Great Lakes Dredge & Dock (GLDD) demonstrated significant growth in its financial performance during the third quarter, showcasing a total revenue increase of 63.1% year-over-year, reaching $191.2 million. This performance surpassed analysts’ expectations by $7.1 million and was largely attributed to the operational debut of their newest hopper dredge, Galveston Island, which has been working effectively since January. In addition to this, the surge in revenue can be credited to the rising revenues from capital and coastal protection projects. On a noteworthy note, GLDD experienced an earnings per share turnaround, improving to $0.13 from a previous loss of $0.09 year-over-year. Although this was below analysts’ projected $0.18 per share due to increased costs from fast-tracking drydocking for another dredge and higher incentive pay for employees reflecting the company’s strong operational performance, the overall revenue growth remains commendable.
Despite the slight earnings miss, GLDD’s overall financial trajectory remains promising as they actively pursue strategies for revenue acceleration and employee rewards. Over the first nine months of 2024, GLDD accumulated $559.9 million in revenues, marking a substantial 37.3% increase from the same period last year and beating consensus estimates by $40.3 million. Even with the additional costs absorbed in Q3, the company significantly improved its year-to-date earnings, rising from a loss of $0.12 to $0.55 per share, far exceeding the Street’s forecast of $0.27. This financial uplift has resulted in a notable stock price increase of 65% year-to-date, reflecting market confidence in GLDD’s operations and performance.
GLDD’s operational momentum is bolstered by a robust order flow reported in Q3, where new awards totaled $543 million and the company’s book-to-bill ratio reached nearly three times the quarter’s revenue. This indicates a strong demand for their dredging services and a healthy pipeline of upcoming projects, including three port deepening and six beach renourishment contracts. Notably, the Sabine-Neches Contract 6 Deepening project stands as the largest with a base award of $235 million. As a result, GLDD finished Q3 with a record backlog of $1.21 billion, alongside an additional $465 million in low bids and options—substantially higher than previous quarters. Following the quarter, GLDD has also successfully converted $90 million of pending awards into their backlog.
The high success rate in winning contracts and the expanding backlog have made a positive impression on S&P Global Ratings, which recently upgraded GLDD’s credit rating from “CCC+” to “B-.” This rating enhancement is anticipated to lead to reduced borrowing costs for the company, further stabilizing its financial foundation. Looking ahead, GLDD expresses confidence in achieving stronger revenues and margins in Q4 compared to Q3, with expectations that Q4 revenues will peg the upper teens percentage of its current backlog. Projections suggest revenues for this quarter could range between $192 million and $228 million, with a midpoint forecast of $210 million, positioning them favorably against the $197.2 million consensus estimate.
Additionally, GLDD’s future growth prospect appears bright with the anticipated introduction of their Amelia Island dredge hopper expected in the latter half of 2025. This new equipment will likely enhance the company’s operational capacity and contribute positively to revenue growth in the forthcoming periods. Coupled with a strong order backlog and strategic operational enhancements, GLDD is set to capitalize on its growth momentum, potentially elevating stock performance in the near future.
In summary, Great Lakes Dredge & Dock has showcased a significant turnaround in revenue and earnings, despite facing minor shortfalls in earnings targets. The notable increase in revenues and backlog positions the company well in terms of future projects and profitability. The upgrade from S&P reflects confidence in GLDD’s ability to manage costs and generate sustainable revenue growth. With projections indicating continued strength in upcoming earnings and operational expansions, GLDD stands as a compelling investment opportunity for those looking for growth in the dredging services sector. Future monitoring of the company’s execution on its current projects and upcoming equipment launch will be essential to track its ongoing progress and stock performance in the competitive marketplace.
