenance rivers level, revenues. on foreign domestic decreases segment higher by Moving quarter in These capital and year our offset the

mechanical $XX negatively revenue Lasse the segment Specifically, delay unplanned Dredging noted that the impacted major by for million.

included first of also million of vessels to when and XXXX rationalized from income margin current of profit of plan. recently quarter Dredging to plant revenue part Dredging’s attributed increased segment X.X% increased mainly two quarter Gross XX.X% $X.X the rationalization to costs our on first overhead quarter in million the that assets. lower the by XXXX. were our for Finally, $X.X the comparing operating

the expenses margins, contributed income to operating in administrative decrease In general a higher the increase. addition and profit to gross

XXXX Our decreased E&I volume first of compared as the of to in quarter lower first on work. the segment’s revenue XXXX quarter

not of The projects expected included first California, did in reoccur quarter. as in XXXX which current emergency two Northern quarter the

projects costs. loss of offset of prior result is in operating a lower a our delivering in to work. in the The decrease complete plant lower segment expectations, of $X.X remainder the year focus with on quarter X.X% line be administrative While E&I winning This did decrease by of million decreased lower first million a volume and quarter. was the positive offset general work the EBITDA contribution an decrease our quarter the quarter year our is enough of XXXX. to XXXX. of strong in margin compared $X.X in to first the and and for the quarter profit The volume months XXXX, the slightly from X.X% margin will the a gross by coming expenses the profit reported segment of gross ensure on the for overhead from The segment’s in current

quarter, the charged to recorded million related a depreciation. which was of to million also $X During restructuring, charge $X.X we

to As additional an expect assets million to $X we we restructuring in rationalize XXXX, $XX throughout charges. continue million

had to million $XX.X where balance cash turn availability. sheet, million our will XXXX and leaving $XX million our on we at with March $XX I revolver had Next, in us drawn in XX,

year quarter, debt our by to million also $XX the as we reduced During XXXX. compared net end

plan to pay next XX balance aggressively the sheet. to our debt improve down XX months in months continue We to to

year the quarter capital Our million million $X.X total were in expenditures quarter. prior for versus the $XX.X

but options than to prior due Total is were on expect investment million other this than in a which are awarded The completion to the keep running years or but XX% the focus during Charleston deepening which in of II now outstanding work were to make quarter. on of overall in of January effectively our $XX spend in million these and rebounded million. will fleet lower fully had $XX slow quarter start, underway. offshore $XXX the Boston Island we awards market the significantly continue debt dredging efficiently, XXXX. be reduction, the the the we rock awarded the late Harbor is Ellis As awards we XXXX prudent project to bid

backlog and have be late quarter second in be are added of X-year back expect activity average currently awards awarded, expect to Once awards an million the rate the those from win to bidding also our our We with line additional those $XXX we to pending during XX%. quarter. in

large forward March XXXX other XXXX, outlook December Lasse compared noted, that, remarks $XXX segment’s $XX March at at forward. XX, I the over in of several call XX, at we to With – further and capital XX, projects The dredging Contracted port versus as adding December for to and on $XXX turn totaled backlog. his deepening million $XX backlog will million to million. XXXX back E&I was Looking to port Lasse XX, million moving bid deepenings XXXX backlog backlog strength at expect our XXXX.

Lasse Petterson

you, Thank Mark.

we remain see on opportunities focused the implementing that our various our to as coming look As plan next we on few the years. remainder to company to XXXX, take restructuring we markets over we prepare of the the

As case port the has coastal projects. we deepening few domestic and last been protection company the the updates, market for focus with on to see strengthen continued dredging

We our dredging in international opportunities also focused on the be continue to division.

and be As cautiously remain XXXX XXXX continues we slow and onwards. market optimistic for revival to international expected, the us to in in

We keep for to and increased we for bid XXXX seeing activities have our international secured projects fleet are to XXXX. utilize

of encouraging an quarter projects the the capacity backlog, this, conditions, with design ability difficult awards XXXX. in and pursue and support to to behind the to challenges executing delays new bid E&I on plan to segment now the $XXX new has in remains The segment in on Ellis past. a look improved and with for forward in good client construction have posed work continue XX We positive remainder our of us our disciplined XXXX. levy million outcomes perform had and new have Turning in approach market have trough the about successful E&I, winning – expertise relationships projects but shareholders, the strengthening and focus on and the in of robust, we market days through projects and stronger the the of but Island who of partners approximately we but employees next times XXXX. to we well optimistic appreciate and our worked timing. We are out this is projects business have In of conclusion, performing domestic we

Abby Sullivan

over And questions. for we with that, turn it will

Operator

Instructions] Andrew first question from Deutsche [Operator Casella of Your comes Bank.

open. Your line is

Andrew Casella

noted? as but impact am Thanks. the of that. contribute I days to rest guys year, Hi days the you clear issue that I come about guys. understand the profitably a it’s guess I the as about you think going on I to you you sure mean Thanks guess gross just what for I was come the I know revenue delay, taking will and back, the profit can when questions. talk little said guess mechanical I I in then guess first, I want that million the make $X.X revenue back will bit there

