Great Lakes New CEO Takes the Reins in May; Building on 2016 Year-End Results and Dredging Successes
On May 1, Great Lakes Dredge & Dock Corp. board of directors named Lasse Petterson CEO. In December 2016, Petterson joined the board of directors, and needed to complete an application for U.S. citizenship, as required by the Jones Act, in order to assume the role of CEO.
Chairman of the Board Robert Uhler stated, “We are pleased to have Lasse join the executive management team at Great Lakes. As expected, since becoming a Board Member late in 2016, his background, reputation and character have enabled him to be a valuable asset to the Company. As CEO, I expect Lasse to continue to make many positive contributions that will enhance value for shareholders. I’d like to thank Chief Financial Officer Mark Marinko for stepping in as interim CEO since the beginning of the year. Mark’s leadership provided consistency and stability while the company executed its strategy and carried out its operations. The board is appreciative of Mark’s willingness to take on the added responsibilities and his commitment to the company.”
Petterson has experience in engineering, construction and the martime industries. He worked and lived in Norway, Asia and the United Kingdom to oversee operations and major projects in Austrailia, Middle East and South America for more than 35 years. Most recently, Petterson served as a private consultant to clients in the oil and gas sector. He served as Chief Operating Officer (COO) and executive vice president at Chicago Bridge & Iron (CB&I) from 2009 to 2013. Reporting directly to the CEO, he was responsible for all of CB&I’s engineering, procurement and construction project operations and sales.
Earlier this year, Great Lakes released its year-end results for 2016. For the three months ended December 31, 2016, Great Lakes reported revenue of $213.4 million, net loss of $7.0 million and Adjusted EBITDA of $11.6 million. The following non-recurring items totaling $7.3 million negatively impacted results during the fourth quarter of 2016: a loss on an asset held for sale of $2.4 million for a vessel based in the Middle East; $2.3 million in losses related to the sale of assets in the Terra services business; and a $2.6 million loss related to the wind-down of the TerraSea joint venture.
Interim CEO and CFO Mark Marinko stated in February, “In 2016, the company executed well on our domestic dredging contracts, particularly on our rivers & lakes projects. Our performance was offset by a major decline in international work due to a smaller market in 2016 that impacted the entire international dredging industry as well as the absence of the Suez Canal project, which contributed robust revenue and contract margin in 2015. We were pleased to have our internationally-based vessels utilized during the second half of the year, however the contracts were not at the margin of recent international projects.”
“At December 31, 2016, total assets and total liabilities on our balance sheet remained consistent with year-end 2015. During the year, we invested $54 million to finance the construction cost of our Articulated Tug & Barge (ATB) hopper dredge. As stated previously, we expect to continue to be deploying our free cash flow until construction of this vessel is complete in the second quarter of 2017,” Marinko said.
For the dredging division: revenue in the fourth quarter of 2016 increased over the prior year period primarily due to higher foreign capital, domestic capital and rivers and lakes revenues, partially offset by lower maintenance revenue and somewhat lower coastal protection revenue.
Gross profit margin decreased in the fourth quarter of 2016 compared to the fourth quarter of 2015, driven by lower domestic contract margin, particularly on several coastal protection projects and capital deepening projects, and lower foreign contract margin.
Operating income decreased in the fourth quarter of 2016 compared to the prior year quarter primarily due to lower gross profit, partially offset by a $3.4 million reduction in general and administrative expense. A $2.4 million loss on a dredge held for sale in the Middle East also impacted results.
The dredging backlog was $467.7 million at the end of the fourth quarter, a decrease of $210.0 million compared to backlog at December 31, 2015.