Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Q1 2023 Great Lakes Dredge & Dock Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Baginskis, conference Director like speaker to now Tina today, of would hand over the your I Investor Relations. ahead. go Please

Tina Baginskis

Thank to welcome call. morning, quarter Good conference our XXXX you. first and

Lasse morning Joining on President Executive Chief Kornblau. the Officer, this Petterson; me is our and call and our Chief Scott Financial Officer,

an with outlook on quarter. our on financial the for the Lasse update of market. quarter. update the will provide the Then an the will update conclude business and with Lasse events for an Scott on will continue results

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

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

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

the over turn will I that, With to Lasse. call

Lasse Petterson

Thank you, Tina.

port with and of due previous the bid in to XXXX. protection amount as EBITDA a in winter capital In $XX.X And market reported deepenings challenges weather to in our work EBITDA quarters. company adjusted continued press revenues profit lower-than-normal quarter each projects results projects coastal the As three the The million. stated ended in first we in had of prior delay this million we release, and improved We compared of Northeast. $XXX gross to the of and on the for margins XXXX. we the quarter in showed large quarter, in quarter, face the improvements of

provide which from lower came Our strong, was but revenues project projects, fleet utilization maintenance in the typically primarily margin first quarter work.

out started and larger have better XXXX the of developments both mix we to bid see to positive to in with coming a market. coming a Fortunately, projects of number projects

the a million of the of over $XXX quarter in ended approximately bidder performance we the backlog, In quarter include bid obligation does contracts. $XX to wind with million $XXX.X first greater approximately $XXX we and $XXX.X with offshore this of market dredging low and reached than award. quarter which million on pending of million, total not we in were is market. quarter XXXX, related ended million that And options of XXXX, bids which XX% We low addition, the first had

Not Freeport the first were million projects a numbers, included the Deepening in we the major which bidder Northeast in project at approximately protection coastal our the around early in $XX million. low and projects on two April, at backlog quarter $XXX namely

these Assuming work projects second we to the two second forward half see could commenced the move year. award of quarter, in in

second and quarter. seen come large is the bid overall started to in expected and in projects up projects large of that in quarter pick has bidding And year. the to have we first the for It positive results first remainder that with additional improvements for

that slowness weeks short-term to bidding typically of the from some in to to minimum in we revenues and some new weeks expect QX six project to saw award will in do and as fleet in to bid That's market this due dredges contract utilization in QX we and have additionally drydock some take XXXX. to However, low eight we lower site, four see in as and projects QX. continuous mobilize

major onwards. we and proactive XXXX part XX-year action and Terrapin in various dredging stacked and old currently retired fleet took support the improved second hopper on cost of in Last an months, market two six of adjustments. we the anticipation the year, dredge, last and equipment In utilization and reductions dredges have Island, the cold swift we

G&A Correspondingly, we SG&A year, overhead our X% XX% through administrative structure had we target changed reduction market have And we and conditions. and natural adjusted cost a after staff in the and in to the attrition. reduction earlier XXXX this reflect

renewal As decommissioning on market the current in in our the remain And we expected to our U.S. on Amelia the be part leader and upgrades market oldest dredges the several, adjust in vessels we be our sistership, to in new market the Island, ongoing of outlook in her dredging is to and continue be delivered our is for to in our strategy budget expected segments. selected we After condition, XXXX, long-term optimistic invested the is industry to XXXX. quarter. fleet the performing Island, Galveston dredge, productivity have operational our hopper is best and program third

installation awarded vessel for first named Wind wind by BP, with we several be beyond. fast-growing for XXXX. and II which contracts We first XXXX the XXXX Last be Equinor are installation, Act-compliant work XXXX. subsea installation And other and and enter rock projects windows U.S. Lakes and are the offshore Construction on installation also our was will executing offshore and on Acadia, and year, rock planned budget strategy I currently farm expected bidding U.S. to of with flagged its Jones half to Great our on delivered wind in Empire fallpipe for in rock the of inclined is operational market.

and turn to discuss a commentary call provide the and the Scott results to our now quarter further further around will the market for the over then I I business.

