Q2 2024 Great Lakes Dredge & Dock Corp Earnings Call
Good day, and thank you for standing by.
Operator: Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: Welcome to the Q2 2024 Great Lakes Drudge and Dock Earnings Conference Call.
Speaker Change: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you need to press star-1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference to your first speaker today, Tina Baginskis, Director of Investor Relations. Please go ahead. Thank you.
Speaker Change: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference to your first speaker today, Tina Baginskis.
Speaker Change: Tina Baginskis, Director of Investor Relations. Please go ahead. Thank you.
Tina Baginskis: Good morning, and welcome to our second quarter 2024 conference call. Joining me on this call this morning is our President and Chief Executive Officer, Lasse Petterson, and our Chief Financial Officer, Scott Kornblau. Lasse will provide an update on the events of the quarter, then Scott will continue with an update on our financial results for the quarter. Lasse will conclude with an update on the outlook for the business and market. Following their comments, there will be an opportunity for questions.
Speaker Change: Good morning and welcome to our second quarter 2024 conference call. Joining me on this call this morning is our President and Chief Executive Officer Lasse Petterson and our Chief Financial Officer Scott Kornblau.
Speaker Change: Lasse will provide an update on the events of the quarter, then Scott will continue with an update on our financial results for the quarter. Lasse will conclude with an update on the outlook for the business and market.
Tina Baginskis: During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2023 Form 10-K and subsequent filings. During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the Net Income to Adjusted EBITDA Reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data. With that, I will turn the call over to Lasse.
Speaker Change: Following their comments, there will be an opportunity for questions. During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.
Speaker Change: Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2023 Form 10-K and subsequent filings.
Speaker Change: During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the Net Income to Adjusted EBITDA Reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.
Lasse Petterson: Thank you, Tina. Great Lakes Dredge & Dock delivered solid second-quarter results, driven by excellent project performance, a well-executed dry dock program, and disciplined cost control. For the second quarter, we achieved net income of $7.7 million and adjusted EBITDA of $25.8 million. This is a very strong result, considering
Speaker Change: With that, I will turn the call over to Lasse.
Lasse Petterson: Thank you, Gina. Great Lakes Dredge and Dock delivered solid second quarter results driven by excellent project performance, well-executed dry dock program, and disciplined cost control.
Lasse Petterson: For the second quarter, we achieved net income of $7.7 million and adjusted EBITDA of $25.8 million.
Lasse Petterson: We have three dredges and a dry dock in preparation for the new capital algae projects, which have commenced in full now in the third quarter. With a record 2024 U.S. Army Corps of Engineers budget of $8.7 billion, the bid market has been robust for the first half of the year and is expected to remain so for the rest of the year, particularly in our prime markets for capital port deepenings and coastal protection projects.
Lasse Petterson: We had three dredges in dry dock in preparation for the new capital LG projects, which have commenced in full now in the third quarter.
Lasse Petterson: With a record 2024 US Army Corps of Engineers budget of $8.7 billion, the bid market has been robust for the first half of the year and is expected to remain so for the rest of the year.
Lasse Petterson: particular in our prime markets for capital port deepenings and coastal protection projects.
Lasse Petterson: The robust bid market has enabled us to keep our dredging backlog strong, replacing most of the revenue burn-off in the first half of the year. At the end of the quarter, our firm dredging backlog stood at $807.9 million, with 85% of that in capital projects. In addition, we had $273.1 million in low bids and options pending award.
Lasse Petterson: The robust bid market has enabled us to keep our dredging backlog strong, replacing most of the revenue burn-off in the first half of the year.
Lasse Petterson: At the end of the quarter, our firm dredging backlog stood at 807.9 million, with 85% of that in capital projects.
Lasse Petterson: In addition, we had $273.1 million in low bids and options pending award.
Lasse Petterson: Post-quarter end, we have continued to be the low bidder on new dredging projects with pending awards for approximately $181.6 million. Additionally, for offshore wind, our backlog was $44.6 million, with an additional $12.7 million in options pending award. On the LNG-related projects, the Port Arthur LNG Phase 1 Channel Improvement Project and the Brownsville Ship Channel Project for next decade cooperation. Rio Grande LNG Project, We are fully mobilized. And the main dredging work will now be in full swing in the third quarter and continue into 2025 and 2020. The Biden administration's temporary pause on approving new LNG export licenses has not had an impact on our two awarded projects.
Lasse Petterson: Post-quarter end, we have continued to be the low bidder on new dredging projects with pending awards for approximately $181.6 million.
Lasse Petterson: Additionally, for Offshore Wind, our backlog was $44.6 million, with an additional $12.7 million in options pending award.
Lasse Petterson: On the LNG-related projects, the Port Arthur LNG Phase 1 Channel Improvement Project and the Brownsville Ship Channel Project for next decade cooperation, the Rio Grande LNG Project.
Lasse Petterson: We are fully mobilized and the main dredging work will now be in full swing in third quarter and continue into 2025 and 2026.
