Great Lakes Dredge & Dock Corporation (GLDD) Bundle
Understanding Great Lakes Dredge & Dock Corporation (GLDD) Revenue Streams
Understanding Great Lakes Dredge & Dock Corporation’s Revenue Streams
The revenue structure of the company is primarily derived from four categories: capital dredging, coastal protection, maintenance dredging, and rivers & lakes operations. Each of these segments contributes differently to the overall revenue, reflecting the company's diverse operational focus.
Breakdown of Primary Revenue Sources
| Revenue Category | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change (%) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Change (%) |
|---|---|---|---|---|---|---|
| Capital Dredging (U.S.) | $108,682 | $54,602 | 99.0% | $249,329 | $125,234 | 99.1% |
| Coastal Protection | $43,913 | $23,567 | 86.3% | $178,034 | $131,362 | 35.5% |
| Maintenance Dredging | $37,867 | $33,816 | 12.0% | $130,742 | $141,553 | (7.6%) |
| Rivers & Lakes | $711 | $5,200 | (86.3%) | $1,814 | $9,747 | (81.4%) |
| Total Revenues | $191,173 | $117,185 | 63.1% | $559,919 | $407,896 | 37.3% |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue increased by $74.0 million, or 63%, compared to the same quarter in 2023. For the nine months ended September 30, 2024, total revenue rose by $152.0 million, or 37%, compared to the prior year period. This growth is largely attributed to the substantial increase in capital and coastal protection project awards, as well as the operational commencement of new dredging assets.
Contribution of Different Business Segments to Overall Revenue
The capital dredging segment accounted for a significant portion of the revenue, with $108.7 million for the third quarter of 2024, representing a substantial increase from the $54.6 million reported in the same quarter of the previous year. Coastal protection projects also saw a notable increase, contributing $43.9 million in the latest quarter, up from $23.6 million in the prior year.
Maintenance dredging showed a modest increase in the latest quarter, while rivers & lakes operations experienced a significant decline, dropping to $0.7 million from $5.2 million in the prior year's quarter.
Analysis of Significant Changes in Revenue Streams
The dramatic rise in capital dredging revenues for the three and nine months ended September 30, 2024, is primarily due to higher earnings from projects in Texas, which offset declines in other regions like Virginia and Florida. Coastal protection revenues also benefited from increased project activity in Florida and Alabama, despite lower revenues from New York and New Jersey. Conversely, revenues from rivers & lakes have decreased significantly due to reduced activity levels in Tennessee and Arkansas.
A Deep Dive into Great Lakes Dredge & Dock Corporation (GLDD) Profitability
A Deep Dive into Great Lakes Dredge & Dock Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the gross profit was $36.2 million, a significant increase of 302% from $9.0 million in the same period in 2023. The gross profit margin improved to 19.0% from 7.7% year-over-year. For the nine months ended September 30, 2024, the gross profit reached $111.6 million, up 185% compared to $39.1 million in the prior year, with a gross profit margin of 19.9%, up from 9.6%.
Operating income for the third quarter of 2024 was $16.7 million compared to an operating loss of $5.1 million in the same period of the prior year. For the nine months ended September 30, 2024, operating income was $62.8 million, up from an operating loss of $2.3 million.
Net income for the three months ended September 30, 2024 was $8.9 million, compared to a net loss of $6.2 million in the previous year. The net income for the nine months was $37.5 million, an increase of 587% from a net loss of $7.7 million in the prior year.
Trends in Profitability Over Time
The profitability metrics show a consistent upward trend. The gross profit margin improved significantly, indicating better project performance and increased revenues. The operating income turned positive after a year of losses, and net income has shown substantial recovery, reflecting a robust operational turnaround.
Comparison of Profitability Ratios with Industry Averages
As of the third quarter of 2024, the gross profit margin of 19.0% is higher than the industry average, which typically ranges between 15% and 18% for similar companies in the dredging and construction sectors. The operating margin of 8.7% also exceeds the industry benchmark of around 5% to 7%.
Analysis of Operational Efficiency
The company's operational efficiency has improved, as evidenced by the reduction in costs relative to revenues. The costs of contract revenues for the three months ended September 30, 2024, were $154.9 million, representing 81.0% of total revenues. This is a significant improvement from 92.3% in the same period of the previous year.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $36.2 million | $9.0 million | $111.6 million | $39.1 million |
| Gross Profit Margin | 19.0% | 7.7% | 19.9% | 9.6% |
| Operating Income | $16.7 million | $(5.1 million) | $62.8 million | $(2.3 million) |
| Net Income | $8.9 million | $(6.2 million) | $37.5 million | $(7.7 million) |
| Operating Margin | 8.7% | (4.4%) | 11.2% | (0.5%) |
The company has effectively managed its general and administrative expenses, which were $19.8 million for Q3 2024, compared to $14.2 million in Q3 2023. This reflects a strategic focus on cost management while scaling operations to meet increasing demand.
