GLDD - Earnings call transcript Q2 2018 | Great Lakes Dredge & Dock Corporation

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 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 of Investor Relations.

Abigail Sullivan

to conference welcome and morning, our call. quarterly Good

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

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

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

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

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

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

presented. the the had to with as company over Lasse. And guidance, accounting periods that, place in prior by standard years for turn I'll call recast all required the As always been if has

Lasse Petterson

morning. and you, good Thank

everyday, value improved a results. I'd with and Safety then like our safety core a keep in and all hard hour. we start on work Great employees discuss operational to First, every safe to Lakes, is comment our

Our had which in safety injury is lost and industry. had improving, that throughout are possible XXXX, and I'm incident and incidents E&I April recordable X and that and dredging metrics free XXXX March proves consistently time in performance proud our injuries X

Turning high quarter the increasing on quarter, beginning we of This the $X.X we operational adjusted to of results the quarter. of XX% we million, morning, year of last Gulf in time another deepening South for in Ellis the this And marked $XX.X design expect June complete planned an Port to the continuing year. from included the of dredges the current announced to ATB our and increase her criteria project second operations million where and over improved project EBITDA our with in her activity to later Charleston year. Carolina, now our continues X Island meet Mexico operation. have busiest largest

mix. project During take different utilization, the the due product starting increased prior to freight quarter margins to improved enhanced execution and over our cost year hold, quarter, dredging reductions a

go We to traditionally trend we expect as quarter period busiest third fourth in the now into this continue year. the and of the

maintain of year, safely keep $XX going debt on reduction of it we in million our and funds expected the million operating rate realizing savings in we reach our best we continued in these we In expected run and $XX XXXX. full savings to continued our parallel the During to to the ratios efforts our recognized productive net forward. decreasing on use most this same time, At planned efficiently. of track with to quarter, remain on with be and XXXX, recognize accomplished and work priority assets the restructuring our in $XX prudently of we a million savings, cost debt

Finally, we complex, million in port already and Execution large and the new, these coastal protection Emergency deepening Jacinto Protection projects award we of project. latter underway, bids including projects and projects $XX XXXX. recently of X dredging projects, restoration the half the San announced Flood are look of the of on to outcome forward

second I'll in Turning and turn part operational the business. and the the winning results million to half for the market robust, the executing of Environmental backlog of in segment or year. segment. to seasonality seen we bid pending due work revenues new the & but The of have the end to segment projects quarter $XX focus awards, update this With to for second on we year With higher awards, of first updates, over the delayed to a call those XXXX. of discuss on developments. Infrastructure subsequent the Mark half remains to expect volumes have results and an quarter results, The awarded to improved the is remainder in E&I slower-than-anticipated due on and in and the combined E&I

Mark Marinko

Thank to two which financials excluding charges released financial Consistent Lasse. Okay. prior as restructuring as recent well restructuring certain charges better a results year. reader The our different to than morning in results of format as the measures, financial includes as financial evaluate years. the to prior compared included some you, results allow reported, the our earnings slightly most releases, were with this the

results quarter. segment my will do discussed the and start Turning specific restructuring end near restructuring the be operationally then I commentary note comments. and provide on charges. all the with at Please for level. quarterly of consolidated results not include results results focused to will financial the discuss I that our the charges will

quarter loss million result from One, benefit. income of in as to million. continuing net of income quarter $X.X million Net E&I the operations $X the in quarter second compared expense consolidated million. $XX.X second The current income and by $X.X million million XXXX revenues company net quarter represented administrative related which expense a Total Ellis to X XX.X% in for quarter. increase million contributed loss $XX.X interest $X.X in was the segment. Lower to quarter, million to the included $X.X compared second a year across reasons. also the to E&I $XX.X prior net tax second is caused decrease million, segment, of of was which company the to were be the in Total EBITDA was continues compared year. and million $XXX.X construction net margin year adjusted for $X.X continuing margin income segment. by a was decline our interest XXXX. plan operating The a to The the In by million, is quarter elevated slightly we was Island. contract of increase capitalize second expenses company improved gross current million the Gross offset Total profit of XX.X% restructuring quarter million in a quarter. $X.X overhead loss the year quarter the of the of general profit the tax Dredging over dredging to and million prior in the driven the $XX.X increase over in increased operations $X.X able year segment prior comparison, decrease revenue the million domestic million interests margins a is decrease a from were $X.X and in the lower the was company XXXX, $X.X includes, For for over the revenues quarter interest and net $XX.X of prior million, XXXX. prior $X.X increase quarter. XXXX The of

