Q2 2025 Great Lakes Dredge & Dock Corp Earnings Call
Good day, and thank you for standing by, welcome to the Q2 2025, Great Lakes, dredge & dock, Corp earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message advising. Your hand is raised.
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Please be advised that today's conference is being recorded, I would now like to hand the conference over to your first Speaker today, Eric Burge, vice president of investor relations. Please go ahead.
Good day and thank you everyone for joining us. Welcome to Great leg stretch and Doc Corps. Second quarter, 2025 Financial results conference call. Before we begin, please note, that certain statements made during this. Call are forward-looking in nature and are subject to various risks uncertainties and assumptions. These factors may cause actual results to differ materially from those anticipated.
For a detailed discussion of these risks, please refer to our filings with the Securities and Exchange Commission.
We will also discuss certain non-gaap Financial measures, including adjusted. Evita reconciliation to these measures to the most direct comparable. Gaap measure can be found on our earnings release and on our investor section of our website at investor.gov along with other supplemental, operating information.
During uh joining me on today's call is last a person, our president and chief executive officer and Scott kornilow our senior vice president and Chief Financial Officer Lassa. Will begin with the review of the quarter's key developments followed by Scott who will provide detailed overview of our financial performance.
Lassa will then conclude the call with commentary on the business Outlook and market trends with that, I will now turn the call over to lasso
Thank you, Eric.
Following strong financial results. In the first quarter of this year, the momentum continued into the second quarter. This solid results.
Driven by high equipment to utilization and strong project performance, executing complex, Pro Port, deepen, and Coastal restoration projects, leveraging, the capability of our extensive Fleet.
We entered the quarter for revenues of 193.8 million and adjusted ibitta of 28 million.
By dredging backlog, remains strong at 1 billion with 93%, coming from Capitol and Coastal protection projects.
Plus an additional 215.4 million in Awards and options. Pending
Our successful bid strategy from last year resulted in a large number of product wins and a quality backlog, which will support high asset utilization and solid revenue generation for the remainder of 2025, as well as providing a good base and revenue visibility for 2026.
During the quarter, we received notice to proceed on the Woodside Louisiana LNG project.
Dredging operation on the project are expected to commence early 2026.
A strong performance.
In q1 and good outlook for the remainder of the Year. Contributed to a decision to initiate. A 50 million dollar share repurchase program in March.
as we believed our share price, did not reflect the company's financial performance and long-term Outlook
As of June 30th, 1.3 million shares had a total spend of $11.6 million under this program.
During the quarter. We upsized our revolving credit facility to further enhance liquidity with Scott, will provide more details on
Moving to our new goal program which is nearing completion. Our newest Hopper dreads, the Amelia Island is expected to be delivered in the next few weeks. And we'll go straight to work on projects already in backlog.
The Amelia Island and our sister ship, the Galveston Island have been specially designed for the shallow and narrow water sin, our us, coastlines, and our efficient tools for us to work on Coastal, protection projects. Such as Beach. Restorations, Wetland improvements and Barrier Island construction
The final vessel in our new real program. The Arcadia, the first US flag, Jones act compliant. Subk Rock installation vessel is also currently under construction and hit a key Milestone with her launch from Dry Dock in July.
Delivery is expected in the first quarter of 2026.
At which time she will go straight to work on Equinox Empire win 1 Project.
The target markets for their kadia include domestic and international projects for protection of critical. Subzi infrastructure such as oil and gas pipelines and power and telecommunication cables and offshore wind installations.
I now turn the call over to Scott to further discuss the results of the quarter and then I'll provide further commentary around the market and our business.
Thank you, Lassa, and good morning, everyone.
I'll start by walking through the second quarter, which resulted in revenues of 193.8 million. Net, income of 9.7 million, and adjusted ibida, and adjusted ibida margin of 28 million and 14.4% respectively.
Despite having 4 dudes performing the regulatory dry dockings at various times. During the second quarter of 2025 revenues of 193.8 million, increased 23.7 million from the prior year, second quarter as every active dredge was working for the majority of the quarter.