Lasse Petterson: The Biden administration's temporary pause on approving new LNG export licenses has not had an impact on our two awarded projects.
Lasse Petterson: There has also been minimal impact on the large number of projects that the Department of Energy has already approved and on which we continue to tender bids. The continuation of these private sector projects greatly supports our dredging business by diversifying and expanding our client base. Modernizing our fleet is a key factor in staying a competitive market leader for the long term, and we have made significant progress on our new building program with the first quarter delivery of our newest 6,500 cubic yard capacity hopper dredge, the Galveston Island.
Lasse Petterson: The vessel went from shipyard through commissioning and sea trials to being in full operation in record time, and she contributed strongly to the solid project performance in the second quarter. The sister ship, Amelia Island, is currently under construction and is expected to be delivered in the second half of 2025. These dredges have been specially designed to operate on projects that redevelop and improve our beaches and shorelines, which are subject to continual damage due to storms and rising sea levels.
Lasse Petterson: The first and only U.S.-flagged, Jones Act-compliant, inclined four-pipe subsea rock installation vessel, the Arcadia, is currently under construction at the Tilly Shipyard. The Arcadia is contracted to install rock foundations for Equinor's Empire Wind I, scheduled for a 2025 start, and to perform rock placement to protect subsea cables on the Ursted Sunrise Wind Project, scheduled for 2026 In addition to the U.S. offshore wind market, there are several other markets opportunities that the Arcadia is well suited for.
Speaker Change: The Acadia is contracted to install rock foundations for Equinor's Empire Wind 1, scheduled for a 2025 start, and to perform rock placement to protect subsea cables on the Ursted Sunrise Wind Project, scheduled for 2026.
Lasse Petterson: She can work in the international offshore wind market. She can also work in the oil and gas and carbon capture market, and the telecommunications and power cable markets, installing rock protection over pipelines and cables. We have pre-qualified and tendered on a number of rock placement projects for Arcadia, both in the U.S. and internationally. We have work planned for 2026 and beyond. In the second quarter, we entered into a $150 million second lien credit agreement for an aggregate principal amount of $100 million and a delayed draw-term loan facility in the aggregate amount of $50 million to provide additional liquidity to support a new bill program and provide financial flexibility to pursue other financing alternatives, including MARAD's Title XI. I will now turn the call over to Scott to further discuss the results of the quarter, and then I'll provide further commentary on the market
Speaker Change: In the second quarter, we entered into a $150 million second lien credit agreement.
Speaker Change: to provide additional liquidity to support a new bill program and provide financial flexibility to pursue other financing alternatives, including MARAD's Title XI.
Scott Kornblau: Thank you, Lasse, and good morning, everyone. I'll start by walking through the second quarter, which resulted in revenues of $170.1 million, net income of $7.7 million, and adjusted EBITDA and adjusted EBITDA margin of $25.8 million and 15.2%, respectively. Revenues of $170.1 million in the second quarter of 2024 increased $37.4 million from the prior year's second quarter primarily due to higher capital and coastal protection project revenues, which together made up over 80% of our total revenues, and the addition of Galveston Island, which worked the entire second quarter of 2024, offset partially by a decrease in maintenance project revenue.
Speaker Change: Revenues of $170.1 million in the second quarter of 2024.
Scott Kornblau: Current quarter gross profit and gross profit margin increased to $29.8 million and 17.5%, respectively, compared to $17.9 million and 13.5%, respectively, in the second quarter of 2023. The quarter-over-quarter increase in gross margin is primarily due to improved project performance and higher capital and coastal protection revenue, which typically yields higher margins.
Speaker Change: $17.9 million and 13.5% respectively in the second quarter of 2023. The quarter-over-quarter increase in gross margin is primarily due to improved project performance and higher capital and coastal protection revenue, which typically yields higher margins.
Scott Kornblau: Second quarter 2024 G&A of $16.2 million is $1.7 million higher than the same quarter last year, primarily due to higher employee benefit and incentive costs and consistent with G&A expense in the first quarter of 2024. Net interest expense of $4.2 million for the second quarter 2024 was up from $3.2 million in the second quarter 2023, primarily due to interest related to the term loan, which closed earlier in the second quarter. Second quarter 2024 net income tax expense of $2.8 million increased $2 million compared to the same quarter of 2023, driven by higher current quarter income.
Speaker Change: Second quarter 2024 G&A of $16.2 million is $1.7 million higher than the same quarter last year, primarily due to higher employee benefit and incentive costs, and consistent with G&A expense in the first quarter of 2024.
Scott Kornblau: Rounding out the P&L, net income for the second quarter of 2024 was $7.7 million, up from $1.7 million in the prior year quarter, and adjusted EBITDA increased $9.2 million to $25.8 million. Turning to our balance sheet, we ended the second quarter with $23.1 million in cash and nothing drawn on our $300 million revolver, which doesn't mature until the third quarter of 2027. Total liquidity at the end of the quarter was just over $325 million, and we have no debt maturities until 2029, putting us in a great position to complete our new build program with ample liquidity.