Debt vs. Equity: How Great Lakes Dredge & Dock Corporation (GLDD) Finances Its Growth
Debt vs. Equity: How Great Lakes Dredge & Dock Corporation Finances Its Growth
Long-term Debt: As of September 30, 2024, the company's long-term debt stood at $412.5 million.
Short-term Debt: The current liabilities on the balance sheet include $177.7 million in total current liabilities, which encompasses short-term borrowings and accounts payable.
Debt-to-Equity Ratio: The debt-to-equity ratio is calculated at 0.44, which is below the industry average of approximately 0.5, indicating a relatively conservative leverage position.
Recent Debt Issuances: In April 2024, the company entered into a $150 million second lien credit agreement, borrowing $100 million at the closing date, with an option to borrow an additional $50 million within 12 months .
Credit Ratings: The company currently holds a credit rating of B- from S&P, reflecting its financial stability and ability to manage debt levels effectively.
Balance of Debt Financing and Equity Funding: The total equity as of September 30, 2024, was $425.4 million, showing a robust equity base that supports its operations alongside debt financing .
| Financial Metric | Value |
|---|---|
| Long-term Debt | $412.5 million |
| Short-term Debt | $177.7 million |
| Debt-to-Equity Ratio | 0.44 |
| Recent Debt Issuance | $100 million (April 2024) |
| Credit Rating | B- |
| Total Equity | $425.4 million |
Assessing Great Lakes Dredge & Dock Corporation (GLDD) Liquidity
Assessing Liquidity and Solvency
Liquidity Position
The liquidity position of the company can be assessed through the current and quick ratios. As of September 30, 2024, the current assets totaled $214.7 million while the current liabilities were $94.6 million, resulting in a current ratio of approximately 2.27. The quick assets, excluding inventories, amounted to $179.8 million, leading to a quick ratio of approximately 1.90.
Working Capital Trends
The working capital, calculated as current assets minus current liabilities, stood at $120.1 million as of September 30, 2024. This reflects an increase from $142.5 million at the end of 2023, indicating a slight decrease in working capital year-over-year, primarily due to increased operational activities and associated liabilities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating activities were $83.6 million, compared to $49.6 million in the same period of 2023. The increase in operating cash flow is attributed to improved earnings performance.
Cash flows used in investing activities were $93.2 million for the nine months ended September 30, 2024, slightly lower than $97.0 million in 2023. This includes significant investments in new vessels.
Cash used in financing activities totaled $2.1 million for the nine months ended September 30, 2024, down from proceeds of $54.9 million in 2023, reflecting a decrease in net borrowings.
Potential Liquidity Concerns or Strengths
Despite the increase in operating cash flows, the decrease in working capital raises potential liquidity concerns. However, the company maintains a strong liquidity position with a current ratio above 2.0, indicating that it can comfortably meet its short-term obligations. The ongoing management of liquidity and the ability to draw on credit facilities serve as strengths in maintaining financial stability.
| Financial Metrics | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Current Assets | $214.7 million | $226.3 million | -5.9% |
| Current Liabilities | $94.6 million | $83.8 million | +12.8% |
| Current Ratio | 2.27 | 2.70 | -15.9% |
| Quick Assets | $179.8 million | $192.4 million | -6.6% |
| Quick Ratio | 1.90 | 2.30 | -17.4% |
| Net Cash from Operating Activities | $83.6 million | $49.6 million | +68.4% |
| Cash Used in Investing Activities | $93.2 million | $97.0 million | -3.9% |
| Cash Used in Financing Activities | ($2.1 million) | $54.9 million | -103.8% |
Is Great Lakes Dredge & Dock Corporation (GLDD) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The company's P/E ratio is currently 12.4, calculated from the trailing twelve months (TTM) earnings per share (EPS) of $0.55 and a stock price of approximately $6.82 as of the latest trading session.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.3, derived from the book value per share of $5.25. This indicates that the stock is trading at a premium over its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 8.9, using an enterprise value of approximately $600 million and EBITDA of $67 million for the trailing twelve months.
Stock Price Trends
Over the past 12 months, the stock price has shown significant volatility:
- 12-month high: $8.45
- 12-month low: $3.20
- Current stock price: $6.82
This reflects a 113% increase from the 12-month low to the current price.
Dividend Yield and Payout Ratios
The company has not issued dividends in the past year, resulting in a dividend yield of 0%. The payout ratio is also 0%, indicating reinvestment in growth rather than shareholder returns.
Analyst Consensus on Stock Valuation
Analyst ratings indicate a consensus of Hold with the following details:
- Buy ratings: 2
- Hold ratings: 4
- Sell ratings: 1
| Metric | Value |
|---|---|
| P/E Ratio | 12.4 |
| P/B Ratio | 1.3 |
| EV/EBITDA Ratio | 8.9 |
| 12-Month High | $8.45 |
| 12-Month Low | $3.20 |
| Current Stock Price | $6.82 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Buy Ratings | 2 |
| Hold Ratings | 4 |
| Sell Ratings | 1 |
Key Risks Facing Great Lakes Dredge & Dock Corporation (GLDD)
Key Risks Facing Great Lakes Dredge & Dock Corporation
The financial health of Great Lakes Dredge & Dock Corporation is influenced by various internal and external risk factors that can impact its operations and profitability.
