Great Lakes Dredge & Dock Corporation Reports 2007 First Quarter Results; Makes Good Start on 2007 Year

  
    
  
  
    
      Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)(NASDAQ:GLDDW) - 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 quarter ended March 31, 2007.
    
    
      The financial results for the Company are compared with the results for 
      the equivalent periods of GLDD Acquisitions Corp., which merged with a 
      subsidiary of Aldabra Acquisition Corporation (“Aldabra”) 
      on December 26, 2006. Following a holding company merger, the surviving 
      company was renamed Great Lakes Dredge & Dock Corporation. The merger 
      was accounted for as the acquisition of Aldabra and was treated as a 
      recapitalization. Accordingly, the Company’s 
      core operating activities were not affected by the merger. Other 
      matters, primarily relating to share and per share data, affecting 
      comparability resulting from the merger with Aldabra are highlighted 
      below.
    
    
      Revenue for the quarter ended March 31, 2007 was $126.7 million, a 17% 
      increase from first quarter 2006 revenue of $108.4 million. Results in 
      the first quarter were driven primarily by maintenance projects and work 
      in the Middle East. The Company began work on another project in Bahrain 
      while continuing its large Diyaar land reclamation project, among 
      others. Throughout the quarter, the Company experienced good utilization 
      of its fleet, both domestically and internationally, although inclement 
      weather along the East Coast of the United States negatively impacted 
      margins on several of the Company’s projects. 
      Gross profit growth in the first quarter of both 2007 and 2006 was 
      hindered by increases in self-insured claims reserves. Despite these two 
      factors, gross profit grew by more than 18% from a year ago producing a 
      slight increase in the gross profit margin to 10.8%.
    
    
      Strong revenue growth enabled the Company to effectively leverage its 
      operating expenses resulting in more than a 46% increase in operating 
      income during the first quarter of 2007. Interest expense was $4.3 
      million for the first quarter of 2007, a decrease of $1.9 million from 
      the first quarter 2006 primarily due to the pay down in the fourth 
      quarter of 2006 of the Company’s term debt. In 
      addition, non-cash adjustments to the market value of the Company’s 
      interest rate swap were favorable between the quarters. EBITDA of $12.4 
      million for the 2007 quarter was up over 20% from $10.2 million in the 
      previous year.
    
    
      Net income was $1.0 million in the first quarter of 2007 compared with a 
      net loss of $1.5 million in the first quarter of 2006. Prior to the 
      Aldabra transaction, GLDD Acquisitions Corp. had shares of preferred 
      stock outstanding on which dividends were accrued semiannually. In 
      connection with the merger, those shares were exchanged for common stock 
      of the Company; therefore there are no preferred dividends in 2007. In 
      2006, the net loss available to common stockholders, after accruing $2.0 
      million of preferred stock dividends, was $3.5 million.
    
    
      With the funds received in connection with the Aldabra merger, the 
      Company paid down its senior bank term debt of approximately $51 
      million. The Company’s $175 million of 7¾% 
      Senior Subordinated Notes due in 2013 remain outstanding. At March 31, 
      2007, the Company also had $3.0 million in revolver borrowings 
      outstanding with $29.1 million of remaining availability. Total debt was 
      $195.1 million, of which $2.0 million was current. The Company was in 
      compliance with all the financial covenants in its senior credit and 
      surety agreements. At quarter end, outstanding performance letters of 
      credit totaled $46.3 million, and total cash and equivalents were $0.3 
      million.
    
    
      At the beginning of the second quarter, the Company signed definitive 
      agreements to purchase two dredges from two domestic dredging service 
      providers. The increase in capacity will enhance the Company’s 
      competitive position in capital and beach dredging and enable it to take 
      on additional domestic and foreign work.
    
    
      The first quarter domestic bid market produced approximately $116.5 
      million of contract awards, higher than the first quarter of 2006 but 
      less than the average quarterly bid markets over the last few years. 
      However, during the quarter the Company was low bidder on a $64 million 
      capital project in New Jersey that has not yet been awarded and is not 
      included in the quarter’s bid market. Although 
      the Corps did put out a number of projects in the first quarter, most 
      were smaller maintenance and rental projects.
    