Current quarter growth profit and growth profit margin increased to 36.6 million in 18.9 respectively, compared to 29.8 million and 17 and a half percent respectively. In the second quarter of 2024, the increase in gross margin is primarily due to improved utilization and project performance, and a large number of capital and Coastal protection projects, which typically yield higher margins.
These projects accounted for over 88% of our second quarter Revenue.
The quarter over quarter growth profit. Increase was partially offset by higher dry docking costs.
Current quarter's operating income is $17.1 million, an increase of $2.5 million compared to the prior year's quarter, which had an operating income of $14.6 million. The year-over-year increase is driven by higher gross profit, partially offset by higher general and administrative expenses, mostly due to increased incentive compensation.
Resulting from the strong first half of the year.
Net, interest expense of 4.2 million. For the second quarter, 2025 was flat compared to the second quarter of 2024 and second quarter 2025 net income tax expense of 3.4 million increased from 2.8 million in the same quarter of 2024 due to the stronger results.
Rounding out the p&l, net income. For the second quarter, 2025 was 9.7 million up from 7.7 million in the prior year quarter.
Of $19.8 million for the hopper dredge Amelia Island, $28.7 million for the construction of the Acadia, $8.8 million related to the addition of support equipment, with the remaining $7.3 million coming from maintenance and growth.
Our previous full year capex, guidance of between 140 and 160 million including capitalized, interest remains unchanged.
Turning to our balance sheet. We ended the quarter with 2.9 million in cash and 5 million drawn on our revolver, which doesn't mature until the third quarter of 2027. And, as Lassa mentioned earlier, in may we executed an amendment to our credit facility, upsizing our Revolver by $30 million to 330 million further, enhancing our liquidity, which stood at 272 million at quarter end
Our balance sheet is in great shape with a trailing 12-month net leverage ratio of 2.7 times a weighted average interest rate on our total debt under 7% and no debt maturities until 2029.
For the first half of 2025, we were 36 million free, cash flow positive and as our new bill program will be substantially complete at the end of the year. We expect this number to significantly grow starting in 2026.
As I discussed on the q1 earnings call 2025 is a heavier than normal Dry Dock year for us. And during the third quarter, we will have 3 vessels at the dock at various times for regulatory surveys and repairs.
Utilization will remain strong on the other vessels. And with the Amelia Islands scheduled to come online. We expect to see third quarter ibida higher than the second quarter.
Despite the large number of dry docks. Our expectation is that full year, 2025 results will be the highest in company history for both revenue and net income.
With that, I will turn the call back over to Lassa for his remarks on the Outlook moving forward.
Thank you, Scott.
The administration continued to demonstrate strong and consistent support for the dredging industry.
The US Army Corp of Engineers is operating in fiscal year 2025 on the continued resolution through September 30th.
Which sustains the record funding levels established in the prior fiscal Year's budgets.
This support along with our 1 billion dollar backlog which includes a robust mix of large and complex projects in the beach. Renourishment and Port deep in the markets, enable us to continue to deliver on a very busy 2025.
And provides clear revenue visibility extending well into 2026.
We expect the 2025 dredging bid market to be at a normalized volume of approximately $2 billion, focused on coastal protection projects. This follows very strong port deepening bid markets in 2023 and 2024.
as we look further ahead, we are beginning to see meaningful progress on the next phase of deepening projects, including New York, New Jersey, Tampa, New Haven, and Baltimore among others.
The dredging work is likely to commence in 2027.
In response to early signs of potential delays. In the US offshore wind Market, we proactively adjusted, our strategic outlook for the Arcadia.
Over the past couple of years, we have expanded our Target markets for the Arcadia to include the safeguarding of critical subzi assets.
Including oil and gas pipelines. Power transmission lines, telecommunication cables and international offshore wind farms increasing our opportunities into a broader range of services. We now refer to as offshore energy
The Arcadia engineered to precisely deposit Rock for the protection of subzi, infrastructure against environmental forces, such as weather and potential acts of sabotage by hostile entities.
We are actively pursuing engagement across these sectors bidding work for 2027 and onwards as we have between Empire and 1 and Earth did Sunrise, wind Arcadia, fully booked, put the work in the US for 2026.
In conclusion.
And all of the year.
And a strong backlog gives us good Revenue visibility for 2026.
