DREDGE & DOCK CORPORATION
A N N U A L R E P O R T
2024
GREAT LAKES
NORTH AMERICA’S
LEADER
For over 130 years, Great Lakes Dredge & Dock
Corporation (“Great Lakes” or the “Company”) has
been the leading provider of dredging services in
the United States owning and operating the largest
and most diverse fleet in the U.S. dredging industry,
comprised of approximately 200 specialized vessels.
With a strong portfolio of major dredging projects, a
strong safety record, and our extensive experience,
we specialize in projects that help improve and protect
our nation’s infrastructure and coastlines. In addition,
Great Lakes is fully engaged in expanding its core
business into supporting the offshore energy industry.
The Company also has a long history of performing
significant international projects. Our Incident & Injury-
Free® (IIF®) safety management program is integrated
into all aspects of the Company’s culture. Great Lakes
had an outstanding 2024, marked by strong project
execution, exceptional financial results, and significant
project wins. Our focus is on the future of Great Lakes,
and we believe with our substantial backlog, improved
fleet, and strategic growth initiative, we can maintain
our position as the leader in the dredging industry
while continuing to provide quality work to our clients,
a safe work environment for our employees, and
positive returns for our shareholders.
THIS PAGE: Trailing Suction Hopper Dredges Galveston Island, Ellis Island, and Liberty Island working on the Sabine-
Neches Waterway Channel Improvement Project in Texas deepening the channel to accommodate larger vessels, reduce
transportation costs, enhance channel efficiency, and improve safety for local port stakeholders. The client on this project is
the Sabine-Neches Navigation District.
COVER: Great Lakes’ newest Trailing Suction Hopper Dredge Galveston Island working on the Sabine-Neches Waterway
Channel Improvement Project in Texas deepening the channel for the Sabine-Neches Navigation District. On October 25,
2024, we celebrated the official naming ceremony of the Galveston Island, at Pier 21 in Galveston, Texas.
FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
Revenue
Net Income (Loss)
Adjusted EBITDA*
Diluted earnings (loss) per share**
Total assets
2024
$ 762,693
$
57,265
$
135,964
$
0.84
$ 1,255,103
2023
$ 589,625
$
13.906
$
72,977
$
0.21
$ 1,110,840
2022
$ 648,781
$ (34,055)
$ 16,966
$
(0.52)
$ 981,780
* Discussion and reconciliation of adjusted EBITDA to net income (loss) attributable to Great Lakes Dredge & Dock is included under Item 7 of our 10-K
** Diluted earnings per share attributable to net income (loss)
2024 ANNUAL REPORT 1
Great Lakes had an outstanding 2024, marked by
strong project execution, exceptional financial results,
and significant project wins which further strengthened
our impressive dredging backlog to $1.2 billion at
December 31, 2024, with work expected to extend
through 2026. We concluded the year with revenue
of $762.7 million, net income of $57.3 million, and
adjusted EBITDA of $136.0 million, the latter two metrics
being the second-highest in the history of Great Lakes.
A record 2024 U.S. Army Corps of Engineer’s (“the
Corps”) budget of $8.7 billion supported a historic
level bid market of $2.9 billion of which Great Lakes
won 33% which added to our substantial dredging
backlog which stands at $1.2 billion, with an additional
$282.1 million in low bids and options pending award,
providing expected revenue visibility well into 2026.
The dredging market saw thirteen bids for major
capital projects of which Great Lakes was awarded
the largest, the Sabine-Neches Contract 6 Deepening
project with awarded base and open options totaling
$235 million. At the end of the year, capital projects
and coastal protection projects accounted for 94% of
our backlog, typically representing higher-margin work.
Also included in our backlog are two Liquified Natural
Gas (“LNG”) projects that were awarded in 2023, the
Port Arthur LNG Phase 1 project and the Brownsville
Ship Channel project for Next Decade Corporation’s
Rio Grande LNG project, which is the largest project
undertaken in Great Lakes’ history. Dredging began
on both capital projects in the third quarter of 2024
with work on one of the projects expected to continue
through 2026. We continue to tender bids on several
pending LNG projects in an effort to diversify and
expand our client base.