    
      A combination of a smaller market and strong revenue generating quarter 
      resulted in the Company reducing its backlog in the first quarter. At 
      March 31, 2007, dredging backlog was $267.2 million compared with $204.1 
      million a year ago and $352.6 million at December 31, 2006. Demolition 
      services backlog was $15.2 million, compared with $16.6 million at 
      December 31, 2006. The Company’s March 31, 
      2007 recorded backlog does not reflect approximately $256 million of low 
      bids pending award and additional phases (“options”) 
      pending on projects currently in backlog. For example, contract options 
      of approximately $156 million are expected to be awarded for the second 
      phase of the Diyaar land reclamation contract in the next 12 to 18 
      months. Additionally, the capital project in New Jersey for $64 million 
      is expected to be awarded in this month.
    
    
      Douglas B. Mackie, President and Chief Executive Officer, said, “We 
      are pleased with our first quarter operating results, particularly given 
      the challenges that inclement weather presented along the East Coast. 
      While the weather impacted margins, we did generate an 18% increase in 
      gross profit and a 46% increase in operating income.
    
    
      “Equally encouraging is the increased 
      capacity we will gain with the acquisition of two existing dredges which 
      had been operated in the domestic market by competitors. We have 
      enlarged our fleet while not increasing overall market capacity, 
      enhancing our competitive position domestically.”
    
    
      EBITDA, as provided herein, represents net income (loss), adjusted for 
      net interest expense, income taxes, depreciation and amortization 
      expense. EBITDA should not be considered an alternative to, or more 
      meaningful than, amounts determined in accordance with GAAP including: 
      (a) operating income as an indicator of operating performance; or (b) 
      cash flows from operations as a measure of liquidity. As such, the 
      Company’s use of EBITDA, instead of a GAAP 
      measure, has limitations as an analytical tool, including the inability 
      to determine profitability or liquidity due to the exclusion of interest 
      expense and the associated significant cash requirements and the 
      exclusion of depreciation and amortization, which represent significant 
      and unavoidable operating costs given the level of indebtedness and 
      capital expenditures needed to maintain the Company’s 
      business. For these reasons, the Company uses operating income to 
      measure its operating performance and uses EBITDA only as a supplement. 
      EBITDA is reconciled to net income (loss) in the table of financial 
      results. (For further explanation, please consult the Company’s 
      SEC filings.)
    
    
      The Company will conduct a quarterly conference call, which will be held 
      on Wednesday, May 9 at 10:00 a.m. C.D.T. The call in number is 
      888-515-2235. The call can also be heard on our website, www.gldd.com 
      under Events and Presentations on the investor relations page. The 
      conference call will be available by replay for two weeks, by calling 
      888-203-1112 and providing passcode 6342322.
    
    
      Great Lakes Dredge & Dock Corporation is the largest provider of 
      dredging services in the United States and the only U.S. dredging 
      company with significant international operations, averaging 18% of its 
      dredging revenues over the last three years. Great Lakes also owns an 
      85% interest in North American Site Developers, Inc., one of the largest 
      U.S. providers of commercial and industrial demolition services. 
      Additionally, the Company owns a 50% interest in a marine sand mining 
      operation in New Jersey which supplies sand and aggregate used for road 
      and building construction. Great Lakes has a 117-year history of never 
      failing to complete a marine project and owns the largest and most 
      diverse fleet in the industry, comprising over 180 specialized vessels.
    
    
      The matters discussed in this news release may constitute 
      forward-looking statements within the meaning of the Private Securities 
      Litigation Reform Act of 1995. Certain forward-looking statements can be 
      identified by the use of forward-looking terminology, such as ‘believes’, 
      ‘expects’, ‘may’, 
      ‘will’, ‘could’, 
      ‘should’, ‘seeks’, 
      ‘approximately’, ‘intends’, 
      ‘plans’, ‘estimates’, 
      or ‘anticipates’, 
      or the negative thereof or other comparable terminology, or by 
      discussions of strategy, plans or intentions. In particular, any 
      statements, express or implied, concerning future operating results or 
      ability to generate revenues, income or cash flow to service debt are 
      forward-looking statements. Forward-looking statements involve risks and 
      uncertainties that could cause actual results to differ materially from 
      those projected. These include risks associated with Great Lakes’ 
      substantial leverage, fixed price contracts, dependence on government 
      contracts and funding, bonding requirements and obligations, 
      international operations, government regulation, restrictive debt 
      covenants and fluctuations in quarterly operations. In light of these 
      and other uncertainties, the inclusion of forward-looking statements in 
      this news release should not be regarded as a representation by Great 
      Lakes that Great Lakes’ plans and objectives 
      will be achieved. Readers are cautioned not to place undue reliance on 
      these forward-looking statements, which speak only as of the date 
      hereof. Great Lakes assumes no obligation to update information 
      contained in this news release.
    