A new bill program is coming to an end. And we are looking at generating solid positive, cash flows for 2026. And with that, I'll turn the call over for questions.
Thank you. At this time. We will conduct the question and answer session.
As a reminder to ask a question, you will 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 as we compile the Q&A roster.
Our first question comes from Joe Gomez of noble Capital, your line is now open.
Good morning. Congrats on the quarter.
Thanks Joe.
I wanted to start off with just kind of. We take a look at the pace of awards. Um, you know, is it running to expectations? Um, are you seeing anything being kind of pushed out?
To the right. Is there anything there that you know leads you to have any concern about the you know the award level for this year?
Yeah, Joe. So you know as we have talked about it at your end, um 1, we expected a more normalized bid Market. Uh for for this year, that's playing out. Um, we also knew as the current deepening cycle was starting to uh come to an end. There would be, you know, very little capital projects that also was playing out. A loss of said we do see early signs of the next wave of deepening projects, you know, coming out in the next 18 months or so, which which is a good sign. And then the third thing with our utilization with our backlog, we were not going to be able to participate in a lot of the bids that came out just because we didn't have availability for the first half of the year. We did not bid on well, over 50% of the projects that came out 1. We just didn't have the availability, or to it just didn't fit into, you know, the profile of The Limited available that we have. So, you know, this this Market as
And flows. Our win rates going to EB and flow, and we have the backlog, you know, like I have, it's just, it's, it's impossible for us to, you know, keep winning at the rate that we were winning uh, over the last couple of years.
Okay, thanks for that.
Um, and on the Acadia. Um, obviously you guys mentioned, you've got it, you know, fully booked in 26 and you're exploring other markets in 27.
Um,
is there the possibility that that you think that vessel could still be in the US in 27 or most of your efforts? Looking overseas in the international markets for 27?
Yeah. Currently, we are bidding a lot of work in, uh, in Europe. And we're also looking at Asia, for the remainder of this decade, uh, the market in Europe is continuing to be strong.
and um,
It, it is.
Probable or most probable that the vessel will be in Europe. Uh when we get entered 2027,
Okay. Um,
And then you know 1 last 1 for me you know kind of more 10,000 foot level ASA. You know, you guys have mentioned. The new build program should be coming to an end here. You know, we'll in all the positives for that.
Is there anything out there?
You know, maybe far out in the Horizon right now that would make you reconsider and say you know maybe we need to build more vessels are, is this, you know? Hey we are definitely done here for whatever the next phase of years is
Well yeah, we we were looking at our Fleet. Uh I I it it's my opinion. We have invested heavily into our Hopper Fleet. So we have now
4 very young, modern hoppers in the market. Plus we have 2 older ones smaller ones. So we have a, a fleet that is updated and uh and uh, very competitive. Uh, I'll cut a fleet. It's uh, it's also large. Uh, we are continuously updating the equipment to border Cutters. Um, so
Uh dredges. Um, but that may change over time, but, uh, I would say, for, for the coming couple of years. Uh, it's not on the agenda. Scott, do you have any comments? No, I, I think that's right. You know, Joe we've, we've said, um, you know, we may look to do some strategic upgrades on, you know, some of the non Hopper Fleet but we're we're comfortable with the number of dredges that we have right now. You know, we we strategically invested over the last few years and, you know, I think we're already starting to see that dividends paying off and and can continue, you know, to expect the the same sort of results.
Okay, great. Thanks for that. I'll get back to you. Thank you.
Thank you. Thank you.
Our next question comes from the line of Julio. Romero of sodium company. Your line is now open,
Great, thanks. Good morning. Los this is Scott and Eric, um, maybe staying on the Acadia for a bit. Um, you know, what's your confidence level in Acadia delivery to you in the first quarter of 26, versus potentially later in the year? And then and then what's, what would be your best guess as to aadia or Revenue dollars in 26, if we assume it does get delivered on time and goes to you know, straight to work on Empire 1.