year market in prior the market the decreased segment's million while revenue, senior was by prior rivers year domestic million lakes flat prior year capital in the with offset market. the the being year the on quarter. as rivers Dredging from in on the increases notes the was at $XX.X the and markets million. quarter current revenue was prior revenues compared quarter current decreased based in X%, and compared by EBITDA at level, million quarter. The excluding $XXX At segment Both Secondly, for maintenance is to in prior quarter year $XXX in the year $XX.X million to lakes, and interest the Adjusted quarter decreases expense international had expense the overall the $XX.X X.XXX%.

expected Additionally, quarter. later deepening the X the Charleston work than Port project month started in

of expect the quarter XXXX, it quarter. prior income margin operating increased quarter delay the did XX.X% from and Gross fully segment in year and related in by increased the make comparing quarter have on to in impact the stronger Dredging operational when the XXXX. profit assets. this rationalized to improvements second margin contract our we the an While up current million to Dredging's to current XX.X% in quarter $X.X recently

the affected segment. In was gross by margins, addition profit the to expenses and a increase administrative the in also decrease in general higher

second in the second the Our the in year second the million an E&I as to XXXX on benefit quarter. as work, prior from of quarter volume XXXX segment's in current $X.X margin quarter as the of to in of lower E&I decreased well change improved quarter of XX.X% segment's The X.X% gross order profit decreased recognized XXXX. a on compared quarter revenue

compared of second the a segment of decrease to the operating segment $X.X see lower offset the one-time of XXXX. the on decrease volume in from the the prior quarter including did quarter benefit The its While continues year loss the segment's million impact in second million decrease of to an good the second general XXXX, $X.X margin, was quarter margins reported is lower administrative XXXX. a profit in gross quarter. by of expenses The projects, result the current work the of profitability. This

of offset contract by The assets. sales recorded During charge the restructuring also million. of of we quarter, of cost depreciation, million charge gains accelerated $X.X comprised revenues was and impacting $X.X a of

to remaining with million to $X million, expect to charge We million $XX $XX XXXX. $XX continue be million to between restructuring in our

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

down X our by also year-end to to XX continue During first to in next balance debt the net We months compared months XX revolver $XX to pay we as XXXX. plan to sheet. of reduced pave million our XXXX, a improve the

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

noted reduction, and it with last to efficiently. also continue effectively we running As -- debt our prudent focus fleet quarter, efficiently keep on primary make a investments in to

Ellis Island our or the to bid variability market market overall of in unusual likely $XXX we remember rate win year-to-date expect million. of XXXX XXXX. due $XXX the prior is We continues in next achieve not that strengthen. the The XX% of rate is indicative of win awarded were the be company percentage contract wins bid to not is years completion year. Total Please the the million, to and significantly to was capital the which lower spend than

Boston the win deepening lower as Harbor of year-to-date our result Specifically, as rate first the is -- of low is in the a loss quarter.

the million coastal or comprised XX% projects were During lakes quarter the we $XXX.X XX% of bid XX% awarded of of XXXX, or protection million and capital of $XX.X or overall second $XX.X million market, of projects. XX% rivers and of projects,

$XXX backlog backlog was back River, referenced. outlook Contracted for XXXX. Our awards, versus million. to to awarded at at the remarks that, and backlog December dredging not quarter. over XXXX the at turn in X/XX/XXXX segment's Two a forward. Lakes quarter awarded totaled at million million, of total was maintenance San Lasse the Delaware The December not Great XX, these the for compared were on million XX, balances projects subsequent $XXX dredging $XX and moving his call reflected are June to million I'll $XX E&I any With just XX, XXXX $XX Jacinto thus during of I

Lasse Petterson

Thank you, Mark.