    
      
        
          Great Lakes Dredge and Dock Corporation
        
      
      
        
          Consolidated Statement of Earnings
        
      
      
        
          (Unaudited and in thousands, except per share data)
        
      
      
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
      
      
        
        
        
        
        
          March 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
          (unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
        
        
          $ 126,732 
        
        
        
        
          $ 108,427 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Gross profit
        
        
        
        
          13,714 
        
        
        
        
          11,611 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          General and administrative
        
        
        
        
          (7,992)
        
        
        
        
          (7,309)
        
      
      
        
          Amortization of intangible assets
        
        
        
        
          (66)
        
        
        
        
          (76)
        
      
      
        
          Impairment of intangible assets
        
        
        
        
          - 
        
        
        
        
          - 
        
      
      
        
          Subpoena-related expenses
        
        
        
        
          (2)
        
        
        
        
          (360)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating income
        
        
        
        
          5,654 
        
        
        
        
          3,866 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other income (expense)
        
        
        
        
        
        
        
        
        
      
      
        
          Interest expense- net
        
        
        
        
          (4,261)
        
        
        
        
          (6,201)
        
      
      
        
          Equity earnings in joint ventures
        
        
        
        
          262 
        
        
        
        
          117 
        
      
      
        
          Minority Interest
        
        
        
        
          (9)
        
        
        
        
          (38)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) before income taxes
        
        
        
        
          1,646 
        
        
        
        
          (2,256)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income taxes
        
        
        
        
          (682)
        
        
        
        
          722 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $ 964 
        
        
        
        
          $ (1,534)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Redeemable preferred stock dividends1
          
        
        
          - 
        
        
        
        
          (2,011)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss) available to common stockholders
        
        
          $ 964 
        
        
        
        
          $ (3,545)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          BASIC
        
        
        
        
        
        
        
        
        
      
      
        
          Earnings (loss) per share
        
        
        
        
          $ 0.02 
        
        
        
        
          $ (0.38)
        
      
      
        
          Basic weighted average shares
        
        
        
        
          39,633 
        
        
        
        
          9,288 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          DILUTED
        
        
        
        
        
        
        
        
        
      
      
        
          Earnings (loss) per share
        
        
        
        
          $ 0.02 
        
        
        
        
          $ (0.38)
        
      
      
        
          Diluted weighted average shares
        
        
        
        
          44,697 
        
        
        
        
          9,288 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            1 The company accrued dividends on its 
            redeemable preferred stock in 2006. This reduced the net income 
            available to stockholders. The preferred stock and all accrued 
            dividends were exchanged for common stock in connection with the 
            December 2006 merger.
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Great Lakes Dredge and Dock Corporation
        
      
      
        
          Supplementary Financial Information
        
      
      
        
          (Unaudited and in thousands)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
      
      
        
        
        
        
        
          March 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
          (unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $ 964 
        
        
        
        
          $ (1,534)
        
      
      
        
          Adjusted for:
        
        
        
        
        
        
        
        
        
      
      
        
          Interest expense, net
        
        
        
        
          4,261 
        
        
        
        
          6,201 
        
      
      
        
          Income tax expense (benefit)
        
        
        
        
          682 
        
        
        
        
          (722)
        
      
      
        
          Depreciation and amortization
        
        
        
        
          6,481 
        
        
        
        
          6,250 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EBITDA
        
        
        
        
          $ 12,388 
        
        
        
        
          $ 10,195 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net cash flows from operating activities
        
        
          $ 965 
        
        
        
        
          $ 4,115 
        
      
    
    
    
    
      (GLDD-G)