OAK BROOK, Ill.–(BUSINESS WIRE)– Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest provider of dredging services in the United States and a major provider of environmental and remediation services, today reported financial results for the quarter and year ended December 31, 2014, including record backlog of $670 million.
Chief Executive Officer Jonathan Berger commented, “During 2014, the Company achieved several accomplishments that are critical pieces of our strategy to profitably grow and deliver results to our shareholders. We began the construction phase on the ATB hopper dredge, completed the Magnus Pacific (“Magnus”) acquisition in November, divested our historic demolition business and continued to execute our strategy of exiting non-core businesses through the sale of New York Sand & Stone and the sale of the real estate owned jointly by our Amboy Aggregates and Lower Main joint ventures (“Amboy Land”). Our 2014 results were bolstered by completion of our subcontract work on the Wheatstone LNG dredging project in Australia, which finished with strong contract margin commensurate with such a large and complex energy project, and a gain on the Amboy Land. Results were negatively impacted by lower utilization of our fleet, scope changes and cost overruns on an environmental & remediation project for which we are currently pursuing additional payment, higher operating overhead costs associated with investments for growth, and losses incurred related to the final project being performed by our TerraSea environmental joint venture that we decided to exit.
“For the three months ended December 31, 2014, Great Lakes reported revenue of $245.5 million, income from continuing operations of $20.3 million and adjusted EBITDA from continuing operations of $31.8 million. For the year ended December 31, 2014, Great Lakes reported revenue of $806.8 million, income from continuing operations of $20.7 million and adjusted EBITDA from continuing operations of $77.1 million.”
Mr. Berger continued, “Our dredging segment recorded record annual revenue in 2014, successfully executing projects in the United States, Australia, Brazil and the Middle East. Conclusion of Great Lakes’ participation on the Wheatstone LNG project had a positive impact on dredging’s results for the year. Results were adversely impacted by an underutilized fleet in the Middle East for much of the year and the delay in several tenders related to Superstorm Sandy work until the fourth quarter 2014, which led to lower utilization of our domestic fleet in the first part of the year. In December, we began work on the $140.5 million Suez Canal deepening project, which will keep a significant portion of our Middle East fleet utilized through the end of the third quarter of 2015. The dredging segment’s backlog at December 31, 2014 is$594.2 million, with an additional $113.5 million in options and low bids pending award.
“Despite strong top-line growth, the environmental & remediation segment encountered challenges in 2014, resulting in an operating loss. The operating loss is attributed to a combination of factors, the most substantial being $4.3 million in scope changes and cost overruns at a site redevelopment project. We are in discussions with our client to receive payment for this additional work. We also made investments to maintain the segment’s expanded equipment base, which resulted in increased overhead costs. General and administrative costs also increased during 2014, driven by expenditures related to the addition of new business development personnel and the establishment of three satellite offices to expand the business.”
Mark Marinko, Chief Financial Officer, added, “Throughout the year, we executed on several significant transactions that impacted our balance sheet. As we have stated previously, one of our growth strategies has been to free up capital tied up in non-core or underperforming businesses. The sales of our historic demolition business, the Amboy Land and New York Sand & Stone operations have enabled us to redeploy capital to support the strategic growth of our core dredging and environmental businesses.
“We amended our revolving credit facility by increasing it to $210.0 million and allowing the full use of the facility for issuance of letters of credit, which gives us greater flexibility as we continue to grow top line revenues. We also executed a $50.0 million term loan to partially finance the $140.0 million construction cost of the ATB hopper dredge. We plan on utilizing our working capital to finance the remaining $40.0 million needed to complete construction. We also completed a $25.0 million add-on to our existing $250.0 million in 7.375% Senior Notes to fund a portion of the Magnus acquisition. Finally, the Company’s strong cash performance during the fourth quarter enabled us to pay down the outstanding amount on our revolving line of credit. The Company remains committed to optimizing our balance sheet and deploying capital where we believe it will drive future earnings growth.
“In 2014, the Company recorded a tax benefit, including a tax benefit related to liquidation of a subsidiary from our former demolition business. This benefit, along with the accelerated depreciation we will begin to record once the ATB comes on line, is expected to mitigate our tax exposure over the next few years. This impact on our cash flow will be favorable.”