The largest provider of dredging services in the Unite States lowered expectations for earnings in the fourth quarter due primarily to external factors such as supply chain issues and weather.
Houston-based Great Lakes Dredge & Dock Corporation (Nasdaq: GLDD) issued an update Tuesday announcing that both revenues and gross profit margins are expected to be lower than previously anticipated in the current quarter but business could begin to bounce back next year.
“These results were impacted by the earlier than expected retirement of the Terrapin Island hopper dredge, significant weather delays on several projects in the northeast and some project production issues,” GLDD said in an update. “Additionally, unexpected drydocking scope increases resulted in additional costs and delays for the hopper dredges Ellis Island and Padre Island. The Padre Island is now out of drydock and in operation and the Ellis Island is out of drydock and expected to be in operation before year end.”
Great Lakes operates a diverse dredging fleet of approximately 200 specialized vessels with an increasing focus on the offshore wind sector.
Lasse Petterson, President and Chief Executive Officer at Great Lakes, didn’t sugar coat that it has been a challenging year, but expressed some optimism for an improving market next year.
“This has been a challenging year driven by an extremely slow bid market in the first half of 2022, rampant inflation, supply chain delays and more than the usual number of differing site conditions on projects. We are proactively taking steps to minimize the impact of these external factors as we are rationalizing older assets like the previously announced retirement of the Terrapin Island, cold stacking several of our oldest and least productive dredges and aggressively reducing other costs,” said Petterson.
“Looking forward to 2023, we expect bidding activity to be more in line with previous years as several large capital projects that were expected to bid in 2022 are now expected to bid in the first half of the year and our LNG prospects are moving toward final investment decisions. We are on track with our fleet modernization program and our newbuild hopper dredge, the Galveston Island, is on schedule to be operational in the second quarter of 2023. As we see the bid market start to recover in 2023, we can quickly reactivate the cold stacked vessels to take advantage of the improving market. We believe we are proactively taking the right steps adjusting to the current market conditions and expect to see their positive effects as we go into next year,” Petterson added.
Great Lakes posted a third quarter net loss of $9.9 million on revenue of $158.3 million and an adjusted EBITDA of $1.3 million. Petterson previously said he expected results to improve in the fourth quarter and a return to normal a dredging market in 2023.
Compared to Q4 2021, the company reported a net income of $24.7 million.
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