Speaker Change: Rounding out the P&L, net income for the second quarter of 2024 was $7.7 million, up from $1.7 million in the prior year quarter, and adjusted EBITDA increased $9.2 million to $25.8 million.
Speaker Change: Turning to our balance sheet, we ended the second quarter with $23.1 million in cash and nothing drawn on our $300 million revolver, which doesn't mature until the third quarter of 2027.
Speaker Change: Total liquidity at the end of the quarter was just over $325 million, and we have no debt maturities until 2029, putting us in a great position to complete our new build program with ample liquidity.
Scott Kornblau: Total capital expenditures for the second quarter of 2024 were $51.3 million, made up of $29.7 million for the construction of the Subsea Rock Installation Vessel, the Acadia, $14.8 million for the Hopper Dredge, Amelia Island, $700,000 for the final payment on Galveston Island, and $6.1 million for maintenance CAPEX. We are lowering our full-year CAPEX guidance from between $170 and $195 million to between $130 and $150 million due to the projected timing of certain milestone payments pushing from late 2024 to early 2025.
Speaker Change: $700,000 for the final payment of the Galveston Island and $6.1 million for maintenance CapEx.
Scott Kornblau: Looking forward to the third quarter, we expect utilization and revenue to increase from the second quarter as both LNG projects commence. While we have no regulatory dry dockings planned for the rest of the year, we will have a few vessels down for a short period of time during the third quarter for planned maintenance, including one that was originally planned for the second quarter but will now occur in the third. With that, I'll turn the call back over to Lasse for his remarks on the outlook moving forward. Thank you.
Speaker Change: With that, I'll turn the call back over to Lasse for his remarks on the outlook moving forward. Thank you. The dredging industry continues to see strong support from both the White House and Congress.
Lasse Petterson: The dredging industry continues to see strong support from both the White House and Congress. On March 9, President Biden signed the Energy and Water Appropriation Bill into law, which allocates $8.7 billion in total funding for the U.S. Army Corps of Engineers for fiscal year 2024. This includes $5.6 billion for the Corps' operations and maintenance, of which $2.8 billion came from the Harbor Maintenance Trust Fund to enhance our nation's waterways, $2.2 billion for flood and storm damage reduction, and $18 million for the beneficial use of dredge material.
Speaker Change: On March 9, President Biden signed the Energy and Water Appropriation Bill into law, which allocates $8.7 billion in total funding for the U.S. Army Corps of Engineers for fiscal year 2024.
Speaker Change: This includes 5.6 billion for the course Operations and Maintenance.
Speaker Change: of which $2.8 billion came from the Harbor Maintenance Trust Fund to enhance our nation's waterways.
Speaker Change: $2.2 billion for flood and storm damage reduction and $18 million for beneficial use of dredge material.
Lasse Petterson: Furthermore, the Disaster Relief Supplemental Appropriations Act for fiscal year 2023, which has been approved, includes $1.5 billion for the Corps to make necessary infrastructure repair post-hurricanes and other natural disasters, as well as beach re-nourishment initiatives to bolster coastal resilience. This increased budget and additional funding have supported a very strong bid market for 2024. Looking forward to what is expected for 2025, the course budget is expected to be another record appropriation.
Speaker Change: as well as beach re-nourishment initiatives to bolster coastal resilience.
Speaker Change: This increased budget and additional funding have supported a very strong bid market for 2024.
Speaker Change: Looking forward to what is expected for 2025, the course budget is expected to be another record appropriation.
Lasse Petterson: On June 28, the House of Representatives Energy and Water Appropriations Subcommittee passed their 2025 Appropriations Bill, providing the Corps with $9.96 billion. The bill includes $5.7 billion for operations and maintenance projects, of which $3.1 billion is from the Harbor Maintenance Trust. On August 1st, the Senate Appropriations Committee approved its draft of the 2025 Energy and Water Spending Bill, which included $10.3 billion in total funding for the Corps. The passing of these appropriations set up 2025 to be another strong bid market for the dredge industry.
Speaker Change: On June 28, the House of Representatives Energy and Water Appropriations Subcommittee passed their 2025 Appropriations Bill, providing the call with $9.96 billion.
Speaker Change: The bill includes $5.7 billion for operations and maintenance projects, of which $3.1 billion is from the Harbor Maintenance Trust Fund.
Speaker Change: On August 1st, the Senate Appropriations Committee approved its draft of the 2025 Energy and Water Spending Bill, which included $10.3 billion in total funding for the Corps.
Speaker Change: The passing of these appropriations set up 2025 to be another strong bid market for the dredge industry.
Lasse Petterson: Looking further ahead, the Water Resource Development Act, or WRDA, is a two-year renewal cycle and includes legislation that authorizes the financing of the Corps' projects for the next two to five years. Werner 2024 has seen strong bipartisan support and has already been approved by the Senate Environment and Public Works Committee and the House Transportation and Infrastructure Committee. And on the 22nd of July, the U.S. House of Representatives approved the verdict 2024, moving the bill one step closer to full congressional approval.
