Divesting itself of its environmental and infrastructure businesses allowed Great Lakes Dredge & Dock Corporation, the largest provider of dredging services in the United States, to improve its financial results by the end of last year.
That was the message from CEO Lasse Petterson, who said, “2019 was an exceptional year at Great Lakes. Our record financial performance was a result of a strong domestic dredging market and the continued effectiveness of our 2018 asset rationalization and cost reduction program.” GLDD reported financial results on February 19 for the quarter and year ending December 31.
Revenue was $164.3 million in the fourth quarter, a decrease of $8.9 million compared with the prior year’s fourth quarter. But gross profit margins increased to 21 percent in the fourth quarter compared with 20.6 percent in the prior year’s fourth quarter. Gross profit margin was $1 million lower than the prior year quarter; however, the gross margin percentage increased to 21 percent in the fourth quarter of 2019 compared with 20.6 percent in the fourth quarter of 2018, due to what the company said was “consistent strong project performance despite the reduction in revenue.”
Fourth Quarter Results
Net income from continuing operations for the quarter was $14.8 million, compared to $5 million in the prior year quarter. The improvement in net income was a result of higher operating income, a decrease in net interest expense of $1.4 million, and a decrease in tax expenses, primarily due to an adjustment in the overall blended state tax rate that was made in the fourth quarter of 2019.
Total operating income from continuing operations was $22.2 million, an increase of $5.5 million over the prior year fourth quarter. Net income from continuing operations was $14.8 million, an increase of $9.8 million over the prior year fourth quarter.
Adjusted EBITDA from continuing operations was $32.6 million, an increase of $4.2 million over the prior year fourth quarter. Revenue was $711.5 million for the full year 2019, a $90.7 million or 14.6 percent increase over the prior year.
Gross profit margin percentage increased to 21.6 percent in 2019, compared to 18.0 percent in 2018.
The backlog was $589.4 million at December 31. Subsequent to the year’s end, the company was awarded an additional $44.8 million in project work.
“Our continued strong operational performance is a validation of our positioning in the dredging marketplace, as well as the tremendous efforts and focus turned in by our outstanding employees,” Petterson said. “Hand in hand with the strong operational and financial results, our drive to an incident- and injury-free work environment continued to progress with a 30 percent decrease in recordable injuries year-over-year.”
During the fourth quarter of 2019, port deepening projects in Charleston, South Carolina, Jacksonville, Florida, and Corpus Christi, Texas, were in full operation with work continuing into 2020.
Operationally, 2019 had lower dredging activity as compared to prior years, due to several planned vessel dry dockings. The impact of the increased dry dockings was partially offset by strong performance on the San Jacinto flood prevention project in Houston, Texas, and the Jacksonville port deepening project in Florida.
Although the bid market was lower than expected in the fourth quarter, the total bid market finished strong at $1.8 billion.
“We expect the dredging market to remain strong for the next two to three years,” Petterson said. ”Our focus remains on port deepening projects, as well as coastal protection projects, which include the renourishment of coastal beaches that have been damaged after the heavy hurricane seasons of the past three years. Some of these projects are expected to bid in the first half of 2020.”
Additionally, the company has begun work on several beach renourishment projects on the New Jersey shoreline to assist in the recovery from the damage caused by coastal storms and to reduce the risk of future damage from flood and storm events.
“All of these projects have strong support from Congress, as evidenced in the approved U.S. Army Corps of Engineers fiscal year 2020 appropriations bill signed into law in December of 2019,” the company said.
In addition to the deepening and coastal protection projects, several liquefied natural gas, petrochemical and crude oil projects are creating the need for port development in support of energy exports. The company said it expects several of these private client projects to progress to bid in 2020.