Scott Kornblau

everyone. and Lasse, Thanks, good morning,

The lower was XXXX, million $XXX were the and first coastal partially lakes of maintenance revenue was project and was of quarter in $XX.X first and million. EBITDA $XXX quarter and to due first revenue $X.X from increase revenue. decreased in the loss For quarter. Revenue $XX.X prior revenues capital the an million million by adjusted of million, net year lower primarily offset protection rivers XXXX,

in in was $XX.X the margin gross revenue the revenue in million quarter the and XXXX of project $XX.X earned the first first margin. one-third to of was Capital first compared of respectively XXXX. respectively profit contributing profit quarter decrease XXXX to and gross quarter the of in Current XX% X.X% and quarter capital million

significant to the projects addition, continued weather in In number a of Northeast. severely delays impact

Operating of the the the first margin gross $XX.X slightly year lower operating income quarter decreased of compared by The loss expenses for lower of $X.X year million is from million result from the quarter. prior to quarter. current prior decrease a offset G&A

$X.X expenses quarter cost and The recruiting relocation, due administrative on First was than reduction. efforts year was million same to the the in our from lower continued year. quarter $XX primarily general of decrease prior G&A lower last XXXX, million and and consulting expenses

in expense the down interest quarter new the of interest for in of million to partially XXXX $X.X first due quarter Net program build was offset our an expense. million current increase first from primarily quarter by interest on capitalized XXXX, revolver $X

income quarter. compared tax P&L, the was prior million First Rounding of quarter the current out in quarter the expense the of tax $X.X million year million, quarter benefit to same $X.X net XXXX of loss XXXX for income net the $XX.X million income. $X.X of from first income quarter XXXX from driven by lower down was

performing projects as quarter the we of shipyard the with Overall, the in the on the the first half of regulatory to dredges entire significant the her were Ohio, for compared improvements most majority quarter, quarter which exception XXXX of the drydocking. saw of our in was second

paid down spend dividends most initiatives savings as cost Our was categories. also in

Island, XXXX Turning $XX of capital the Previous rock the million the $XXX to million full-year quarter maintenance quarter for remains our build $X.X and million consisting the $XXX were CapEx first $XX.X for first million balance of for installation the million the million the our of Amelia $XX.X multicats Total Island, for sheet. XXXX drawn in the $X.X of guidance Acadia million, of CapEx. We $X.X expenditures ended unchanged. with Galveston of million for on cash construction vessel, and and million the approximately revolver. $XX.X subsea

take of to very review last January XI quarter months, new vessel, Administration this Transportation continue parallel, Title comes on moving other of terms. which in the year, Department in capital. we The or expected, The discussed nine is as of is unit for can Maritime financing we to applied which wind with explore up of which a MARAD, our with sources but typically process, attractive As

As our current of $XXX delays backlog, deepening of million due of port to the $XXX but consists only entered we in the projects. with million mentioned, XXXX, backlog second quarter project Lasse capital bid in

the job, current and While will mix Freeport capital be to projects backlog increase than and the significantly to of we lower expect of award quarter due normal margins backlog. third the upon second

of dredge We be a of towards the the part in also quarter planned and regulatory the two will the that for dredges the shipyard shipyard drydockings end enter repairs. the will and second quarter maintenance for third undergoing have that

the of remainder the for planned drydockings regulatory further no have We year.

I moving back Lasse on his outlook forward. With for to remarks that, turn the call will the over

Lasse Petterson

Scott. Thanks,

including Harbor maintain law, We program U.S. civil and billion support Maintenance continue to budget initiatives, dredging Biden from the included projects the works strong Fund and of record funding fiscal year XX, billion into infrastructure is of to which signed Army Appropriations for from see December Trust last another of Corps $X.X was our the waterways. equipment. XXXX the for and of nation’s year, provided modernize use require for ports $X.X of Engineers coastal that Omnibus the On Bill which Administration protection Congress

and make which Appropriations Supplemental XXXX. billion XXXX budgets included projects for the bid hurricanes disasters approved the Act resiliency. for market increase and to infrastructure coastal that other increased Disaster Relief necessary our dredging beach funding and repairs year to to addition, natural and The initiate in market In XXXX a fiscal by impacted will for and Corps $X.X was expectation stronger support renourishment additional

budgeted San projects funding appropriations Norfolk. including improvement the Houston, several of Sabine, port Corpus additional and delayed these expect Christi, We support of capital Juan phases to