Speaker Change: Looking further ahead, the Water Resource Development Act, or WRDA, is a two-year renewal cycle and includes legislation that authorizes the financing of the core's projects in the next two to five years.
Werner: Werner 2024 has seen strong bipartisan support and has already been approved by the Senate Environment and Public Works Committee and the House Transportation and Infrastructure Committee.
Werner: And on the 22nd of July, the U.S. House of Representatives approved the verdict 2024, moving the bill one step closer to full congressional approval.
Lasse Petterson: The U.S. offshore wind market reached historic milestones in the first half of 2024, with two commercial-scale offshore wind farms becoming operational and supplying power to the grid in New York and Massachusetts. He also saw New Jersey awarding 3.7 gigawatts of power purchase agreements, and the tri-states—Massachusetts, Rhode Island, and Connecticut—solicitation for 6 gigawatts of offshore wind are expected in the third quarter. The latest Blomberg Offshore Wind Market Outlook shows global offshore wind expected to grow tenfold by 2040, with a forecasted installed capacity of approximately 742 gigawatts, with the United Kingdom and the United States to be two of the top three offshore wind energy producers, which provides us with a very strong long-term market outlook, supporting our revenue growth.
Speaker Change: The U.S. offshore wind market reached historic milestones in the first half of 2024, with two commercial-scale offshore wind farms becoming operational and supplying power to the grid in New York and Massachusetts.
Speaker Change: We also saw New Jersey awarding 3.7 gigawatts of power purchase agreements, and the tri-states Massachusetts, Rhode Island, and Connecticut solicitation for 6 gigawatts of offshore wind are expected in third quarter.
Speaker Change: The latest Blomberg offshore wind market outlook show global offshore wind expected to grow tenfold by 2040 with a forecasted install capacity of approximately 742 gigawatts.
Speaker Change: with the United Kingdom and the United States to be two of the top three offshore wind energy producers which provides us with a very strong long-term market outlook supporting a revenue growth opportunity.
Lasse Petterson: In my opinion, Great Lakes is now well positioned in a very exciting time. We have a strong dredging backlog consisting of large, flexible capital port deepening and LNG projects. We have a robust bid market in 2024 and expect the same for 2025, which will support improved year-over-year revenue growth and greatly improve our position to continue to deliver solid results, which again supports the generation of higher free cash flow to continue to modernize and upgrade our fleet with more productive dredges and support our expansion into the high-growth, high-margin offshore wind market. And with that, I turn the call over to you for questions. Thank you.
Speaker Change: In my view, it is my view that Great Lakes is now well positioned in a very exciting time.
Speaker Change: We have a strong dredging backlog consisting of large, flexible capital port deepening and LNG projects. We have a robust bid market in 2024 and expect the same for 2025.
Speaker Change: And this will support improved year-over-year revenue growth and greatly improve our position to continue to deliver solid results.
Speaker Change: which again supports the generation of higher free cash flow to continue to modernize and upgrade our fleet with more productive dredges and support our expansion into the high-growth, high-margin offshore wind market. And with that, I turn the call over for questions.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A list. Our first question comes from Joe Gomes from Noble Capital. Please go ahead.
Speaker Change: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Joe Gomes from Noble Capital. Please go ahead.
Joe Gomes: Good morning, very nice quarter. Thanks for taking my question.
Joe Gomes: Good morning. Very nice quarter. Thanks for taking my questions.
Unnamed: Good morning, Joe.
Joe Gomes: Wanted to start out, I don't know if you guys can, you know... Market Statistics for the quarter, kind of like your bid share, your win share of the quarter. Were there any particular projects out there that you won that you weren't expecting to win, and, on the flip side, any particular projects that you thought that you were in the driver's seat on and ended up not being in the driver's seat?
Speaker Change: Good morning, Joe.
Joe Gomes: I wanted to start out, I don't know if you guys can provide us some of the
Speaker Change: the market statistics for the quarter, kind of like your bid share, your win share.
Speaker Change: of the quarter, were there any particular projects out there that you won that you weren't expecting to win and or on the flip side, any particular projects that you thought that you were in the driver's seat and ended up not being in the driver's seat?
Unnamed: Oh, that's what I said.
Lasse Petterson: As I said, in general, the bid market has been very strong in 2024, and we are very happy to see that now the deepening, port deepening projects in the Gulf are moving forward, in particular, and also the beach restoration market on the East Coast is moving forward. That has been delayed over the last two years, and that market has come back strongly. That is typically a market where we perform well.
Speaker Change: So, as I said, in general, the bid market has been very strong in 2024 and we are very happy to see that now the deepening...
