Great Lakes Dredge & Dock Corporation (GLDD) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $195.2 million, increased $4 million year-over-year due to improved utilization and project performance, as well as the addition of the newly delivered Amelia Island dredge.
Adjusted EBITDA $39.3 million, with a margin of 20.1%, reflecting strong project performance and high utilization.
Net Income $17.7 million, up from $8.9 million in the prior-year quarter, driven by higher gross profit and lower general and administrative expenses.
Gross Profit $43.8 million, with a margin of 22.4%, compared to $36.2 million and 19% in the prior year, due to improved utilization and a higher proportion of capital and coastal protection projects.
Net Interest Expense $4.6 million, slightly down from $4.9 million in the prior year.
Net Income Tax Expense $6.1 million, up from $3.2 million in the prior year, due to stronger financial results.
Capital Expenditures $32.8 million, including $8.3 million for the completion of Amelia Island, $18.6 million for the construction of Acadia, and $5.9 million for maintenance and growth.
Backlog $935 million, with 84% in capital and coastal protection projects, plus an additional $194 million in awards and options pending.
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Operating Highlights
Delivery of Amelia Island: The sixth hopper dredge, Amelia Island, was delivered and is now operational. It is designed for shallow and narrow waters, aiding in coastal protection projects like beach restoration and wetlands improvement.
Construction of Acadia: The Acadia, the first U.S. Flagged Jones Act compliant subsea rock installation vessel, is under construction and expected to be delivered in Q1 2026. It will support offshore energy projects, including Empire Wind 1.
Offshore energy market expansion: The company commenced rock placement operations on Equinor's South Brooklyn Marine Terminal and started armor rock installation on Empire Wind 1. The Acadia is expected to support domestic and international offshore energy projects.
Port deepening projects: Backlog includes major port deepening LNG projects such as Port Arthur LNG Phase 1, Brownsville Ship Channel, and Woodside Louisiana LNG, with work extending into 2026.
Financial performance: Q3 2025 revenues reached $195.2 million, with adjusted EBITDA of $39.3 million. The company achieved a gross profit margin of 22.4%, up from 19% in Q3 2024.
Backlog and project funding: The backlog stands at $935 million, with 84% in capital and coastal protection projects. All projects are fully funded, ensuring operational continuity.
Refinancing and debt management: The company refinanced and upsized its revolving credit facility to $430 million, extending maturity to 2030 and repaid $100 million in second-lien notes, reducing annual interest expenses by $6 million.
Strategic shift for Acadia: In response to potential delays in the U.S. offshore wind market, the company broadened Acadia's target markets to include safeguarding subsea assets like pipelines and cables, as well as international offshore wind farms.
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Risk or Challenges
Government Shutdown: Although the company has not experienced any interruptions during the current government shutdown, there is an implied risk that prolonged or future shutdowns could potentially disrupt operations, bidding activities, or payment schedules.
Regulatory Dry Docking and Repairs: Three dredges were at the dock during the quarter for regulatory dry docking and repairs, which could impact operational efficiency and project timelines if not managed effectively.
Offshore Wind Market Delays: The company has observed early signs of potential delays in the U.S. offshore wind market, which could impact the utilization of the Acadia vessel and related revenue streams.
Economic and Market Conditions: The normalization of the dredging bid market in 2025, following a strong port-deepening bid market in previous years, could result in reduced opportunities and revenue growth.
Subsea Infrastructure Protection: The company is diversifying into safeguarding critical subsea assets, but this strategy involves risks related to market acceptance, competition, and execution in a relatively new service area.
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Guidance & Outlook
Revenue Visibility: The company has a strong backlog of $935 million, providing revenue visibility well into 2026. This includes large and complex projects in beach restorations and port deepening markets.
2025 Bid Market: The 2025 dredging bid market is expected to normalize at approximately $1.8 billion, focusing on coastal protection projects funded by the 2023 Disaster Relief Supplemental Appropriations Act and dredging maintenance projects funded by the U.S. Army Corps of Engineers.
Future Port Deepening Projects: Meaningful progress is being made on the next phase of port deepening projects, including New York, New Jersey, Tampa, New Haven, and Baltimore, with work likely commencing in 2027.