Corps the seen we for months Norfolk already the projects has for significantly bidding and which in deepening Freeport, bids in won. was the delayed of XXXX, these first projects have capital XXXX port Although four

two of the by Last to of Included FERC issuance proceed, which dredging liquified approved Brownsville with LNG awaiting to our also financing will our Notice final the potential bids decision proceed has Texas this enable month, and the completion clients. decade approved contracts. projects year. natural project construction our FERC from in later EPC LNG been investment Proceed for followed pending gas projects to low that next

and the or facility continue were Port LNG decision to are projects next half positive on Earlier to one year we in the be that in expected the a dredging to quarter, the would news, on so XXXX. and in of dredging made decided this dredging Based second LNG few bids months. with throughout optimistic two proceed recent Arthur the Sempra start

billion, is This what will over figures. XXXX, Congress the negotiations Corps The Fiscal the March the a when Federal for $X.X amount Congress we Biden in passed. President’s are line year the is in hopeful is President eventually at record recent which Year budget, targeted that In for the spending is increase XXXX. released for point become Corps' amount budget for with XXXX proposed and starting history, President's the will actual it fiscal

of and of Corps’ projects. signed end XXXX, on the of renewal for projects XXXX, XXXX, flood that and and the into the two-year XXXX ecosystem hurricane President. law Resources was Congress includes At dredging, protection, would a construction WRDA other authorize Development is WRDA by legislation cycle the Water financing approved and restoration Act by the

estimated Protection to The the New includes well shipping billion, and feet, Jersey as XX safeguard Texas from amongst deepened $XX restoration authorized Program, Gulf marsh surges. things New the things Coastal to channels law other Texas and $X and features be dune Restoration as among Coast billion, at other which to the estimated many at for York hurricane

by billion of $X and wind, ambitious gigawatts current XX the for XXXX of power administration offshore announced in projects. XXXX, installed the generation offshore federal guarantees loan provided In an goal wind

BP As II. has installation the stated and Empire for Great Equinor the awarded Wind Lakes previously, and contracts I rock already

with We when developers several other for commencing discussions she XXXX farm have that tendered a operation. the good we for have projects in and rock wind starts Arcadia are to placement ensure and beyond in schedule work

with delivering in we XXXX of and results. focus the to the more place, through of challenges year improved the and main and presented delayed beyond. cost can in continue end to operating situation Island keep to with us bid current year-over-year this confident our manage reduction with improvements goal Galveston have market the and the has conclusion, market normal we conditions that through year the on operational managing a Combined is we delivery In toward of the return this initiatives the difficult various are

And call for that, turn with I'll the over questions.

Operator

Our Noble Instructions] [Operator from you. first Thank Gomes comes question Joe Capital. of

Your line is open.

Joe Gomes

taking for Thanks questions. morning. Good my

Lasse Petterson

Hey, Joe.

Joe Gomes

of some and ones, bit in saw little on start Baltimore, last one of looking awards releases. the It you got I'm a we Cashman a environment. million some for like to Harbor for week the $XX Norfolk, wanted end got at a I competitive award looked that So at and obviously big DoD the guys. the Dutra other Galveston

bit awards be coming that a Just normal you a Corps have from competitive some looking is bids? the happen spread out participants. been touch to the the going that looks side out on getting out, companies of these environment And just on it little environment smaller there, indication seeing awarded of if Are seems like they're a more that number to it's operating kind some of some still to of to fair what today. or just more bids and guys the them smaller they those of you there to

Lasse Petterson

just work out is Corps large but on Corps it for that there's bids smaller competition these normally bids from a bid Engineers contractors increase Engineers there's will respect. three, five, to they the the their awarded in potentially policy and Army one, change two reasons. split that spread no weeks six be of to way Yes. correspond bidding could no out if to, into also there the projects that are they I Great secondly, say, contract, Lakes conscious to in year, this probably work. And contracting is who fiscal of out has is the as because One for different change it the budgets if Army two, way of phases, and guess in Larger the the they question to projects. those four, a