Speaker Change: projects in the Gulf are moving forward in particular, and also the
Speaker Change: The beach restoration market on the East Coast is moving forward. That has been delayed over the last two years and that market has come back strongly. And that is typically a market where we perform well.
Joe Gomes: And then you mentioned, Lasse, some of the other potential opportunities for Acadia. You pointed out oil and gas. Telecom, Power Cable, Protection, Markets. These are things that, you know, at least I don't recall you speaking about previously. Is that... You know, more of a, just kind of looking for what else can be done in the U.S. offshore if the offshore wind market doesn't take off as anticipated in the U.S., or is this, you know, some of the participants in these industries coming to Great Lakes and saying, hey, we could make use of that vessel. I'm just trying to get a little more color on those potential opportunities.
Speaker Change: Okay.
Lasse Petterson: You mentioned, Lasse, some of the other potential opportunities for Acadia. You point out oil and gas.
Lasse Petterson: Telecom, power cable, protection markets. These are things that, you know, at least I don't recall you speaking about previously. Is that...
Lasse Petterson: you know, more of a just kind of looking for what else can be done in the U.S. offshore if the offshore wind market doesn't take off as as anticipated in the U.S.
Speaker Change: Or is this, you know, some of the participants in these industries, you know, coming to Great Lakes and saying, hey, we could make use of that vessel? I'm just trying to get a little more color on those potential opportunities.
Lasse Petterson: Yeah, the vessel can do all these things which I described. It places rock over, in support of offshore wind installations, the monopiles, the substations, and also places rock over pipelines. There are a number of pipelines being installed that need that protection now, cables need that protection, and so there's a very large market for cable protection worldwide. So when the offshore wind markets kind of hit a bump here last year, we looked at, well, what do we, where do we look, and where are the opportunities for the vessel in the short term, and it's very clear to us that there's a strong offshore wind market internationally.
Speaker Change: Yeah, the vessel can do all these things which I described. It places rock over.
Speaker Change: in support of offshore wind installations, the monopiles, the substations.
Speaker Change: and also...
Lasse Petterson: That's a very large cable protection market internationally, and also the oil and gas sector requires rock oil pipelines, which we also can address. All these markets are open for Arcadia. Arcadia was targeted by the offshore wind market in the U.S. as a prime market, but we can compete internationally in all these sectors.
Joe Gomes: Okay, and then just one more for me, I'll get back in queue. You mentioned Galveston Island being up and running, full quarter, is that all up to expectations? Any hiccups on Galveston Island, or how pleased are you with the performance of the vessel in the quarter?
Speaker Change: Okay, and then just one more for me I'll get I'll get back in queue so
Lasse Petterson: We are very pleased with the performance. As you know, we had some delays in getting the vessel delivered, so we put a lot of effort into commissioning as much as we could when the vessel was being built. She went through sea trials and commissioning in record time for us and has performed very well since she was delivered.
Speaker Change: We are very pleased with the performance. As you know, we had some delays in getting the vessel delivered, so we put a lot of effort into commission as much as we could when the vessel was being built.
Joe Gomes: Great, thanks again for taking the questions and a great quarter.
Speaker Change: Great, thanks again for taking the questions and great quarter.
Operator: Thank you. One moment for our next question. Our next question comes from Julio Romero from Sidoti & Company. Please go ahead.
Speaker Change: Our next question comes from Julio Romero from Sidoti and Company. Please go ahead.
Julio Romero: Thanks. Hey, good morning. Can you talk about maybe demand for coastal protection and give us a sense of how much coastal work is expected to be bid over the back half of 2024 and then when that could be reflected in your backlog?
Lasse Petterson: Yeah, as we've been talking about before, the last two years, the coastal protection market, particularly on the East Coast, has been very slow. And that market has now come back, and there are, particularly on the East Coast, a number of projects which we are now bidding on and addressing. Where we are looking, it's in the range of... More than $500 million in coastal protection, maybe on the high end of that.
Speaker Change: Where we are looking, it's in the range of more than $500 million in coastal protection, maybe in the high end of that.
Lasse Petterson: So, that market has come back with a vengeance, and that's great to see because a lot of these communities along the East Coast and in Florida are dependent on the tourist industry. And with the lack of funding and also project approvals for these projects over the last two years, that has suffered, and now we see a great uptick in that market.
Speaker Change: A lot of these communities along the East Coast and in Florida are dependent on the tourist industry.
Unnamed: And, Juli, I'll add, you know, we mentioned the second half looks very strong. July was a very busy month, and, you know, we've mentioned on the call, we won over $180 million in just the July work. There was about $75 to $80 million just in that sector, just for the month of July, with a lot more to come.
Speaker Change: And Julio, I'll add, you know, we mentioned the second half looks very strong. July was a very busy month and, you know, we've mentioned on the call we won over $180 million of just the July work. There was about $75 to $80 million just in that sector just for the month of July with a lot more to come.
Julio Romero: Got it. That's helpful. And, you know, it was good to see the mix of backlog continue to hold up well with capital projects and, you know, being a big part of that mix. Can you talk about how the mix of the backlog should trend for the next two quarters?
