The largest provider of dredging services in the United States and a major provider of environmental and remediation services, Great Lakes Dredge & Dock Corp. (GLDD) has been awarded three contracts worth $59.5 million. Two dredging contracts with a combined value of $39.6 million entail deepening of the main channel of the Delaware River in Philadelphia, PA, while the third is a $19.9 million coastal protection contract in North Carolina.
Two years ago, Great Lakes deepened a different section of the Delaware River. Per the new contract, Great Lakes will use a combination of hopper and clamshell vessels to dredge over one million cubic yards to deepen a section of the river from 40 feet to 45 feet.
The $19.9 million coastal protection contract has been awarded by the U.S. Army Corps of Engineers Wilmington District. The scope of work is to provide dredging services to protect Highway 12, the only north-south highway along North Carolina’s Outer Banks.
This project involves placing approximately 1.7 million cubic yards of beachfill material immediately north of the Mirlo Beach community in Rodanthe, NC. This part of the beach has suffered the aftermath of Superstorm Sandy in 2012. Great Lakes has already completed four major Sandy coastal protection projects within the past 12 months.
The dredging services provider reported loss per share of 4 cents in the first quarter of 2014, compared with earnings per share of 8 cents in the year-ago quarter. Sales decreased 3.2% year over year to $174 million in the quarter, mainly due to lower revenues in dredging segment.
Dredging revenues decreased 6.9% to $162 million, due to lower capital dredging and rivers & lakes revenues, partially offset by higher maintenance and coastal protection revenues. Environmental & remediation segment’s revenues were at $12.7 million, increased more than two-fold driven by a large number of projects.
Going forward, Great Lakes Dredge & Dock will benefit from capital projects, including the Port Miami deepening, coastal protection projects and maintenance dredging. In addition, several bidding opportunities, especially in the Middle East, would allow for strong utilization of internationally deployed fleet.
The new Water Resources Reform and Development Act is also expected to help expedite projects. Great Lakes Dredge & Dock expects majority of the environmental & remediation segment’s backlog to be completed in 2014. The company’s continuous focus on managing working capital and free cash will also drive growth. However, the company remains concerned about the severe delays due to weather conditions which will affect revenues in the future.
Great Lakes Dredge & Dock is the largest provider of dredging services in the United States and also one of the largest providers of commercial and industrial demolition and remediation services, in the country, mainly in the Northeast. Great Lakes Dredge & Dock owns and operates the largest and most diverse fleet in the U.S. industry, comprising over 200 specialized vessels.
Great Lakes Dredge & Dock currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Tutor Perini Corporation (TPC), Simpson Manufacturing Co., Inc (SSD) and Primoris Services Corporation (PRIM). While Tutor Perini holds a Zacks Rank #1 (Strong Buy), Simpson Manufacturing and Primoris carry a Zacks Rank #2 (Buy).
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