We expect the 2025 dredging bid market to remain
strong and the Company’s outlook for the upcoming
year is very positive with a large portion of our planned
revenue secured with higher-margin capital and coastal
protection backlog. We continue to make progress
on our new build and fleet renewal program which
we believe will allow us to continue to be the leading
dredging contractor in the U.S. for years to come
and keep us well positioned to meet future market
demands. Our newest 6,500 cubic yard capacity
hopper dredge, the Galveston Island, was successfully
placed into operation in the first quarter of 2024 and
has shown solid project performance. Her sistership,
the Amelia Island, is expected to be delivered in the
second half of 2025. These dredges will work on
projects that redevelop and improve our shorelines,
which are subject to continual damage due to storms,
rising waters, and the effects of climate change. These
new hopper dredges, together with the 15,000 cubic
yard capacity dredge Ellis Island, Liberty Island, Dodge
Island and Padre Island, comprise the largest and
youngest hopper fleet in the U.S. dredging industry.
We remain steadfast in our commitment to executing a
long-term strategy that maximizes growth opportunities
for the Company. The Acadia, the first U.S.-flagged
L E T T E R T O S H A R E H O L D E R S
LASSE PETTERSON
President &
Chief Executive Officer
2 GREAT LAKES DREDGE & DOCK CORPORATION
Jones Act compliant subsea rock installation vessel, is
currently under construction and has secured offshore
wind rock placement contracts for Equinor’s Empire
Wind 1 and Ørsted’s Sunrise Wind projects to protect
foundations and cables. In addition, during the fourth
quarter, we signed a vessel reservation agreement
for the Acadia for another wind project in the United
States. All three of these projects are fully permitted
and we believe will not be directly impacted by the
President’s Executive Order pausing issuance of new
offshore wind leases and permits.
The Acadia is also well suited for work outside of
U.S. offshore wind and over the past year we have
been broadening our target markets for the Acadia to
include international offshore wind projects, as well as
projects protecting critical subsea infrastructure such
as oil and gas pipelines and telecommunication and
power cables. These potential projects are expected
to provide the Acadia with work planned for 2026
and beyond. These additional markets pave the way
for the rebranding of our offshore wind division to
Offshore Energy.
Great Lakes has over 1,000 dedicated employees
performing critical infrastructure services. I thank them
for their hard work, dedication, resilience, and spirit
which contributed to the Company’s accomplishments
in 2024. Our Incident and InjuryFree® (IIF®) safety
culture is strong and deeply founded and we continue
to maintain our strong commitment to keeping all team
members safe. The health and safety of our employees
is a core value at Great Lakes and our goal is meeting
or exceeding established environmental and safety
standards in all our operations as we strive to perform
our work in ways that leave the areas that we touch in
a better state than when we arrived. Our Sustainability
Reports can be found on our website at www.gldd.com.
Great Lakes continues to be an industry leader and
with our fleet renewal, strong project performance
and strategic growth initiative, we believe we are well
positioned for the future. On behalf of the executive
leadership team and our Board of Directors, we would
like to thank our customers for their trust and you, our
shareholders, for your continued commitment and
support.
Lasse Petterson
President & Chief Executive Officer
2024 ANNUAL REPORT 3
ABOVE: The Great Egg Harbor Inlet Beach
Renourishment Project, New Jersey for the U.S.
Army Corps of Engineers, Philadelphia District.
RIGHT: Mechanical Dredge 54 maintenance
dredging of the St. Lucie, Florida entrance
channel and impoundment basin for the U.S.
Army Corps of Engineers, Jacksonville District.
INVESTING IN OUR
FUTURE
TOP: Trailing Suction Hopper Dredge Galveston
Island working on the Sabine-Neches Waterway.
CENTER: Trailing Suction Hopper Dredge Amelia
Island coming off dry-dock at Conrad Shipyard.
BOTTOM: The Acadia, Great Lakes’ new
subsea rock installation vessel currently under
construction.
GREAT LAKES DREDGE &
DOCK CORPORATION
uFORM 10-K
INVESTING IN OUR
COMMUNITY
TOP: Parkview Office May 30, 2024 CPR AED Class.
LEFT: Houston Office April 13, 2024 Surfside Beach Cleanup.
BOTTOM LEFT: Human Resources Specialist Leslie Paz and Human Resources
Generalist Norma Barron accepting on behalf of Great Lakes, the President’s
Volunteer Service Award for cumulative group volunteer hours at the Houston
Food Bank.