Yeah, we have a high confidence in getting the best of delivery in q1. That is the date that the guard is giving us, uh, the, um, the acquisition of the yard, um, by the Koreans, uh, hva, uh, has resulted in in, uh, additional resources, coming to the yard. And, um, the progress is is good. As I said, we are out of the dry dock and it's now at the outfitting key at Philly Shipyard and, uh, they are looking at, uh, trying to improve the delivery dates to an earlier delivery in q1, but uh,
As we are speaking today, that is what the artists is telling us.
Uh, Revenue expectations. Yeah and and, and, and who, you know. So we are um, there are some options that, you know, we'll, we'll get exercise. We're still, um, you know, finalizing pricing on that. So, you know, I'm going to keep keep numbers a little closer there, but, you know, with the end of q1 delivery and, you know, call it another month month and a half of commissioning, you know, we should see you, you know, a little more than than 6 months, give her give or take of of Revenue. Um, you know, I think we have said that in the US, you know, this vessel will, you know, is definitely capable of getting uh you know. Well north of a 100 million dollars revenue for for full year and you know, again call it, you know, 7 months, give or take.
Make, uh, with this year, you know, just normal es and flows and mobs between jobs. I think you can get directionally correct on how we're thinking about it.
Yep, fair enough. Um and and you know any update on potential wins for the offshore energy Awards um for the Acadia and a and a quick refresher on what the lead time is between bidding and award for um, for offshore energy in Europe and in Asia.
Yeah, and the uh, that's a lead time is much shorter in in those markets. Uh, it's mature markets here in the US, we were fortunate to be able to book projects, very early for the Arcadia, due to the newness and and the novelty in in the market and lack of vessels. Or us vessels flagged vessels in the international markets. And it's more looking at a, maybe a year, maybe less in in lead time between a water and you actually execute the project. Yeah, who who, you know, there has not been 1 project uh in Europe or Asia that we have bid on for 27 or Beyond there's been awarded to anybody yet.
Okay yeah I appreciate the finer point on the the lead time there and you know, a year or less, that's very helpful. Um
Just maybe on on the base business. Um,
You know, are are you?
I think you touched on it earlier. But, you know, are you seeing any any change in in customer hesitation at all or or any delays? Um, in decision making, um, on on, on the base stretching business
Well as you know uh we are in a continued resolution uh which is good and bad news. Um
the core uh cannot did new projects uh in this uh situation but they have the revenue um,
So that means that there's a lot of uh projects which are being executed. Um,
In this situation, we have to wait until the government uh, or the Congress get together and make a new budget for for next year. And then there is a number of of new projects that should be included in that new budget. Um,
That that is the uh let's say Clarity that we have around it, there's a number of Beach. Uh
Renourishment and and reconstruction projects that are being did at this point in time and that market is very strong. And as you know, we perform, uh, extremely well on those projects on on the East Coast.
And I guess, for LG, I guess is also what I was getting at if if you know the order Cadence of LNG, any change from decision from customer decision, making on that front.
Well, we are currently engaged in 3 projects. Uh, in the LG space there is a couple of other projects where, um, it's either being, uh, done by other dredgers.
That's probably 2 LNG projects, other than the 3 that we are working on that is going forward and, uh, where uh, our competition will be uh, fully engaged.
so beyond that, it it's probably more a discussion on the general LNG Market, uh, is there room for more capacity to be built in the US and how can
The export markets really absorb these volumes of LG going forward.
Helpful, I'll pass it on, thanks.
Thank you.
Our next question comes from the line of Kevin gay of Thompson Davis and Co your line is now open.
Good morning, Los is Scott. Ner, uh, nice, nice quarter. Um on a heavy dryer.
Great. Thanks. Kevin
I was hoping that maybe we could kind of touch on the Acadia conversations that you guys are having.
And maybe at this point.
What what is more likely to happen? Is it going to be more International wind work or asset protection jobs, and kind of how those conversations are unfolding?
Yeah, it's a very interesting uh, market for us. Um,
I think I've been saying on these calls that we always knew that the offshore energy business would be both U.S. and international work.
Um the fact that uh we now have a Slowdown in the US as as we are seeing means that the international work um had to be addressed earlier. We started that
Almost 2 years ago to uh talk to clients that we have here in the US about their European operations.
And uh, we have been bidding very actively for that that work.