Speaker Change: Got it. That's helpful. And, you know, it was good to see the mix of backlog continue to hold up well with capital projects and, you know, being a big part of that mix. Can you talk about how the mix of the backlog should trend for the next two quarters?
Unnamed: Yeah, so we're working all the capital projects now, including the commencement of both L&G, so we'll start burning off quite a bit of capital over the second half of the year. There are some jobs coming up, though, in the second half. I mentioned the very strong July. We did win two capital projects in July, so we'll see that get added to our backlog next quarter. That was to the tune of about $95 million.
Speaker Change: Yeah, so we're working all the capital projects now, including the commencement of both L&G, so we'll start burning off quite a bit of capital over the second half of the year. There are some jobs coming up, though, in the second half. I mentioned the very strong July. We did win two capital projects in July, so we'll see that get added into our backlog next quarter. That was the tune of about $95 million. The larger segment of the market in the second half of the year is likely the coastal protection. There's just so much coming out with the supplemental bill, you know, a billion and a half dollars. We're starting to see that spent right now, so I think that'll be the strongest piece, but there are still a number of capital projects that we're eyeing.
Unnamed: The larger segment of the market in the second half of the year is likely coastal protection. There's just so much coming out with the supplemental bill, $1.5 billion. We're starting to see that spent right now, so I think that'll be the strongest piece, but there's still a number of capital projects that we're eyeing.
Julio Romero: Okay, understood. And then the last one for me is just on the, I appreciate the updated CAPEX guidance you gave. Can you just quickly remind us how much is left on the new build program and when that's expected to happen?
Unnamed: Yeah, so we have roughly $65 to $85 left in the second half of this year. Call that roughly $10 million of maintenance capital expenditure, so $55 to $75. And then we have roughly an additional $80 million for the new build program in 2025. So all said and done, about $150 million, give or take, is left on the new build program. And we should take delivery of both the Amelia Island and the Acadia in the third quarter.
Speaker Change: Yeah, so with, you know, I said we have, you know, roughly 65 to 85 left in the second half of...
Speaker Change: And then we have roughly an additional $80 million for the new build program in 2025.
Speaker Change: So, you know, all said and done, about $150 million, give or take, left on the new build program and we should take delivery of both the Amelia Island and the Acadia in the third quarter.
Julio Romero: Very helpful. I'll pass it on. Thanks very much.
Operator: Thank you. One moment for our next question. Our next question comes from Jon Tanwanteng from CGS Securities. Please go ahead. Hi, good morning.
Speaker Change: Very helpful. I'll pass it on. Thanks very much.
Speaker Change: Our next question comes from John Tamwatang from CGS Securities, please go ahead.
Jon Tanwanteng: Hi, good morning. Very nice quarter, and thank you for taking my questions. I was wondering if you could talk about how much white space you have left in the schedule for the remainder of the year just given all the activity in July.
Lasse Petterson: Yeah, we don't have much white space left in our program. We have good utilization of the dredges. There is some opportunity for revenue generation on our cutter side of our fleet, but with a strong beach market that we see coming up, there are good opportunities here towards, let's say, the fourth quarter and into next year.
Speaker Change: Yeah, we don't have much white space left in our program. We have a good utilization of the dredges. There are some opportunities for revenue generation on the Qatar side of our fleet.
Unnamed: And I will add, John, one of the reasons we really like these large beach projects and capital projects is they provide us with a ton of flexibility. So, even though we may have penciled in full utilization on a number of vessels this year, we can still bid work as we have opportunities to push some of the planned work from 24 into 2025 if we find other opportunities.
Speaker Change: And I will add, John, you know, one of the reasons we really like these, you know, large beach projects and capital projects is they provide us a ton of flexibility. So, even though we may have penciled in full utilization on a number of vessels this year, we can still bid work as we have, you know, opportunities to push some of the planned work from 24 into 2025 if we find other opportunities.
Jon Tanwanteng: Got it. Thank you. And then how much was the impact of maintenance in Q2 being pushed out to Q3? And do you have any other planned maintenance for heading into Q4?
Unnamed: Yeah, so we had a few vessels that we had planned to do in Q2. One of them had a full backlog, and there was a delay in getting some of the parts we needed to the yard, so we just kept working, and we'll take her down.
Speaker Change: Yeah, so we had a few vessels that we had planned to do in Q2. One of them had full backlog, and there was a delay in getting some of the parts we needed to the yard, so we just kept working, and we'll take her down. It'll be a couple of weeks that we had planned in Q2. That'll now happen in Q3. We always have planned maintenance on these vessels, but nothing really of note that we have planned between now and the end of the year. We just have a normal handful of vessels that will be taken out for a week or so just to do what needs to be done and get them back on payroll.