BOTTOM RIGHT: Houston Office June 21, 2024, at the Houston Food Bank.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-33225
Great Lakes Dredge & Dock Corporation
(Exact name of registrant as specified in its charter)
Delaware
20-5336063
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
9811 Katy Freeway, Suite 1200, Houston, TX
77024
(Address of principal executive offices)
(Zip Code)
(346) 359-1010
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, (Par Value $0.0001)
GLDD
Nasdaq Stock Market, LLC
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-
T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates of the Registrant was $572,246,283 at June 30, 2024. The aggregate market value was computed
using the closing price of the common stock as of June 28, 2024 on the Nasdaq Stock Market. (For purposes of calculating the foregoing amount only, all directors and
executive officers of the registrant have been treated as affiliates.)
As of February 17, 2025, 67,282,528 shares of Registrant’s Common Stock, par value $.0001 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part of 10-K
Documents Incorporated by Reference
Part III
Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the 2025 Annual Meeting of Stockholders.
i
TABLE OF CONTENTS
PART I
Item 1.
Business
2
Item 1A.
Risk Factors
11
Item 1B.
Unresolved Staff Comments
29
Item 1C. Cybersecurity
29
Item 2.
Properties
30
Item 3.
Legal Proceedings
30
Item 4.
Mine Safety Disclosures
30
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
31
Item 6.
[Reserved]
32
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
33
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
44
Item 8.
Financial Statements and Supplementary Data
44
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
44
Item 9A.
Controls and Procedures
44
Item 9B.
Other Information
47
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
47
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
48
Item 11.
Executive Compensation
48
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
48
Item 13.
Certain Relationships and Related Transactions, and Director Independence
48
Item 14.
Principal Accounting Fees and Services
48
PART IV
Item 15.
Exhibits, Financial Statement Schedules
49
Item 16.
Form 10-K Summary
49
SIGNATURES
82
1
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K may constitute “forward-looking” statements as defined in Section 27A
of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the
Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission
(“SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause the actual results, performance or achievements of Great Lakes Dredge & Dock
Corporation and its subsidiaries (“Great Lakes”), or industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking
statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the
words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “would,” “could,” “should,” “seeks,”
“commitment to” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or
comparable language, or by discussion of strategy or intentions.
These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention
of obtaining the benefits of the “safe harbor” provisions of such laws. Great Lakes cautions investors that any forward-looking
statements made by Great Lakes are not guarantees or indicative of future performance. Important assumptions and other important
factors that could cause actual results to differ materially from those forward-looking statements with respect to Great Lakes, include,
but are not limited to, risks and uncertainties that are described in Item 1A. “Risk Factors” of this Annual Report on Form 10-K for the
year ended December 31, 2024, and in other securities filings by Great Lakes with the SEC.
Although Great Lakes believes that our plans, intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements.
Great Lakes’ future financial condition and results of operations, as well as any forward-looking statements, are subject to change and
inherent risks and uncertainties. The forward-looking statements contained in this Annual Report on Form 10-K are made only as of
the date hereof and we do not have or undertake any obligation to update or revise any forward-looking statements whether as a result
of new information, subsequent events or otherwise, unless otherwise required by law.
2
Part I
Item 1. Business.
The terms “we,” “our,” “ours,” “us,” “Great Lakes”, “GLDD” and “Company” refer to Great Lakes Dredge & Dock
Corporation and its subsidiaries.
Organization
Great Lakes is the largest provider of dredging services in the United States which is complemented with a long history of
performing significant international projects. The Company is also fully engaged in expanding its core business into the offshore
energy industry.
The Company was founded in 1890 as Lydon & Drews Partnership and performed its first project in Chicago, Illinois. The
Company changed its name to Great Lakes Dredge & Dock Company in 1905 and was involved in a number of marine construction
and landfill projects along the Chicago lakefront and in the surrounding Great Lakes region. The Company now operates on the East
and Gulf coastlines and throughout many inland U.S. waterways. Since its founding, Great Lakes has been a leader in the building and
maintenance of the nation's navigation system, the protection of shore lines, the restoration of sensitive habitats and the creation of
critical aquatic infrastructure.
The Company operates in one operating segment, which is also the Company’s one reportable segment and reporting unit.