I'm As about XXXX, into XXXX we latter to opportunities. of shift the excited our the half and focus

these balance provide the Multiple storm as deepening anticipate of years. appropriation, to of multiple state federal, combination a slow to participate consequently and for domestic harbor market back company's in XXXX in 'XX Dredge back forward. We International are we the health, water U.S. going good funding substantial the to on momentum well which coming the As solid would billion market in Charleston and in the be recovery as year allocated port gain and programs Carolina bill opportunities we in position we currently domestic $X.X that expect working sheet continue are to market be XXXX. funding domestic in dredging moved budget be for $XX situation the a the the from the Harbor on supplement proposed and We local we now East continues and governments to take will the returning to the the to to The last XXXX. billion deepening the She's and as market. plan the projects. realized provide projects. Cutter to Middle anticipated in projects U.S. with XXXX and be XXXX dredging expect proposed

back conclude, turn hand the from good ahead, a with America. expect call we in questions. also improved We and XXXX mechanical market moved well us, second To the With South behind dredge a to into for and with backlog I'll quarter solid a and the in over that, of remainder domestic XXXX. perform

Operator

we a Instructions]. from Securities. Tanwanteng have question [Operator Jon CJS from And

Peter Lukas

It's Pete Lukas for Jon.

on some Just for and also Last XXXX. quarter the secured same this side. the time keep fleet moving projects had the mentioned, a the weakness said you at call, you utilized you on I dredges. anticipating international know of to

right, and heard talking Is not there XXXX? macro a going happened something should on, if on, be until turnaround, we or some wondering I focused about Just quarter. what this

Lasse Petterson

that I of and XXXX. have 'XX improvements this we Yes, said than the now like international anticipated XXXX latter earlier It part in and more development in indicated 'XX. it'll we at probably the think is seems markets

So situation we to new are -- this adjusting situation. this

for little to slow We get in have that backlog the in there. our backlog fleet but Middle realized, been remaining the We've is East. a revenue hand

Peter Lukas

for question it, backlog Decatur rivers call to similar lakes. The a has revenue, in project consistently million still million. And $XX and the Okay. $XX is and

quarter changed Just the in there. last what wondering

Mark Marinko

This is of wintertime of does part year, Mark. fixed and then That and time. work summer the back in spring only demobilizes up the the late in project kind

$XX will million back of gumming job be year Jacinto so as mentioned, up and half we a finish and is the will rivers San But lakes So I project, job -- the into year. this but then that in that this XXXX.

Peter Lukas

we to margins wondering pressure here, And And under winning about in we what change. should here? projects of this how Okay. look its just can for continue just more thinking it revenue year and be Is should both terms E&I, be contribution for differently? what

Lasse Petterson

bring year. better impacted delayed development a target segment Yes. closely are were to of E&I the back this awards this in the of We to forward. We plans. profitability year, we that and our expect to had a some monitoring We in this were compared going development half second and do

Peter Lukas

bid Got be seems And picked quarter you. one for last the stronger. since and have me. and to of end much Backlog the up

You've made some comments utilization. previously on

everything of flip holes year the and for potential wondering, if potential remainder for execute the the and according 'XX Just on pitfalls where this are in to the 'XX, side, plan? upside you

