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Great Lakes Dredge & Dock CORP (GLDD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered strong execution: revenue $202.8M, diluted EPS $0.29, Adjusted EBITDA $40.2M with 20% margin; gross margin expanded to 24.1% on higher capital/coastal mix and project performance .
  • Backlog quality/visibility improved: $1.24B total as of 12/31/24 (dredging $1.19B), with $282.1M in low bids/options pending; 94% of backlog is capital/coastal, typically higher margin .
  • 2025 setup: management expects revenue above 2024 despite seven regulatory dry docks (four hoppers), ~60% of backlog to convert in 2025, and “very strong” margins given mix; revolver repaid post year‑end, liquidity “over $300M” and no maturities until 2029 .
  • Strategic optionality: Offshore Energy (Acadia SRI vessel) booked on Empire Wind 1 and Sunrise Wind; broadening to international wind, pipelines, and telecom protection; Acadia delivery targeted late 2025/early Q1 next year; LNG capital deepening projects underway and additional LNG opportunities cited .

What Went Well and What Went Wrong

  • What Went Well

    • Mix and execution: 85%+ of Q4 revenue from capital/coastal protection with higher margins; gross margin rose to 24.1% YoY on improved utilization and execution .
    • Backlog and wins: Record bid market ($2.9B) with 33% win rate; backlog ~$1.2B at year‑end plus $282.1M pending; marquee Sabine‑Neches Contract 6 ($235M) supports utilization into 2026 .
    • Balance sheet progress: S&P upgrade to B‑ and revolver fully repaid after year‑end; weighted average interest rate under 7% and no maturities until 2029; “liquidity over $300M” .

  • What Went Wrong

    • Interest cost headwind: Net interest expense rose (Q4: $4.9M vs $2.8M LY) on the second‑lien term loan, pressuring net income versus prior year despite higher gross profit .
    • One‑off benefit last year: Operating income was flat YoY as Q4’23 benefited from a $7.4M terminated offshore energy contract gain not repeated, and higher incentive comp in Q4’24 .
    • Dry dockings ahead: Seven regulatory dry docks in 2025 (including four hoppers) will temporarily depress utilization and margins versus “could‑have‑been” levels despite strong mix .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($M)$181.7 $170.1 $191.2 $202.8
Diluted EPS ($)$0.32 $0.11 $0.13 $0.29
Gross Margin %21.3% 17.5% 19.0% 24.1%
Operating Income ($M)$30.5 $14.6 $16.7 $30.0
Net Income ($M)$21.6 $7.7 $8.9 $19.7
Adjusted EBITDA ($M)$40.8 $25.8 $27.0 $40.2
Adj. EBITDA Margin % (reported)——14.1% 20.0%

Segment revenue (quarterly):

Segment ($M)Q4 2023Q4 2024
Capital$61.5 $98.8
Coastal Protection$65.0 $75.3
Maintenance$46.0 $28.1
Rivers & Lakes$6.6 $0.6
Total Dredging Revenues$179.1 $202.8

Key KPIs and balance sheet:

KPI12/31/202312/31/2024
Total Backlog ($M)$1,083.7 $1,239.1
Dredging Backlog ($M)$1,039.1 $1,194.2
Backlog Mix – Capital ($M)$741.8 $799.6
Backlog Mix – Coastal ($M)$138.4 $328.1
Backlog Mix – Maintenance ($M)$152.1 $60.2
Cash & Equivalents ($M)$22.8 $10.2
Total Long‑Term Debt ($M)$412.1 $448.2
2024 Capex ($M)—$135.7
Low Bids/Options Pending ($M)—$282.1