Operations
Dredging generally involves the enhancement or preservation of the navigability of waterways or the protection of shorelines
through the removal or replenishment of soil, sand or rock. Domestically, our work generally is performed in coastal waterways and
deep water ports. The U.S. dredging market consists of four primary types of work: capital, coastal protection, maintenance and rivers
& lakes. The Company’s “bid market” is defined as the aggregate dollar value of domestic dredging projects on which the Company
bid or could have bid if not for capacity constraints or other considerations. The Company experienced an average combined bid
market share in the U.S. of 31% over the three-year period ended December 31, 2024, including 28%, 59%, 19% and 16% of the
domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively, exclusive of liquefied natural gas (“LNG”)
projects.
Domestic Capital (46% of 2024 revenues). Capital dredging consists primarily of port expansion projects, which involve the
deepening of channels and berthing basins to allow access by larger, deeper draft ships and the provision of land fill used to expand
port facilities. This work also includes projects to prepare ports and channels for access by larger vessels into LNG terminals. In
addition to port and LNG work, capital projects also include coastal restoration and land reclamations, trench digging for pipelines,
tunnels and cables and other dredging related to the construction of breakwaters, jetties, canals and other marine structures. Although
capital work can be impacted by budgetary constraints and economic conditions, these projects typically generate an immediate
economic benefit to the ports and surrounding communities.
Coastal protection (33% of 2024 revenues). Coastal protection projects generally involve moving sand from the ocean floor to
shoreline locations where erosion threatens shoreline assets. Beach erosion is a continuous problem that has intensified with the rise in
coastal development and has become an important issue for state and local governments concerned with protecting beachfront tourism
and real estate. Coastal protection via beach nourishment is often viewed as a better response to erosion than trapping sand through the
use of sea walls and jetties, or relocating buildings and other assets away from the shoreline. Generally, coastal protection projects
take place during the fall and winter months to minimize interference with bird and marine life migration and breeding patterns as well
as coastal recreation activities.
Maintenance (21% of 2024 revenues). Maintenance dredging consists of the re-dredging of previously deepened waterways and
harbors to remove silt, sand and other accumulated sediments. Due to natural sedimentation, most channels generally require
maintenance dredging every one to three years, thus creating a recurring source of dredging work that is typically non-deferrable if
optimal commercial navigability is to be maintained. In addition, severe weather such as hurricanes, flooding and droughts can also
cause the accumulation of sediments and drive the need for maintenance dredging.
Rivers & lakes (less than 1% of 2024 revenues). Domestic rivers and lakes dredging and related operations typically consist of
lake and river dredging, inland levee and construction dredging, environmental restoration and habitat improvement and other marine
construction projects. Although the Mississippi River has a large source of projects on which the Company bids, certain dredges used
on these projects are more portable and able to be transported to take advantage of the fragmented market. Generally, inland river and
lake projects in the northern U.S. take place in non-winter months because frozen waterways significantly reduce contractors’ ability
to operate and transport its equipment in the relevant geographies.
3
Foreign. Foreign capital projects typically involve land reclamations, channel deepening and port infrastructure development.
The Company targets foreign opportunities that are well suited to the Company’s equipment and where it faces reduced competition
from its European competitors. Historically maintaining a presence in foreign markets has enabled the Company to diversify its
customer base and take advantage of differences in global economic development. Over the last two decades, the Company has
performed dredging work in the Middle East, Africa, Australia, the Caribbean and Central and South America. No foreign revenues
were recognized during 2024. The Company expects to continue targeting foreign capital projects in the future on a case by case basis.
Offshore Energy Market
While the Company continues to reinvest in our core dredging business and renew our dredging fleet, we remain steadfast in our
commitment to executing a long-term strategy that maximizes growth opportunities for the Company.
We believe that Great Lakes has established a unique business position with our subsea rock installation (“SRI”) vessel, the
Acadia, the first and only Jones Act SRI vessel being constructed in the United States, targeting the offshore wind, oil and gas and
telecommunication industries, both domestically and internationally. The Acadia has secured offshore wind rock placement contracts
for Equinor’s Empire Wind 1 and Ørsted’s Sunrise Wind projects to protect foundations and cables. In addition, during the fourth
quarter, we signed a vessel reservation agreement for the Acadia for another wind project in the United States. All three of these
projects are fully permitted and we believe will not be directly impacted by the President’s Executive Order pausing issuance of new
offshore wind leases and permits.