Joe Gomes

those give claims we talked those little you where that on some Okay. the large resolutions? for on about a that. Thank you And could in us claims you year projects we've three had the on. past, unusual last stand update Maybe

Scott Kornblau

Yes, Joe.

see. they through. decide from call did said different we out last So claims I two what as we ones three Not you of moving unusually that larger to in typically recall, scope large because are are the The quarter. much

changed QX. not we the think resolved have that those not to that look if We get those in and way QX, feel about early

So as expected. moving they're

moving some things to take time last is As which and that through, expected. going as then project the is these the warned as I And go yet are three of year, just a not it mentioned, third it's one, to I is but that longer job, expectations a resolve. take the core done is is a to and not our one little smaller

Joe Gomes

I could expenditures, delta Okay. on things million million a the know $XX you first for the a And think $XX was looking $XX I you In in quarter. you that Maybe of heard $XX there. quarter, maybe kind shift if million CapEx And but on around, the I CapEx? more were to I pretty big you million, the quarter. last color in more give that's little us capital correctly, did surprised, of the

Scott Kornblau

warned and I few of you the the from two goes to on midst of if slip newbuilds. weeks, payments, progress payments one year, They're what those we it's exactly or And big it last QX. a in have Yes. were QX

$XXX to I naturally the a as So weeks. and These year the our that few change. that Again, move of million guided it's CapEx, beginning we mentioned, the do left the just doesn't total things timing. right to at

Joe Gomes

me else let for more enough. And someone one and Okay. ask. maybe Fair then I'll

tendered any So kind timing wind bids see that? or projects to when on awards you work, on on as of progress some you've some the that for might additional

Lasse Petterson

projects wind are The forward. Yes. moving

awarded larger design to potentially have believe of will turbines been chain projects, one that's wind it's the XXXX. have XXXX, in changes already and have due that solution. and it's it's on we projects year the a and because that for position them the of supply there be this movement also on right have said, everybody slight execution to tendered the one XXXX, on I one But these to to where bid due we we most in then we these has permitting, a In XXXX. in for As marketplace, that economical of wants due to XXXX issues, projects

Joe Gomes

Great. Thank very you much.

Lasse Petterson

Thank you.

Operator

Adam next you. comes Instructions] from [Operator Thompson And of Thalhimer Thank our question Davis.

open. is line Your

Adam Thalhimer

Good improved QX. results morning, versus Hey. guys. the on Congrats

Scott Kornblau

Adam. morning, Good

Adam Thalhimer

have the the any is pretty talked compelling? about you bringing have Do line into sight back cold environment any service? stacked Do guys bidding you line you to that because of vessels

Lasse Petterson

Yes, we are coming bring we we see. do. our And the starting new out that the market are back in. into bid to market optimistic there to projects are vessels those we capacity as have to work to that that we adjust we as now have on soon And these operations in

is So the our That answer yes. plan. is

Adam Thalhimer

Okay, what margins it sounded normal. said And then you QX, like. good. below That's QX

you as my – chance look and QX? question So guys to a a thinking out that's is, normal what we there are is that as achievable we about margin

Scott Kornblau

Yes. but projects range, us not XX% high-teens, We've is always to it's be just mix that to going have there. right said normal now, we in with the of that,

Lasse said but We're even end these that, So started. the Freeport full this possibly some of going to Award, on it's jobs take get with time blown be QX, to probably QX.

to mentioned I in change a two the at backlog is next of the now. quarters. $XXX So we're capital executing right we're This be over work going million

we what see So start on huge to from capital deviation not executing on this would a quarter we work. expect margins more I saw until

Adam Thalhimer

Understood.

little down Okay. ticks then QX, a in up and And QX in rate more a then in with utilization QX?