Unnamed: It'll be a couple of weeks that we had planned in Q2. That'll now happen in Q3. You know, we always have planned maintenance on these vessels, but nothing really of note that we have planned between, you know, now and the end of the year. We just have a normal handful of vessels that will be taken out for a week or so, you know, just to do what needs to be done and get them back on payroll.
Unnamed: Scott Kornblau, Lasse Petterson, Scott Kornblau, Jonathan Tanwanteng, Joseph Gomes, Tina Baginskis, Great Lakes Dredge & Dock Corp.
Speaker Change: Got it. Between the utilization and kind of the lighter, you know, or maybe no dry docking through the end of the year, is it reasonable to assume that you could approach the Q1 earnings performance in the third and fourth quarters if not hit it?
Unnamed: Q4, in particular, is shaping up to be extremely high utilization of Q1. We had extremely high margins. A lot of the projects that we were working on were grand slams. We typically do very, very well on capital projects. So, you know, we have the backlog and the mix of backlog to have a very solid second half of the year.
Speaker Change: Q4 in particular is shaping up to be extremely high utilization of
Speaker Change: Q1, we had extremely high margins. A lot of the projects that we were working on were grand slams. We typically do very, very well on capital projects. So, you know, we have the backlog and the mix of backlog to have a very solid second half of the year.
Jon Tanwanteng: Got it. Thank you.
Speaker Change: Got it. Thank you. And then finally, just any movement in the opportunities for Acadia that could...
Unnamed: And then finally, just any movement on opportunities for Acadia that could move into that open window in 26? I think I recall last time you spoke about projects that were being delayed that actually might go into that window or maybe projects pulling in that might go into that window. Could you give us a little bit more update on the opportunities set to fill the utilization as you approach that, you know, the end of the ERSTED project?
Speaker Change: moved into that open window in 26.
Speaker Change: I think I recall last time you spoke about projects that were being delayed that actually might go into that window or maybe projects pulling in that might go into that window. Could you give us a little bit more update on the opportunity set to fill the utilization as you approach that, you know, the end of the ERSTED project?
Unnamed: Yeah, we have options that could fill out 2026. And then we need some new awards coming at the end of 26 and into 27.
Unnamed: But there are a number of projects that we have bid on and where the clients are looking for reservation agreements, and we are negotiating these at this point in time. It's a fluid situation, as you can well imagine, with all the things going on in the market, both in the U.S. and also internationally, but we are confident to have the vessel well utilized back out in 2026 and 27 and onwards. In particular, 28 and onwards is extremely strong, both in the U.S. and in Europe, so we just need to fill in that short-term utilization that we are looking for there.
Speaker Change: And we are negotiating these at this point in time.
Speaker Change: It's a fluid situation, as you can well imagine, with all the things going on in the market.
Speaker Change: both in the U.S. and also internationally, but we are confident to have the vessel well-utilized back out in 2026 and 27 and onwards.
Speaker Change: In particular, 28 and onwards is extremely strong, both in the U.S. and in Europe, so we just need to fill in that short-term utilization that we are looking for there.
Jon Tanwanteng: Got it. If I could speak one more in there, is there a lot of competition for that window of time?
Speaker Change: I'll be six.
Speaker Change: Got it. If I could speak one more in there, is there a lot of competition for that window of time?
Unnamed: No, that's not true. As you know, Arcadia is the only Jones Act-compliant vessel, so for U.S. projects, we are in a very strong position. And then internationally, the activity levels are still high, and as I said, we are also looking at opportunities internationally in the oil and gas and cable protection markets. So good prospects for Arcadia, but a bit of a fluid situation due to the political situation there in the U.S.
Speaker Change: No, that's not. As you know, Arcadia is the only Jones SAC-compliant vessel, so for the U.S. projects, we are in a very strong position.
Operator: Thank you. One moment for our next question. Our next question comes from Adam Thalhimer, on behalf of Thomas Davis. Please go ahead.
Speaker Change: And then internationally, the activity levels are still high, and as I said, we are also looking at opportunities internationally in the oil and gas and cable protection market.
Speaker Change: So good outlooks for the Arcadia, but a bit of a fluid situation due to the political situation there in the U.S.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Adam Thalheimer from Thomas Davis. Please go ahead.
Adam Thalhimer: Hey, good morning guys. Congratulations on the Q2 beat. Thanks, Adam. The market looks pretty strong here. I'm just curious, what do you see in terms of competitive behavior?
Adam Thalheimer: Hey, good morning, guys. Congrats on the Q2 beat.
Speaker Change: Thanks Adam. The market looks pretty strong here I'm just curious what do you see in in terms of competitive behavior?
Lasse Petterson: Yeah, we saw some, let's say, interesting behaviors last year, with new entrants into the market and also our biggest competitor Weeks changing ownership. But As I said, the bid market is very strong, and everybody sees that, so there's no, let's say, extraordinary activity as we see it or behaviors in the market. The bid market is strong, and you can also see on the... The bid announcements, when they come out, there is quite a big spread on the pricing, and that comes from the competition, and we are quite busy at this time.