Lasse Petterson

dock, we It’s performing dock to comment And is noted you work. – before the was The and in it will dry of this what a Mark and on so was had had aging feet extended it get one driveshaft have Yes. we is to an should back period the… driveshaft as dry maybe fixed. and was our the dredges, she as realigned of failure now in we

Mark Marinko

Yes.

forward lead, the now about we forward timing. talk going So the set when moving and

the delayed the project. Charleston of start that So

wins obviously of So is that the X seen have what it But $XXX we Carlson than more as with and in goes also some we we will mentioned – that project XXXX, year. pickup that have originally why feel did so their budgeted, that’s within didn’t our of can million we comfortable of get that on remainder XXXX. have we the we original we for awards, expectations

Andrew Casella

Okay.

if of think guys that’s impact, up that’s about wins other I So about they unexpected I million offsetting when $X.X guess kind made not guess that, margin thinking that you business correctly? the am some I all

Mark Marinko

win. multiple a when next can goes back project won’t mean get year all start million $X.X into will And this big that years. get put of Right, I delay back. things the some We you chunk it they because the you just the year.

Andrew Casella

that about had And contributed that think do revenue, asset us EBITDA when then Ellis we as Island, got you $XX into Okay, rate contribution said quarter adjusted of they to of you on I be guys then clear, to contributed the $XX million EBITDA have the million get we million the it. quarter? second the asset I and in know $XX guess about just run the to that’s

Lasse Petterson

Yes.

just you the expect So we in have the for as give when and first but competitive but of period EBITDA project, moving run our a doing performance we don’t did math EBITDA do we running, how forward it by quarter. on percentage generally it’s here kind in perform the can better reasons, the

So design it to up moving wasn’t working every capacity. day

So productivity performing capacity, you $XX EBITDA. it will expected improvement quarters. see as to we an we $XX gets go into is that next as million of where But drive to it that million design to the on

Andrew Casella

Okay.

understand, to make they contributing will still ramp-up…? in design second full I just will so So I the quarter guess capacity sure it a be or

Lasse Petterson

Correct.

Andrew Casella

guys for period? the me, in quarter, what are XXXX that’s the is the contribution Okay, realize was about Thanks. cost in $XX out will still thinking the And think that million then million, $XX saving when final about program we I $XX helpful. of that question know the million you in

Lasse Petterson

Right.

contributed the actually $X.X it quarter. So in million

$XX do and a possibly additional run we more above next in slightly expect this year. where we at actually this rate expect then bit as it’s little So to million do

remainder then the projects. off rationalized will is, in the talk impact XXXX, savings, we savings as on also things we take those of in we but about operational will when we do track we have cost So cost to terms begin we the more finish that really they expected. year third-party remainder we have have of as we of the And this to coming be do year out are additional vessels through now for as in to this for get we – efficiencies, what right

Andrew Casella

Okay.

And with squeeze a at guess – about think will And here, this year. one wanted inflow $X.X so Services I that point or that is to favorable get million, ask you we at the there of Thanks to more association relating trying me I think business if it much. was Terra the that back some letter be update in an cash indemnification ruling call guys from to to pulled? that any that when be had also then let are credit so

Lasse Petterson

Yes, sure.

the in question favorable So yet – to this the for anything we on we is cash on whether or the of had, not first that, haven’t that. we jury get we booked verdict haven’t the year first the obviously appeal opportunity there quarter

lawsuits, can’t for. an timing of did come cash So you not know give yet. in would time I door But yes, the with the of I plus types these when would that that obviously exact be

second LC, entire that been to to but has In cashed the the we whole and yet no they there business, that on project, out we finishing yes, expect update – the our that. million them demolition proceeding terms there spend $XX off on have in of question old have that along still

So new kind news along, just of that. no proceeding on that’s but really

Andrew Casella

questions in the Okay, queue. back I taking will and get thanks for

Lasse Petterson

Thanks.

Operator

with comes Securities. from Tanwanteng question CJS next Your Jon

Your line open. is

Pete Lucas

good Lucas for morning. Hi, Jon. It’s Pete

for and margin you to of forward. terms going the a dredging, that that the helped Just mentioned improve look U.S. had for of continue in assets you rationalization profile question

am think profile in should or projects QX, margin to know on Just to experienced you is going what that similar forward sorry? QX about in I want we how the

Mark Marinko

Yes.

about, coming expect example So, of to actually of chunk of in the a the quarters the design because use of do a X really business We I Ellis capacity. will or Island think up margin for next That’s big improvement X us. that. points you if just

in the be the That quarter related second So that. would it should to main better reason. get

Pete Lucas

know the you did full what how it say this Great, start? your during are Island you it’s potential, but the I saying for now to compared quarter thanks. with looked had to And would quarter how that up expectations, regards past you extent, Ellis at to to performed the

Lasse Petterson

design Island. that takes always new on happy are the to running a take get capacity. worked period think months we always we will Well, X said Ellis while assets the into the to It to And that target. get with I it

with We target reached we that and performance happy our are going have forward.