Scott Kornblau

That fair. sounds

Adam Thalhimer

QX thoughts kind QX? your of on utilization What are versus

Scott Kornblau

that's white end not mean we but there the right still QX, so space but have Yes. some – I QX, some. that's still of At is now unusual. mean, in I QX,

out. are get seeing we those some, again. feel of we As some burn coming, book coming will utilized see we projects We these and

but we vessels going concerned not have but know we're it the fully fill, now, point. I'm this don't of a and about QX that booked white already we space for are a to of including how number have compare at the rest to completely right year, QX, I So to little it

Adam Thalhimer

it too more to getting Is for early excited start XXXX? even

Lasse Petterson

that market, times. U.S., on and we at complex When though from to contractor as Yes. the been of is got and and delay I us. impact on to understand XXXX, is projects out at It's whole it here. to focus interesting that coming had you large bid XXXX the delayed and want a that year It always largest even bid now was significant from a look the just quite in depressing bid has revenue of XXXX, our this dimensions the the projects dredging in

about, I said XXXX. ends last I'm very what on The QX science good we up very optimistic it the call bid as good, and to a then when for on here market with QX, QX comes see execution. XXXX for our for which very looks

optimistic where one I'm where the at. So on a LNG most we with situation have that good them is projects already going to probably this negotiated we have development and year that to is And see onwards. we executed be and two side look the contracts, of late

Adam Thalhimer

Good All color. right. a lot. Thanks

Lasse Petterson

Okay.

Operator

Tanwanteng next Jon Instructions] our CJS comes Securities. [Operator you. question of And Thank from

Your line is now open.

Jonathan Tanwanteng

how Good risk that morning. wondering, the debt for from U.S. and I budgets questions. government, if happen? if the does is on the Thank impact here you default just something for my planning the you was taking and are limit, what

Lasse Petterson

Are we're the applying for? Title you financing referencing XI that

Jonathan Tanwanteng

No.

Corps. Army operation the happens What if… Just the of

Lasse Petterson

their budget. With

years, of lot have as situation limit issues. seen using in are politicians different we a the debt to negotiate the previous Well, Sorry. this

I probability coming XXXX, for will it discussion believe do limit expectation is my seen and the discussions the federal to have U.S. the think the the is more when no will that of government. is while, there I towards of previous financing that raised hence that on budget impact and up no potential comes of the year, for here years. see resolution debt you in a we approving continued of as be these end the

Jonathan Tanwanteng

backup? start have QX some the actually LNG still year? this year the it pipeline get Okay, great. of and you still is other that margin You this have else Freeport, the projects And in that capital could projects then what that could are that into start, what could make

Lasse Petterson

Yes.

good hopeful that be could was do executed good to work are is projects of and margin project some part We coastal funding we these protection that the supplemental work, that bid and come towards well. of those QX,

executed addition protection in bill could and in port projects, to that coastal projects QX. So come the that in deepening the was out get

Jonathan Tanwanteng

Great. a could this you before, you us remaining better I spending for cadence if could Okay. you know capital the don't in Scott, – the said give year?

Scott Kornblau

to and but slip in QX then a the looking the Yes. QX about out million, QX. each at round $XX Again, million to subject $XXX about of $XX right roughly million and or just left bit,

Jonathan Tanwanteng

are Understood. and more to hot? looking at bit Thank you. are coke And in to QX, in keep then a planning QX? more dredges lastly, or you then utilization them just work stack going going Just lower you expecting QX

Scott Kornblau

Yes. some I – mentioned, we space there I do as white mean is fill. have to

as be, taking aggressive see not to anything. going we costs are on the mentioned, We out do we vessels if dock putting and

have work. continue money them to to bid But to that, and we So to going if and a can visibility them clear these things keep very stack are going we'll get quickly mentioned, we as have of don't efficiently work. and quickly monitor cold we we out vessel get not but of spending

Jonathan Tanwanteng

in and it storage any have two in So now, more put no point? to at plans stands you as this

Scott Kornblau

vessels just Yes. there we to and can have feel of or off we that something do. have if shut planning we'll something point. is lot horizon We'll at them off not, make them we contract on It's turn back roll as not as quickly. that spend to on the quickly a form monitor of call time and the We

Jonathan Tanwanteng

Fair you. enough. Okay. Thank

Operator

closing for now Thank back Tina you. remarks. I the turn would to conference Baginskis to like

Tina Baginskis

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

Operator

now for concludes call. today's conference This may and participating you you disconnect. Thank

Great Lakes Dredge & Dock (GLDD) 2 May 232023 Q1 Earnings call transcript