Speaker Change: Yeah, we saw some, let's say, interesting behaviors last year with new entrants into the market and also our biggest competitor Weeks, changing ownership, but
Speaker Change: As I said, the bid market is very strong and everybody sees that. So there's no, let's say, extraordinary activity as we see it or behaviors in the market.
Speaker Change: The bid market is strong and you can also see on the...
Speaker Change: The bids, announcements, when they come out, there is quite a big spread on the pricing and that comes from the competition and we being quite busy at this time.
Adam Thalhimer: That is good to hear, and then I'm kind of blown away by the July high bids of 182, billion. What's your sense for how you guys are going to finish out the quarter?
Speaker Change: That is good to hear and then I'm kind of blown away by the July blow bids of 182 billion. What's your sense for how you guys are going to finish out the quarter?
Unnamed: And actually, 180 million, that's five awards, and they're all awardable. We actually had a sixth one of over $100 million. We were the lowest bidder, but just slightly over the government estimate. So we're working with them to find a path to get that one awarded.
Speaker Change: And actually, so 180 million, that's five awards, and you know they're all awardable. We actually had a sixth one of over a hundred million dollars. We were low bidder, but just slightly over the government estimate. So we're working with them to find a path to get that one awarded. So that July number can potentially grow even higher than that.
Adam Thalhimer: So that July number can potentially grow even higher than that. The third quarter is shaping up to be extremely strong, even stronger than the second quarter. Again, July was a good indication, over $400 million. We think August will be a higher number than July. We have 17 projects that we have eyed for July that we are working on potentially putting bids out. How many we put out will be dependent on availability and how many of those earlier ones we win. There is a lot of work coming out in the second half of the year, but particularly in the third quarter.
Speaker Change: The third quarter is shaping up to be extremely strong, stronger than the second quarter. Again, July was a good indication, over $400 million. We think August will be a higher number.
Van Geluy: Van Geluy. Thank you. Thank you.
Van Geluy: We have 17 projects that we have eyed for July that we are working on, potentially putting bids out. How many we put out will be dependent on availability and how many of those earlier ones that we win. There is a lot of work coming out in the second half of the year, but particularly in the third quarter.
Adam Thalhimer: I'm trying to think of how to ask this, but my framework question is, like, how much is still in cold stack? Like, as we think about 25, verses twenty-four. You know, what's the growth potential for 25 versus?
Speaker Change: I'm trying to think how to ask this but my framework question is like how much is still in cold stack like as we think about 25?
Speaker Change: versus 24.
Speaker Change: What's the growth potential for 2025 versus 2024?
Unnamed: Yeah, I mean, you know, we've said the vessels that we have had in long-term cold storage, they may not come out again in this market, that's a decision we need to make. There's a reason they haven't worked for a couple of years, and it would take quite a bit of money, you know, to come back. Where we're seeing, you know, the flux of work is in the, you know, beach work and in the capital work.
Speaker Change: Yeah, I mean, we've said the vessels that we have had in long-term cold stack, they may, even in this market, not come out again. That's a decision that we need to make. There's a reason they haven't worked for a couple of years and it would take quite a bit of money to come back. Where we're seeing the flux of work is in the beach work and in the capital work. The cold stack vessel that we have right now is a mechanical that may or may not be well-suited for that kind of work. So I wouldn't expect, even in this very robust market, that it gives us an opportunity to take that cold stack vessel out. Now, I did mention on the last call, we did have a cold stack vessel.
Adam Thalhimer: The cold stack vessel that we have right now is a mechanical that, you know, may or may not be well suited for that kind of work. So I wouldn't expect, you know, even in this very robust market, that it gives us an opportunity to take that cold stack vessel out. Now, I did mention on the last call that we did have a cold stack vessel that we are reactivating now because we did win a job. I think it's unlikely we will see the other one follow the same path.
Speaker Change: Scott Kornblau, Tina Baginskis
Adam Thalhimer: Okay, but I guess as we think towards next year, I mean, you do have the earnings from Acadia.
Speaker Change: Okay, but I guess as we think towards next year, I mean, you do have the earnings from Acadia, so...
Unnamed: Yeah, Acadia will come on, but you know, remember Adam, we've always said it's possible that that will be replacement capacity instead of additional. Not a decision we need to make now. We can make it in the second half of the year as Amelia Island comes on. Great.
Adam Thalheimer: That helps. Yeah. Acadia will come on. But, you know, remember, Adam, we've always said it's possible that that will be replacement capacity instead of additional. Not a decision we need to make now. We can make it in the second half of the year as the Amelia Island comes on.
Adam Thalhimer: Great. Thanks, guys.
Operator: I am showing no further questions at this time. I will now turn it back over to Tina Baginskis for closing remarks. Thank you.
Tina Baginskis: Thank you. We appreciate the support of our shareholders, employees, and business partners, and we thank you for joining us in this discussion about the important developments and initiatives in our business. We look forward to speaking with you during our next earnings call.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.