Great Lakes Dredge & Dock Corporation (GLDD) Q2 2025 Earnings Conference Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with record high revenue, a solid dredging backlog, and strategic expansion into offshore wind markets. The share repurchase program and cash flow expectations are positive, despite some uncertainties in project bidding and LNG market insights. The Q&A reveals confidence in asset delivery and market expansion, with a focus on deleveraging post-newbuild program. Overall, the company's strategic plans and financial health suggest a positive stock price movement.
Key Financial Performance
Revenue $193.8 million, increased by $23.7 million year-over-year due to high equipment utilization and strong project performance.
Adjusted EBITDA $28 million, with a margin of 14.4%, reflecting improved utilization and project performance.
Gross Profit $36.6 million, increased from $29.8 million year-over-year, driven by improved utilization and a large number of capital and coastal protection projects.
Gross Profit Margin 18.9%, up from 17.5% year-over-year, due to higher-margin projects and improved utilization.
Operating Income $17.1 million, increased by $2.5 million year-over-year, driven by higher gross profit but partially offset by higher general and administrative expenses.
Net Income $9.7 million, up from $7.7 million year-over-year, due to stronger results.
Net Interest Expense $4.2 million, flat year-over-year.
Net Income Tax Expense $3.4 million, increased from $2.8 million year-over-year, due to stronger results.
Capital Expenditures $64.6 million, including $19.8 million for the hopper dredge Amelia Island, $28.7 million for the construction of the Acadia, and $8.8 million for support equipment.
Liquidity $272 million at quarter-end, enhanced by upsizing the revolving credit facility by $30 million.
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Operating Highlights
New Hopper Dredge - Amelia Island: Expected delivery in the next few weeks, designed for shallow and narrow U.S. coastlines, and will work on coastal protection projects.
Subsea Rock Installation Vessel - Acadia: First U.S. flagged Jones Act-compliant vessel, launched in July, expected delivery in Q1 2026, targeting offshore energy projects.
Woodside Louisiana LNG Project: Dredging operations to commence in early 2026, included in Q2 backlog.
Offshore Energy Market Expansion: Acadia's target markets expanded to include oil and gas pipelines, power transmission lines, telecommunication cables, and international offshore wind farms.
Revenue and EBITDA Growth: Q2 2025 revenue of $193.8 million and adjusted EBITDA of $28 million, driven by high equipment utilization and strong project performance.
Backlog and Awards: $1 billion backlog with 93% from capital and coastal protection projects, plus $215.4 million in pending awards and options.
Share Repurchase Program: Initiated $50 million program, repurchased 1.3 million shares for $11.6 million as of June 30.
Strategic Shift for Acadia: Proactively adjusted to address potential delays in U.S. offshore wind market by expanding target markets to broader offshore energy services.
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Risk or Challenges
Regulatory Dry Docking: The company faces challenges with regulatory dry docking requirements, which have led to multiple vessels being out of service at various times, impacting utilization and potentially increasing costs.
Offshore Wind Market Delays: Potential delays in the U.S. offshore wind market have prompted the company to adjust its strategic outlook for the Acadia vessel, which could impact revenue generation and project timelines.
High Capital Expenditures: The company is experiencing high capital expenditures due to its newbuild program, which could strain cash flow and financial resources in the short term.
Dependence on Government Funding: The company's operations are heavily reliant on U.S. Army Corps of Engineers funding, which is subject to government budget approvals and could pose risks if funding levels change.
Economic and Environmental Risks: The company’s projects, such as coastal protection and subsea infrastructure, are exposed to environmental forces and economic uncertainties, which could disrupt operations or increase costs.
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Guidance & Outlook
Revenue and Net Income Projections: The company expects full-year 2025 results to be the highest in its history for both revenue and net income.
Dredging Backlog and Revenue Visibility: The company has a $1 billion backlog, providing clear revenue visibility into 2026. Additionally, the 2025 dredging bid market is expected to normalize at approximately $2 billion, focusing on coastal protection projects.
New Build Program and Vessel Deployment: The Amelia Island hopper dredge is expected to be delivered in the next few weeks and will immediately begin work on projects in the backlog. The Acadia vessel is expected to be delivered in Q1 2026 and will commence work on the Empire Wind I project.
Offshore Energy Market Expansion: The company is expanding its target markets for the Acadia vessel to include safeguarding critical subsea assets such as oil and gas pipelines, power transmission lines, telecommunication cables, and international offshore wind farms. The Acadia is fully booked for U.S. work in 2026 and is bidding for projects in 2027 and beyond.
Capital Expenditures and Cash Flow: The company expects capital expenditures for 2025 to remain between $140 million and $160 million. With the new build program nearing completion, significant positive cash flow is anticipated starting in 2026.
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Shareholder Return Plan
Share Repurchase Program: A $50 million share repurchase program was initiated in March 2025. As of June 30, 2025, the company has repurchased 1.3 million shares, spending a total of $11.6 million under this program. The decision to initiate the program was based on the belief that the company's share price did not reflect its financial performance and long-term outlook.
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Key Q&A
Q:Is the pace of awards running to expectations, and are there any concerns about the award level for this year?
A:The pace of awards is running as expected with a normalized bid market. However, the current deepening cycle is ending, leading to fewer capital projects. Early signs of the next wave of deepening projects are expected in the next 18 months. The company did not bid on over 50% of projects in the first half of the year due to lack of availability or project fit. The win rate will fluctuate due to the backlog.
Q:Will the Acadia vessel still be in the U.S. in 2027, or is it more likely to operate in international markets?