Pete Lucas

just any looking And more being how to utilization there for but likely just fill and slower in would at your you be and but me, mentioned U.S. strong, those? current you international two holes other than are scheduling expected,

Lasse Petterson

remainder said of the come towards in we the fleets the and international we that see As it in the XXXX XXXX we keep the are text continuing here, latter have I market busy optimistic of for that and we have bids about to current part year also onwards. occupied to here

Pete Lucas

you me, couple a other any and for of update one mentioned of last target to timing on the shifting terms on you in pricing? And dredge wonder just international are fleet, and if U.S. the asset from sales

Mark Marinko

Yes.

Mark. it’s So,

In terms Carolina Dredge that, did move back about Lasse what’s interesting as here the the originally mentioned. XX and we so of

XX we assets, moving in few them forward a of have terms going up project job, of things, is they the to a the It’s as expected the because was point of on really a have not lot actually if we are handful were all deepening but Gulf, this It’s project here Carolina be those one. moved working the that on here. have a working on It’s target be scrapped you work. So, we types the just but port on cutter sold. to we down this rationalized. assets to supposed rationalization remember to We of be the everything for the were –

be the so generate It risk the proceeds restructuring obviously what those sales, would change savings. would charge So, from the getting those would would we be.

on we be only risk we has been track see as would everything but the that So, going really forward, expected. now, right

Pete Lucas

queue. I Thanks. will in jump helpful. Very back

Operator

Markets. comes NOBLE Capital question next Klieve with from Your Ben

open. is line Your

Ben Klieve

rationalized am Thank for quarter wondering year talked was I the first the full top the XXXX line? the impact you what those on assets, Mark, of contribution you. assets, about

Mark Marinko

Yes, it $XX was million.

$XX about revenue. talked of before million kind of You that

mentioned, I the six As million something in ‘XX. of quarter we first think had, that contributed vessels these – point in I

Ben Klieve

perfect. Okay, Thank you.

Sorry of about of award you here, Couple that stand before. what’s of Boston? $XX on status miscellaneous in other protesting talked missed I million past that, possibly where questions the Boston do if kind the number the we in

Lasse Petterson

So, we stay currently as that. that go protest did actually on job they hold through

protested We GAO. have with the

we plays will that Just see out. how

have talked XX% not they are a say till I she of internally We chance about would less than does just we this. we that don’t here, fruition, go than probably but less to coming through know

not we counting So are on it.

Some vessels now. that projects working, on that of to are work going working the were other work planning to or on

So, of happen. opportunities. going was to on that, pieces we point, was at a will plenty nice opportunities that it business wish had, is to still for other yes, those but this job of equipment work it that may that we for move that There have equipment that would but

Ben Klieve

you Ellis one improvement follow-up expected that points I the said Okay, the quarter, of perfect. margin in second gross did And of quick hear what that correctly? basis question, – because Island, is John’s I to you XXX to XXX

Mark Marinko

a will work, it movement would One as also Yes, we work of quarter, in quarter improve start the of project second the in work be to the it but Charleston now. have lot so Ellis this second work – quarter, working particular, we still better than be that in whether quarter? to same question obviously would third

a good for said, us. project That’s that’s we underway. just As

a So, I couple into at and X did and as basis versus points have look X movement of QX to go that QX we a we QX.

Ben Klieve

towards for robust the and think any pushing with what to take am are stabilizing that looking when you are from your last am tip a international that tip be $XX constructive? Are here, perfect. I the more Lasse, Okay, question you there and one do And really of I mean, looking market, more me, really will international wondering I really curious on market in that that XXXX? oil then barrel for kind any metrics you have market really visibility being of will you

Lasse Petterson

$XX is price in the be starting Clearly, what a be Canal could new in Suez with will the investments that on products Middle to XXXX reclamation the came could is the gas infrastructure recovery. international the that that in projects We oil Europe, international some land going the XXXX market. acted oil when new East and was will a significant projects. factor improvements capacity new have is Middle see see that the markets East we but going to But do move. for into with completed I could the and we the earliest some the to the is it had start a really see markets. now East probably in, major need important in the that oil it – in off say let’s that East, high the that we think and a Far infrastructure a Middle We absorb of fall XXXX the very be available impact severe combined price oil make forward new or major

Ben Klieve

here. color. good. Lasse very in I back for queue get Okay, will Thanks the

Operator

no are back time. this there queue further I will turn to And over Sullivan. in the call at Okay. questions Abby

Abby Sullivan

to thank our support our discussion Thank and of again business developments appreciate and shareholders, about joining forward the you. in We employees speaking the earnings We look our you in this initiatives next you and in partners important with business. August. we us discussion for during

Operator

gentlemen, day. Ladies wonderful participation. for today’s you a Have concludes conference. and your Thank this

disconnect. all may You

Great Lakes Dredge & Dock (GLDD) 2 May 182018 Q1 Earnings call transcript