Offshore Wind Market: The Acadia vessel has secured full utilization for 2026 through projects like Empire Wind 1 and Ørsted's Sunrise Wind. The company is also pursuing broader offshore energy opportunities, including safeguarding subsea assets and international offshore wind farms, to ensure full utilization of the Acadia in 2027.
Financial Projections: 2025 is expected to be the highest EBITDA year in company history by a large margin. The company anticipates being significantly free cash flow positive starting in 2026, as the new build program will be substantially complete by the end of 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are the expectations for bidding and winning coastal protection orders through 2026?
A:Bidding is expected to continue as normal for maintenance dredging projects and coastal protection and restoration projects. The bid market for 2025 is expected to reduce compared to 2023 and 2024, returning to a more normal mid-market size.
Q:Does cash interest expense and GAAP interest expense converge going forward?
A:Yes, cash interest and GAAP interest expense will converge after the Acadia is delivered. Interest expense is expected to decrease, with a quarterly run rate of about $3 million in Q1 2026. The company plans to prioritize paying down the revolver, leading to further savings.
Q:How is the company getting paid during the government shutdown?
A:The Corps of Engineers has over 30,000 employees, with only 1,000 furloughed. Most of the Corps' staff is funded through project-based accounts, so ongoing projects are being executed and payments are being received as normal.
Q:What is the outlook for the 2026 bid market?
A:The 2026 bid market depends on the continuation of the CR. If extended, budgets will remain the same as in 2024, allowing for maintenance and coastal protection projects to continue. New port deepening projects are expected to be bid out towards the end of 2026, with operations starting in 2027.
Q:Has the company signed contracts with non-wind-oriented customers for the Acadia?
A:No, contracts with non-wind-oriented customers for the Acadia are still a work in progress. The company has been active in Europe, bidding on projects for execution in 2027 and 2028, but no awards have been made yet.
Q:How does Q4 compare to Q1 in terms of performance?
A:Q4 is expected to be extremely strong, though not at the same level as Q1, which was one of the best in company history. Two hopper dredges will be in dry dock during Q4, impacting revenue and costs, but the quarter will still be strong overall.
Q:Is offshore energy work starting earlier than expected?
A:No, offshore energy work is proceeding as scheduled. The company chartered a vessel to execute work on Empire Wind 1 due to delays in the Acadia's delivery. Additional work on the South Brooklyn Marine terminal also contributed to Q3 revenue.
Q:What is the outlook for the coastal protection market and upcoming bidding opportunities?
A:A number of beach restoration and coastal protection projects are expected to be bid out in Q4 and Q1 next year. These projects are funded through different streams, allowing them to continue during the CR. The company has diversified its client portfolio to balance federal and private funding.
Q:What are the uses of strong cash flow expected in 2026 and beyond?
A:The priority is to deleverage by paying down the revolver, which will reduce interest expenses. The company also plans to finish the Acadia and focus on operational cash flow.
Q:What is the margin contribution from offshore energy work in Q3?
A:Offshore energy work in Q3 contributed $6 million in revenue with healthy margins, meeting expectations. The margin profile is expected to remain strong as the Acadia comes online.
Q:Can the company meet or beat 2023 EBITDA levels in 2026?
A:The company expects 2026 to be an extremely strong year with a similar mix of revenue as 2023. High-margin LNG projects and a healthy backlog support this outlook.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer to the question about comparing Q4 to Q1 performance, only stating that Q4 would be strong but not providing specific guidance. Similarly, they did not provide specific guidance on 2026 EBITDA levels compared to 2023, only stating that 2026 would be strong.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Acadia Flagged
Acadia end
Birge Vice
Brooklyn Marine
Coast line
Delivery Empire
Empire Wind
Equinor South
Finance day
Flagged Jones
Instructions conference
Island Amelia
Island construction
Island milestone
Island pace
Island work
LNG dredging
LNG initiative
Lasse commentary
Lasse credit
Lasse review
Marine Terminal
Officer Kornblau
President Investor
United States
Vice President
build program
capacity lien
credit facility
delivery
dredge majority
facility capacity
hopper dredge
note
payment
rate
restoration
shipyard
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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