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Business Services Industry

Great Lakes Dredge & Dock Corporation Reports 2008 First Quarter Results

Business Wire, May 6, 2008

Company Positioned for Continued Growth in Foreign Operations

Dredging Backlog Registers Strong Increase

OAK BROOK, Ill. -- Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) - the largest provider of dredging services in the United States and a major provider of commercial and industrial demolition services, today reported financial results for the three months ended March 31, 2008.

Douglas B. Mackie, President and Chief Executive Officer, said, "We executed a redeployment plan during the first quarter that we believe advantageously positions our dredges for the future. We have relocated several of our vessels to the Middle East, which will enable us to take advantage of attractive opportunities in that market and maximize our utilization rates for those vessels.

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"The fact that foreign revenues increased by 29% to $32.8 million for the first quarter of 2008 despite the mobilization of our hydraulic cutterhead dredge, Texas, to the Middle East underscores the attractiveness of this market. Once the dredges, Texas and Reem Island begin operating, we anticipate an additional increase in foreign revenues over their current robust levels.

"The domestic dredging bid market at $210 million was nearly double the market from a year ago with the increase being driven by maintenance work and the awarding of options on capital projects. We won over 28% of this work, adding $60 million to our domestic backlog during the quarter. As a result, our total dredging backlog at quarter-end was $300.3 million or 12% higher then this time last year. With our increased backlog a significant portion of our dredging fleet is booked through the remainder of 2008."

2008 First Quarter Operating Results

Revenue for the quarter ended March 31, 2008 was $135.7 million, up 7% from $126.7 million a year earlier. The 2008 first quarter activity reflected a decrease in dredging utilization which was more than offset by a sizeable contribution from the demolition unit. The Company's demolition business, North American Site Developers ("NASDI"), generated revenues of $35.5 million versus $11.4 million a year earlier. NASDI has seen an increase in activity since the third quarter of 2007 and is continuing at these higher levels in 2008. Foreign dredging operations continued to be strong, producing 33% of dredging revenues in the quarter versus 22% last year. Beach work was down as state and local governments continue to experience delays in getting the approvals necessary to put projects out to bid. This has become increasingly significant as these jurisdictions play a growing role in funding beach nourishment projects. Revenues were also impacted by the mobilization to the Middle East of four dredges, in particular the dredge Texas, which has been a big contributor to the Company's financial results in previous quarters. In addition, as discussed below, the dredge New York was in dry dock undergoing repairs. This dredge is currently expected to resume operation late in the second quarter.

Gross margin for the first quarter of 2008 was 8.8% versus 10.8% for the first quarter of 2007. Gross margin was down as a result of lower utilization rates in the dredging business and a substantial amount of subcontract work in the projects that drove the increased activity in the demolition business.

Operating income in the 2008 first quarter decreased to $1.8 million from $5.7 million a year ago. This decrease was the result of the lower gross profit noted above, as well as an increase in general and administrative expenses. The higher general and administrative expenses were primarily driven by an increase in incentive pay in the demolition business as a result of its strong results and normal salary increases quarter over quarter. EBITDA (as defined below) of $9.4 million for the 2008 quarter was down 24% from $12.4 million in the previous year, as anticipated due to the mobilizations to the Middle East, the lower level of beach work going into the quarter and the impact of the temporary loss of the dredge New York.

Interest expense was $3.6 million for the first quarter of 2008, a reduction of $0.6 million from the first quarter of last year. This savings resulted from the market value of the Company's interest rate swap increasing by $0.6 million versus the first quarter of 2007. The Company recognized a net loss of $1.0 million, or ($0.02) per diluted share, in the first quarter of 2008 compared with net income of $1.2 million, or $0.02 per diluted share, a year ago.

First Quarter 2008 Bid Market/Backlog

The first quarter U.S. dredging bid market of $210 million was significantly higher than the first quarter bid market in 2007 of $116 million. This quarter's market was driven by additional maintenance projects throughout the U.S. and the award of options on capital projects. The Company won a 28% share of the work awarded during the first quarter of 2008. Given the Company's bidding success over the last few quarters, dredging backlog at March 31, 2008 totaled $300.3 million compared with $267.3 million at March 31, 2007. Additionally, the March 31, 2008 dredging backlog does not reflect approximately $282 million of low bids pending award and additional phases ("options") pending on projects currently in backlog. This number consists of approximately $172 million for various projects in Bahrain, including the second phase of the Diyaar land reclamation contract, which is currently expected to be awarded this year with the balance of $110 million relating to domestic projects. The March 31, 2007 dredging backlog excluded approximately $256 million of pending work; $156 million for work in Bahrain and $100 million of domestic work.

Business Services Industry

Great Lakes Dredge & Dock Corporation Reports 2008 First Quarter Results

Business Wire, May 6, 2008

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