Notes: Q4’24 operating income was flat YoY due to non‑recurring Q4’23 gain and higher incentive comp, offset by better gross profit .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue outlookFY 2025N/AExpect 2025 revenue higher than 2024 New
Backlog conversionFY 2025N/A60% of $1.2B backlog to convert in 2025 ($720M floor) New
Margin outlookFY 2025N/A“Very strong margins” despite 7 dry docks given high‑margin mix New
Regulatory dry docksFY 2025Higher than 2024 implied 7 planned; 4 hopper dredges Updated/quantified
CapexFY 2025N/A$140–$160M incl. ~ $20M capitalized interest New
Liquidity/LeveragePost 12/31/24N/ARevolver repaid, currently undrawn; liquidity >$300M; WA interest <7%; no maturities until 2029 Update
Vessel deliveries2025–Q1’26N/AAmelia Island: 2H’25; Acadia: late ’25 or early Q1 next year New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Bid market & fundingRobust 2024 bid market; record Corps $8.7B; WRDA activity supportive 2024 bid market record $2.9B; 2025 Corps budget near $10B expected; CR through Mar 14, 2025 Positive funding; timing risk from CR
Backlog & mixBacklog $808M (Q2), $1.21B (Q3); 85%+ capital/coastal Backlog $1.24B; 94% capital/coastal Improving quality/visibility
Offshore Energy (Acadia)Contracts on Empire Wind 1/Sunrise; pursuing international wind/pipelines/telecom Rebranded to Offshore Energy; another U.S. reservation signed; international tenders; delivery late ’25/early Q1 next year Broader TAM; timing watched
LNG capital deepeningPort Arthur & Brownsville started Q3; further LNG tenders Projects in backlog; lifting of export permitting expected; additional LNG opportunity cited Constructive
Fleet modernizationGalveston Island in service; Amelia in 2H’25 Amelia 2H’25; 7 regulatory dry docks in 2025 Near‑term dry dock headwind
Margins/UtilizationQ4 seasonally stronger; mix tailwind Q4 Adj. EBITDA margin 20%; 2025 margins “very strong” despite dry docks Strong mix offsets downtime
Regulatory/legal—Jones Act court ruling on first‑layer rock didn’t change position; Title XI paused Neutral (no change)

Management Commentary

  • “Great Lakes had a strong 2024 with fourth-quarter revenues of $202.8 million and EBITDA of $40.2 million... the second-highest results in Great Lakes' 135-year history.”
  • “Great Lakes won 33% of the overall bid market... substantial dredging backlog at year-end of $1.2 billion, with an additional $282.1 million in low bids and options pending award.”
  • “We expect approximately 60% of our $1.2 billion backlog to be converted into revenue during [2025]... liquidity currently over $300 million... no maturities until 2029.”
  • “We are broadening our targeted SRI market to include oil and gas pipelines and telecommunication cable protection, and international offshore wind.”
  • “All three [Acadia] projects are fully permitted and... will not be directly impacted by the... Executive Order pausing issuance of new offshore wind leases and permits.”

Q&A Highlights

  • Appropriations/CR timing risk: Management sees minimal 2025 impact given awarded, funded backlog; potential effect would be on 2026 backlog formation if bid timing slips .
  • Jones Act ruling: Technicality; position unchanged—second‑layer rock remains Jones Act protected; many farms lay no first layer; evaluating next legal steps .
  • Title XI: Government loan programs paused post administration change; company already secured alternative financing; now “nice to have,” not needed .
  • 2025 cadence: Q1 likely highest revenue quarter; largest hopper dry docks skew to mid/late year .
  • Revenue/margins: 60% backlog conversion is a floor (“book-and-burn” adds to it); expect 2025 revenue higher than 2024; margins “very strong” despite dry docks due to mix .
  • Acadia delivery/utilization: Delivery late ’25/early Q1; international work viable if U.S. projects delayed; protections exist in contracts .
  • Cash flow/newbuild: ~$110–$120M left on Acadia/Amelia; 2025 capex includes ~$20M capitalized interest; 2025 cash flow roughly neutral despite capex .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved at time of analysis due to data access limits. As a result, we cannot quantify beats/misses versus consensus for this quarter based on S&P Global data.

Key Takeaways for Investors

  • Mix-led margin strength persists: With 94% of backlog in capital/coastal protection and Q4 gross margin at 24.1%, the setup supports above-trend profitability into 2025 despite dry dockings .
  • 2025 revenue floor is high: 60% backlog conversion ($720M) plus incremental “book-and-burn” implies revenue ahead of 2024, per management .
  • Mid‑year execution risk: Seven regulatory dry docks (four hoppers) will temporarily dampen utilization/margins; Q1 likely peak revenue quarter in 2025 .
  • Offshore Energy optionality: Acadia contracts with Empire/Sunrise and international pipeline/telecom opportunities broaden TAM; delivery timing (late ’25/early Q1) is a watch item .
  • Funding backdrop constructive: Record 2024 bid market and anticipated near‑record 2025 Corps budget underpin multi‑year demand; CR may delay awards but not 2025 revenue execution .
  • Balance sheet improved: Revolver repaid post year‑end; liquidity >$300M; WA interest <7%; no maturities until 2029, reducing refinancing risk into capex peak .
  • Trading setup: Near‑term catalysts include beach renourishment seasonal windows and Q1 strength; potential volatility around mid‑year dry docks and Acadia timing; backlog conversion updates and new awards (capital/coastal, LNG) can be stock drivers .

Appendix: Additional Press Releases (Q4 2024 context)

  • $342.3M awards (incl. Sabine‑Neches Contract 6) on Oct 1, 2024 .
  • $182M coastal protection awards on Dec 19, 2024 .