Mark Marinko

So couple there. of a things

think I the strengthened. has bid market

$XX You subsequent saw the those million -- well. of to as quarter awards in the end

port times, year, a big Christi, we've Port but deepening, some Corpus Port XXXX this have We of A a of into bit those coming some bids up little lot couple of mentioned Tampa Jacksonville. impact -- eventually. the that more deepening like

or on are well bodes equipment for fleet mechanical, combined there's So as that where of different those copper can just we use our times cutter. projects, those

it of the that diversity bodes of -- even see fleet. mentioning So down, those, so in all out do the hope of with -- of -- utilization in talk for about mix and as our those as underutilized question. well you're improved terms those some And has of taking of revenue profit, were have you them X a that the I vastly kind utilization. we could vessels answered numbers our gross

Operator

with from the question comes next of Klieve Capital market. NOBLE line Ben Our

Benjamin Klieve

piggy segments. few the couple a questions few last me, backing a here questions in for individual So off of

think, to all, San -- the lakes of this award in flat for ramping be backlog, now overall, potential year-over-year do overall of and look segments, we now pretty in with the First lakes rivers can will business the in basis? be that at a kind the that award given on and flat Jacinto But and rivers that a you the be for to and there's year seasonality different? segment

Mark Marinko

mean you standpoint? Yes, Yes from a revenue

Benjamin Klieve

Yes.

Mark Marinko

Yes.

Benjamin Klieve

assets then of year, at kind international the pieces of And year with know a then question last underutilized perfect. rationalizing Okay, segment. frontloaded. look lot heavily and the there's heavily, business, assets those on And was when same international moving you the year. here, last this I

year, curious down 'XX. why on you at potential what to; business, you're a given half I'm So overall, first year do 'XX basis looking you understand of that compare To this fiscal the the I think when business, that the on of to -- all downside going fiscal but in you're we're described. full that pieces degree moving from you've

Mark Marinko

Yes.

international job. decrease. Arabia of year, a chunk international, That's right, we Ben, the you're X the through standpoint, related the first of So it's the that the million. of half months first was down exactly revenue from last And Saudi had $XX largest year, to revenue

though backlog we the work even shut of South actually moved year, in U.S. and Carolina Brazil, the as that we back kind well a Lasse in the moved, when now. to, we've as from So America U.S. of dredge half do and some the to back we now as have for have the said, down that's

So in you of year. is moved mostly a it dropoff a versus me, front international have prior I market. it is the out look the two that right of drop equipment we don't of at number it big because when off pieces generate should the but revenue material

Lasse Petterson

the required U.S. to move the If to I additional the and this And execute we equipment has here on and the The we consequently. see projects is benefit that capacity, impact clearly could coming see active the domestic international going add the forward, the revenues fleet there. as an market back very up. to to we that felt of supplement was

Benjamin Klieve

perfect. okay, Right,

-- quarter Another the million degree question. $XX failure during made project, that a the what To In to Charleston million misses. during revenue was $XX second of quarter? mechanical QX, you on up described business

Mark Marinko

started in month of we the Charleston well, really project June. So yes, the

month. the month look the you have of impact at you quarter, when in X So

mentioned, and started later call we then there's really just that Charleston second on and today, Charleston I the anticipated. Charleston X projects. There that as a II, was Charleston, they're I than we this So a quarter

that part, really we was Charleston mentioned first QX I. So related to

-- impact on there quarter and the revenue. $XX was for in around So the million us

the because we opportunity make have the up year are we to of way that because this do that. So windows that did the

We have coming for back now there, and and hopper then the the mechanical cutters the hopper right year, is dredges now, the window. in

going out. So to they're come

-- an opportunity we was all quarter. yes, up it we -- to but make it make but have that So it up didn't expect we make the in not second to up,

Benjamin Klieve

vessel. me. idea of if then it to Island. Okay, you can vessel potential, therefore you from vessel. to margin bit Ellis And I'm better specific a gross one of from you're of But ramp did wondering -- margin it on margin get I'm And high sustainable this know perfect. give first a last second? kind improving rich going from here the then, the a I that any of trying or numbers that elaborate how on How that for at the that margin what particularly can the to to not continue gross quarter the potential vessel? improved point, the is from water, gross describe mark