A:The Acadia vessel is most likely to operate in Europe in 2027. The company is bidding for work in Europe and Asia, with the European market continuing to be strong.
Q:Is there any possibility of building more vessels in the future, or is the newbuild program coming to an end?
A:The company does not see a need to build new dredges in the coming years. The hopper fleet is modern and competitive, and the cutter fleet is being continuously updated. Strategic upgrades on the non-hopper fleet may be considered, but no new builds are planned for the next few years.
Q:What is the confidence level in the Acadia vessel being delivered in Q1 2026, and what are the revenue expectations for 2026?
A:The company has high confidence in the Acadia vessel being delivered in Q1 2026. The vessel is expected to generate well north of $100 million in revenue for a full year. For 2026, with about 7 months of operation, revenue will be directionally proportional to this figure.
Q:What is the lead time for offshore energy awards in Europe and Asia, and are there any updates on potential wins for the Acadia?
A:The lead time for offshore energy awards in Europe and Asia is about a year or less. No projects for 2027 or beyond in Europe or Asia have been awarded yet.
Q:Are there any changes in customer hesitation or delays in decision-making in the base dredging business?
A:The company is in a continued resolution, which prevents the Corps from bidding new projects. However, there are ongoing projects and a strong market for beach renourishment and reconstruction projects, particularly on the East Coast.
Q:Are there any changes in the LNG order cadence or customer decision-making?
A:The company is engaged in three LNG projects, with two additional projects being handled by competitors. The general LNG market's capacity and export potential are under discussion.
Q:What is more likely for the Acadia vessel: international wind work or asset protection jobs?
A:The Acadia vessel is likely to engage in international wind work, including offshore wind farms, rock protection for power cables, and protection of infrastructure like oil and gas pipelines from sabotage. The company is actively bidding for this work starting in 2027.
Q:What is the dry dock schedule for Q3 and Q4, and what are the expectations for 2026?
A:There are three planned dry docks in Q3 and two in Q4. The dry dock schedule for 2026 is expected to be lower than average due to the heavy dry dock year in 2023.
Q:What was the operating cash flow in Q2, and what are the expectations for the second half of the year?
A:The operating cash flow in Q2 was approximately $60 million. The second half of the year is expected to have flattish cash flow, with stronger cash flow in Q4. The company expects to generate significant cash starting in 2024 as the newbuild program winds down.
Q:What is the company's approach to capital allocation beyond CapEx?
A:The company prioritizes deleveraging after completing the newbuild program. The buyback program was a reaction to a depressed stock price, but the focus will now shift back to deleveraging unless there is another significant disconnect in stock price.
Q:What was the rationale behind expanding the credit facility?
A:The credit facility was expanded to support LNG and offshore energy projects, which require letters of credit. The company has approximately $60 million in letters of credit outstanding to support these projects.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue numbers for the Acadia vessel in 2026, citing ongoing pricing finalizations. Additionally, they did not provide detailed cash flow projections for the second half of the year, only offering general expectations. The response to the LNG market's future capacity and export potential was also vague, lacking specific insights or data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Acadia addition
Acadia couple
Acadia project
Acadia safeguarding
Acadia work
Act subsea
Alberto Romero
Arcadia
Birge Vice
Dock Corp
Inc Research
Kornblau Senior
Lasse
President Investor
Research Division
Vice President
asset
cable wind
credit facility
debt
equipment
gas pipeline
market Acadia
newbuild program
number dock
oil gas
pipeline power
project award
project port
protection project
remainder
restoration
share
telecommunication cable
time
utilization project
GLDD Transcript
Great Lakes Dredge & Dock Corporation (GLDD) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call reveals strong financial performance with record net income and gross profit, along with a robust backlog. The Q&A session highlights ongoing revenue visibility and strategic market expansion. While there are some uncertainties in bidding and non-wind contracts, the company's positive cash flow outlook and strategic focus on deleveraging suggest a promising future. Despite management's reluctance to provide specific guidance, the overall sentiment is positive, supported by optimistic revenue and net income projections for 2025.
Great Lakes Dredge & Dock Corporation (GLDD) Q2 2025 Earnings Conference Call Transcript
Positive8-5
The earnings call indicates strong financial performance with record high revenue, a solid dredging backlog, and strategic expansion into offshore wind markets. The share repurchase program and cash flow expectations are positive, despite some uncertainties in project bidding and LNG market insights. The Q&A reveals confidence in asset delivery and market expansion, with a focus on deleveraging post-newbuild program. Overall, the company's strategic plans and financial health suggest a positive stock price movement.
Great Lakes Dredge & Dock Corporation (GLDD) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call presents a mixed picture: strong financial performance with increased revenue and net income, but challenges like regulatory dry docks and paused projects. The share repurchase program is positive, yet project delays and competitive pressures temper optimism. The Q&A reveals management's lack of clarity on certain issues, adding uncertainty. Overall, the neutral sentiment reflects balanced positives and negatives, with no strong catalysts for significant stock price movement.
Great Lakes Dredge & Dock Corporation (GLDD) Q3 2024 Earnings Call Transcript
Positive11-5
The earnings call summary shows strong financial performance with increased revenues, net income, and gross profit margins. The backlog and future revenue growth potential, particularly in offshore wind, are promising. However, there are supply chain and competitive pressures, but the overall sentiment remains positive. The Q&A section revealed a strong bid market and increased gross margins expected. Despite some uncertainties in project timelines, the company's financial health and strategic positioning suggest a positive stock price movement over the next two weeks.
GLDD Report
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