Great Lakes Dredge & Dock Corporation (GLDD) announced that it has been awarded a $51.9 million option for the Miami Harbor Deepening Project by the U.S. Army Corps of Engineers – Jacksonville District. With this, the total value of Great Lakes Dredge & Dock’s Miami contract has gone up to $174.1 million. There are $31.6 million remaining to be awarded under the current plan of the Corps.
In May 2013, Great Lakes Dredge & Dock had announced that it had been awarded a $122 million contract for deepening of the Miami Harbor by the U.S. Army Corps of Engineers. The deal had options of further contracts, which were expected to be awarded by January 31, 2014.
The project was begun in the fourth quarter of 2013. It entails the deepening of the Port of Miami to 50 or 52 feet and to equip the port to accommodate the next generation post-Panamax vessels that will transport cargo through the expanded Panama Canal, starting early 2015.
The base work of the project includes excavation of the offshore entrance channel to the Port. The option that has been currently awarded, which is the first of two options for the project, covers the dredging of Fisherman's Channel and Lummus Island Turning Basin as well as dredging the adjacent berthing areas.
The project will take place in the environmentally sensitive waters of one of the busiest ports in the United States. Thus, important aspects of the project include seagrass and coral resource health monitoring and water quality and sedimentation measurement activities.
Great Lakes and other environmental partners will be liable for safety of the public, crew employed on the project, vessel traffic as well as the marine environment. In order to excavate the hard limestone found in Miami and other East Coast ports, Great Lakes will employ the best-in-class heavy-duty rock cutter suction dredge.
Great Lakes reported earnings per share of 2 cents in the third quarter of 2013, reversing the year-ago quarter’s loss of 9 cents. The increase was due to strong performance in the dredging segment. Total backlog as of the quarter-end stood at $606 million, up significantly from $505 million as of the prior-year quarter end.
The Dredging segment delivered another strong quarter. This momentum is expected to continue, going forward. Bidding activity was particularly strong in the quarter, bringing the year-to-date domestic dredging bid market total to $1.1 billion for the year, of which Great Lakes won 55%. Great Lakes will benefit from its record backlog and strong short-term bidding activity in the coming quarters.
The market has seen over $400 million in coastal protection work in 2013, primarily in response to Superstorm Sandy. Great Lakes foresees numerous coastal restoration projects. The company expects more Sandy work to be up for bidding in 2014, for long-term coastal protection projects.
The company is currently assessing strategic alternatives to its demolition business. It intends to take a measured approach and selectively target those demolition and environmental remediation projects that it can execute well.
Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States. Great Lakes is also one of the largest U.S. providers of commercial and industrial demolition and remediation services, mainly in the Northeast.
Great Lakes currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Fluor Corp. (FLR), Jacobs Engineering Group Inc. (JEC) and Chicago Bridge & Iron (CBI). All of these retain a Zacks Rank #2 (Buy).
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