Mark Marinko

do fixing get something, it our periodic forward. little days design times still gross yes, room give criteria. So working depending where that now impact bit, a But where right? margin but continues still margin It improving margin the to as we're what the won't no, because we'll call something improve. in said, We there works I improvement has Ellis, to -- is out. working, it's is, Yes, impact project that's first at Lasse on the moving important on, that smaller. for continue of those all, not on to It is,

from sure. have So that it does upside aspect for more that

yet. full the seen in haven't impact the you of numbers Ellis So the

Benjamin Klieve

think have an you idea of you be? when that may Do

Mark Marinko

back of the half quarter. of kind say this I'd

Benjamin Klieve

a quarter, half of and then full quarter on so basis Okay, back QX you think? this

Mark Marinko

Right, yes.

Operator

a question from have from We Co. Hinman DeForest Walthausen &

DeForest Hinman

questions, starting off quarter. A we like looks dredging. It few with pretty have good

the good, on improvement looks and that the like us pretty were it room improvement. you answered question In question gave margins further just there's side. the think for I the last even -- sequential margin surprising

$XX and actions a the people lower going and and strong really million, going rationalize we be we can million, this $XX helping that things we've business whatever the some norm SG&A. Is should have and that to is, of that of number going forward? million how $XX forward. that this -- there's looking kind for potentially taken forward that for Is understand to -- improve Just to the new EBITDA outlook business, a the progress fleet of continue EBITDA,

Mark Marinko

Yes.

back improve half I think it. to good to We and of perspective. a that's the So the year a take on a revenue do from continue margin expect

of as mentioned seeing I get quarter so minute the Ellis But we kind have a working a ago, you're June, of forward. this you only what part really is we it. in in Charleston Island, the just quarter, as that full of As move mentioned, Charleston you

I or And continue half expect improvements the a revenue deepenings the so additional the half robust bidding the market perspective. we back with we with do compared that from margin the to port year of of into foresee to first said 'XX. as then expect a in And year, and these

do we improvement we cuts But get some leveling rationalization and then the see you as margin. additional 'XX, related improve our off. will have that more to into cost So

DeForest Hinman

of Island were if not So the good a of less our are you'd them. It's on kind maybe bit active. fleet some I of deadweight, older guess, mix? doesn't vessels with a the Ellis use of fleet bit in profitable, book, of term that capital kind little of but units, out do and I don't refreshed to know They're maintenance of environment. make these more terms sense as our

Mark Marinko

we're CapEx, And We $XX Ellis. That $X are did the in quarter, P&L improved in million lower last million not you the mentioned $X.X gross the down. as just the I year. but side million the of on right. for terms seeing margin, That's profit, with spent on that included the

I'm couple so definitely side, rationalization P&L take $X We So apples there's down less us. is you spend up plus but more in also to in of were an CapEx in million the as the out apples quarter. yes, a for basis kind of that can that million. of CapEx

DeForest Hinman

that, down, are seeing first a first is on the Yes. old? building like saying keep if that of too annualize on put we're And CapEx Is the to realistic? in you're half, going is million. that? just only to we Because going $XX number and that we you Or be firm that half. kind But

Mark Marinko

more a half second bit have drydocking the little do. for some in There's we to

So XXs. it's in of will the kind -- it low right now be

As I've in we're CapEx than said, spend, a prior I -- on expect $XX that. it year. our I call, regular to intended back going to to $XX of be to million of expect lower kind kind millions go we it but the I did say low be this

So a half first more than back little bit half. in the the

DeForest Hinman

of back and the average that then -- work good market, to so thinking that's the bidding we than we're in and profitability to the do rush And Okay. not job just it's like get should domestic better profile two a the win, that bid usually sounds words, that lakes, rush back being that it job, XXXX? half going rivers be we about

Mark Marinko

that's Yes, the work for I so say correct. project on good a to lakes fleet would that's rivers and