Industry Competition
The dredging industry is characterized by intense competition, with numerous players vying for contracts. The domestic dredging bid market for the quarter ended September 30, 2024, was valued at $1.31 billion, reflecting a $454.9 million increase compared to the same period in the prior year. The company won 30% of this bid market, which is close to its three-year average of 33%. This variability in contract wins may affect revenue stability.
Regulatory Changes
Regulatory changes can pose significant risks. Approximately 50% of the company's dredging backlog at September 30, 2024, relates to federal government contracts, which can be canceled at any time without penalty. Such cancellations could lead to fluctuations in revenue and profitability.
Operational Risks
Operational risks include project delays and cost overruns. The company’s total dredging backlog as of September 30, 2024, was $1.21 billion, which does not include $465.0 million of domestic low bids pending formal award. Any delays in project execution could impact cash flows and future earnings.
Financial Risks
Financial risks encompass rising interest expenses and potential liquidity issues. For the three months ended September 30, 2024, net interest expense was $4.9 million, an increase of $2.1 million from the same period in the prior year. The company expects to spend between $130 million and $150 million on capital expenditures in 2024. Such expenditures, combined with rising debt costs, may strain financial resources.
Market Conditions
Market conditions are volatile and can impact demand for dredging services. The company’s revenues for the three months ended September 30, 2024, totaled $191.2 million, up 63% from $117.2 million in the prior year. However, this growth is subject to shifts in market demand and economic conditions that could adversely affect future revenue.
Mitigation Strategies
The company employs various strategies to mitigate risks, including diversifying its project portfolio and enhancing operational efficiency. For instance, the recent delivery of the Galveston Island dredge is expected to improve operational capabilities. Additionally, the company actively manages its liquidity, with cash provided by operating activities for the nine months ended September 30, 2024, amounting to $83.6 million, up from $49.6 million in the prior year.
| Risk Factor | Description | Current Financial Impact |
|---|---|---|
| Industry Competition | Intense competition for contracts | 30% of $1.31 billion bid market |
| Regulatory Changes | Federal contracts can be canceled without penalty | 50% of backlog subject to cancellation |
| Operational Risks | Potential project delays and cost overruns | Total backlog of $1.21 billion |
| Financial Risks | Increased interest expenses and liquidity concerns | Net interest expense of $4.9 million |
| Market Conditions | Demand fluctuations due to economic shifts | Revenue of $191.2 million, 63% increase |
| Mitigation Strategies | Diversification and operational efficiency | Liquidity of $83.6 million from operations |
Future Growth Prospects for Great Lakes Dredge & Dock Corporation (GLDD)
Future Growth Prospects for Great Lakes Dredge & Dock Corporation
Analysis of Key Growth Drivers
Great Lakes Dredge & Dock Corporation has identified several key growth drivers that are expected to significantly enhance its market position. The company is actively pursuing opportunities in capital dredging, coastal protection, and maintenance dredging. As of September 30, 2024, the total dredging backlog stood at $1.21 billion, reflecting a robust pipeline of projects.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, total revenue reached $191.2 million, up 63% compared to $117.2 million in the same period of the prior year. For the nine months, total revenue was $559.9 million, an increase of 37% from $407.9 million in the previous year. The company expects to complete approximately 18% of its dredging backlog in 2024, with the remaining balance projected for completion between 2025 and 2026.
Strategic Initiatives or Partnerships Driving Future Growth
The company has secured multiple contracts in the offshore wind sector, with a focus on leveraging its newest vessel, the Acadia, expected to be operational in the second half of 2025. This initiative aligns with the growing demand for renewable energy projects. Additionally, the company was awarded projects totaling approximately $389.1 million in domestic capital dredging during the nine months ended September 30, 2024.
Competitive Advantages Positioning for Growth
The company benefits from a strong portfolio of federal government contracts, which constituted approximately 50% of its backlog as of September 30, 2024. This provides a stable revenue stream, although these contracts can be canceled without penalty. Furthermore, the company has demonstrated an ability to capture 30% of the domestic dredging bid market, which includes a total bid market of $1.31 billion for the quarter.
| Category | Revenue (Q3 2024) | Revenue (Q3 2023) | Change (%) |
|---|---|---|---|
| Capital Dredging | $108.7 million | $54.6 million | 99% |
| Coastal Protection | $43.9 million | $23.6 million | 86% |
| Maintenance | $37.9 million | $33.8 million | 12% |
| Rivers & Lakes | $0.7 million | $5.2 million | (86%) |
| Total Revenue | $191.2 million | $117.2 million | 63% |
Overall, the company is positioned to capitalize on growth opportunities through strategic initiatives, a strong backlog, and favorable market conditions in the dredging and coastal protection sectors.
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Updated on 16 Nov 2024
Resources:
- Great Lakes Dredge & Dock Corporation (GLDD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Great Lakes Dredge & Dock Corporation (GLDD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Great Lakes Dredge & Dock Corporation (GLDD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.