Uh, starting in 27 and onwards, it's offshore wind farms as large uh volumes of rock needed for the offshore wind farms, but also the uh, power cable transmit or transmission cables. That are being installed in Europe. Requires a lot of rock protection.
Uh, it is uh, it's a large Market.
And uh, we are actively engaged in in bidding for for that work.
there's also been discussions around, uh,
the communication cables, uh, the sabotage that's been happening in the baltics and the, uh, let's say, unprotected infrastructure that you see in the North Sea of, uh, oil and gas pipelines. And there is discussions ongoing on how to protect those from sabotage.
uh so there is uh several markets here which are interesting for aadia
because I appreciate that color, uh, as far as
I think you mentioned, Scott treks, or
In Q3 going to be 3. Um, is there any setup for Q4 as well, currently?
And just uh to clear up on the cash flow. Um, what was the operating cash flow Q2? And do you have any thoughts about, um, second half cash flow?
yeah, uh, Q2 operating cash flow was
Right around. Uh,
30. I mean I'm sorry about 60-ish uh for operating cash flow and as I mentioned on the call free cash flow for the first half of the year uh well above 30. Um you know we expect to see I'm not going to say the numbers will be the same but this year is going to look like a normal year. You know that the bookend quarters q1 and Q4 will be the strongest and then, you know, the, the middle ones, something less. So we saw that the first half of the year. My expectation is we'll see that in the second half of the year. Um, I think we do still have, uh, to finish up the payments on the Amelia Island. We obviously have, uh, some more to do on the kadia for this year. So we still have some capex this year. My guess is, if you just kind of look at at total cash flow, second half of the year, um will be probably flattish, give or take. Um, and then as we talked about next year as the new bill,
Program, you know, winds down at the beginning of the year; that's when we really start generating cash.
Great. Sounds good.
Thank you.
As a reminder, to ask a question, please press *1, 1 on your telephone. Our next question comes from the line of John Tanan of J. CJs Securities. Your line is now open.
Good morning. It's Jeremy on for John. Thanks for taking the time to take questions. Um,
How should we think about Capital allocation Beyond capex? Uh given the stronger performance has your preference shifted more towards repurchases versus Debt Pay down.
No, I think you know with, uh, with where we're at now. I think we've kind of go back to the priorities. We had been stating all along, let's get through the new bill program. And then, let's, let's start delivering the new build pro. I mean, the, the buyback program we put in place was was more a, uh, the a reaction to the softball that the market gave us were, um, you know, we just saw this huge depression in the stock price, so put the program in place. Um, you know, we're able to take some swings at it at a very depressed price. Um, now we'll, you know, as long as we see, you know, the price where it's at or or higher, not not that. We think it's properly valued now but we'll just go back to the other priority, the program's still in place, if we see.
Another huge disconnect. Um, we can always start nibbling again but right now um as I see it, let's get through the new build program. And then, uh, let's let's start delivering.
Makes sense. Thank you. And then can you just discuss the expansion of the credit facility and kind of the rationale behind uh, doing so?
Yeah. A couple of things drove that um, we did have on our second lean, uh paper, the ability to upsize it by 50 million dollars that, uh, that expired. During the second quarter, we weren't going to take it, but we did get, uh, have the opportunity to, uh, upsize revolver at much, uh, much more favorable pricing for the tune of 30. We did it. Um, also, with the LG work, um, that we have and the, um, you know, progress, we're making on the offshore energy. Those projects typically require letter of credits, as opposed to the, the base, uh, dredging business, which are usually shy bonds. So, the revolver for us is not just a mechanism to borrow cash. It's also the facility that we use to, uh, issue letter of credits. You'll see we're going to issue our 10q later. Today we have roughly $60 million of letter of credits.
Outstanding right now to, to support the LNG and offshore energy backlog.
Awesome. Thank you.
Thank you.
I'm showing no further questions at this time. So I would now like to turn it back to Eric Burge for closing remarks.
Thank you. We appreciate the support of our shareholders employees and business partners. And we thank you for joining us for our discussion today about the important developments initiatives in our business. We look forward to speaking to you during this quarter earnings. Thank you.
Participation. In today's conference, this does conclude the program, you may now disconnect