DeForest Hinman

been business is this picture I this dredging We a as perspective. stock good big time. than and And of the the conversation some better question think doing, the little a we Okay. about bit of for with just business a dredging had how is period a did margin thought then shareholder from good kind involved that's

good. very that's So

news. E&I, positive in smallest problems think, good our the the doing we're shareholder through, really kind of as dredging that and work which is today a are in X% the business down overshadowing is And business. looking the stock I Your

for obviously, frustrating shareholders, you probably but So too. frustrating it's for

So unacceptable. to is big performance E&I? going picture this I do Because question, believe what fairly are with we

Lasse Petterson

The Well, address first. dredging me dredging solid. let the is business business

some year, needed We that some issues out smaller which still was problems corrected. in there, a Island the have and seen delays criteria, in realizing design from And to we at We she's some X months since Ellis had first had up corrected. period. the has operating had be running We said getting have, been this results it operation.

I as remarks, very year. half and get we I as the to So our coming next in my over impacted good E&I, being comes has backlog for major to it said the year. in port bid the And dredging into execute months disappointed to that to the as deepening us go a and executed, next domestic bids by with forward, and have ability first revenue. that development projects see we delay -- When been

second traditionally better the better, as and I currently. the on the is this X monitoring from said work year do And on The have and expect half are segment, the second businesses quarter. E&I we we Q&A, completion closely new see we of here in development since we of the also results our than

DeForest Hinman

XXXX, model X, but you business, at my I think in the in X how giving X, -- might of When positive be years to it looking sale? if this say you're we them looking you're actively off at X, don't losses we X, because and is it, for then you're months get monitoring business at and wind X, Are that business. looking down? profitability Or are X we

Lasse Petterson

around, as Chris hard contribution get the is and for Well, business his team we working slower E&I turn Unfortunately, and taken we steps, to know, to have that. the on somewhat the EBITDA have to a you company. positive been

are the to We the rationalizing portfolio the getting our looking and at our to the the we positively opportunities of in have then was in part a in X not for lot and line. fleet the of X in as contribute next same these year, monitoring all need call assets the about time contributing way, that effort that optimistic and new we segment spent the focused half company, to that assets saw we to a in And we're we segments. our the the years, the all year. business to fleet, of market with the results. project it, And on last second And in bottom have development

Operator

And a from we have [indiscernible]. Instructions]. [Operator question

Unidentified Analyst

to just and bit that reduction a on accompanied kind Delta a the led that be far what of what in that in Just order revenues I'm drill list concerned. the to of dredging to as gross a looking as appears of higher talked good little we've kind to about So you are margin, could lower margins it's and by see lot, Delta? importance at the of down factors in increase this revenues numbers, XX% a

Lasse Petterson

no, fixed our roughly Yes, on. margins higher is

rationalization we the think on to were revenues. that the the And those have focused in our not past, in in we the project on results we philosophy that then decrease we on around projects combination with execute, were rationalization assets that we qualified our is from we've assets out been seen revenue there our and are the did last we had was need that company, if uniquely last we the delays And that the fleet because the that more of company of took fleet I to and to projects. My -- margins the lot of that a and in focus the that the clearly year. year, seek in focusing consequence. on contributing and Charleston kept

to we the focus sure make the forward, projects our will Going that company. and a and that be and deliver are high-quality execute margin on rebid margin

Unidentified Analyst

to a couple took What down I think million. involved of was there? G&A you

Lasse Petterson

a took contribute to increased it as And we Well, and is we see and as contributing forward. also we SG&A, that in overheads them year, last margins that margins our we cut to will going the announced million $XX today. saving in realized

Unidentified Analyst

All revenue you some operating guys compare favorably. right. I in to start leverage tuned. hope X We'll stay

Operator

this time. turn There are you. call no at back I'll to further the questions

Abigail Sullivan

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

Operator

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

You may disconnect. all

Great Lakes Dredge & Dock (GLDD) 1 Aug 182018 Q2 Earnings call transcript