In addition to targeting domestic offshore wind projects, the Acadia is also well suited for work outside of U.S. offshore wind
and over the past year we have been broadening our target markets for the Acadia to include international offshore wind projects, as
well as projects to protect critical subsea infrastructure such as oil and gas pipelines and telecommunication and power cables. These
additional markets pave the way for the rebranding of our offshore wind division to Offshore Energy. Entering the Offshore Energy
market offers us the opportunity to diversify our client base, enter different markets and grow our bottom line.
The latest BloombergNEF offshore wind market outlook shows global offshore wind expected to grow tenfold by 2040 with a
forecast exceeding 700GW of installed power. In addition, according to industry sources, market expectations for telecommunication
and oil and gas scour protection projects globally are estimated to require the capacity of approximately 10 rock placement vessels of
Acadia’s class. We believe there is an undersupply of rock placement vessels and we are pursuing opportunities in all of the above
mentioned markets, which are expected to provide the Acadia with work planned for 2026 and beyond.
We expect to continue to build our offshore energy capabilities, bid on SRI projects and position the Company for growth in the
offshore energy markets, as many of our European competitors have done in the international offshore energy markets.
Dredging Demand Drivers
The Company believes that the following factors are important drivers of the demand for its services:
•
Deep port capital projects. Since the Panama Canal Expansion project, the market for dredging has expanded as most of
the East Coast and Gulf ports have deepening and widening projects that are required to better meet the needs of maritime
trade and enhance the capabilities to compete for international trade. In addition, shipping line manufacturers continue to
deploy larger and deeper ships which require greater channel depths for travel. Many U.S. ports are constrained due to the
channel dimension requirements that are needed to accommodate these vessels. The Company has worked on several port
deepenings along the East and Gulf coasts over the past years, including our current projects in Brownsville, Port Arthur,
Freeport and Mobile. The 2025 U.S. Army Corps of Engineers’ (the “Corps”) budget is expected to be another record
appropriation. On June 28, 2024, the U.S. House of Representatives (the “House”) Energy and Water Appropriations
Subcommittee passed their 2025 Appropriations Bill providing the Corps with a budget of $9.96 billion, which is $2.7
billion above the President’s Budget request. The bill includes $5.7 billion for Operations and Maintenance projects, of
which $3.1 billion is from the Harbor Maintenance Trust Fund (“HMTF”). On August 1, 2024, the Senate Appropriation
Committee approved its draft of the 2025 Energy and Water spending bill which provides $10.3 billion in total funding for
the Corps. However, these appropriations bills have not yet been passed by the full House or Senate. On December 20,
2024, Congress approved a continuing resolution to provide funding at previously enacted levels through March 14, 2025.
Through the increased appropriation of HMTF monies, the Company has seen increased funding for harbor maintenance
projects let for bid throughout 2024 and expects this trend to continue in 2025. Corps projects involving deepening,
maintenance and coastal dredging are in line for robust funding continuing the trend of recent years. The annual domestic
bid market for maintenance dredging over the three-year period ended December 31, 2024 averaged $870 million. The
Water Resources Development Act (“WRDA”) is on a two-year renewal cycle and includes legislation that authorizes the
financing of Corps’ projects for studies, flood and hurricane protection, dredging, ecosystem restoration and other
construction projects aimed at improving rivers and harbors in the United States. The WRDA of 2022 (“WRDA 2022”)
4
included funding for deepening the New York and New Jersey shipping channels to 55 feet, as well as the Coastal Texas
Protection and Restoration Program, which aims to protect the Texas Gulf Coast from hurricanes. On January 4, 2025,
then President Biden signed the WRDA of 2024 (“WRDA 2024”) into law, which includes several capital projects and
projects designed to enhance flood protection, improve coastal resilience and support ecosystem restoration. Port
deepening projects are essential to maintaining safe and efficient navigation channels in ports and harbors along our
coastlines. The Company believes that port deepening and expansion work authorized under current and anticipated future
legislation will continue to provide significant opportunities for the domestic dredging industry. The annual bid market for
domestic capital dredging, which includes deep port capital dredging and Gulf Coast restoration, averaged $828 million
over the three-year period ended December 31, 2024.
•
Substantial need for coastal protection. Beach erosion is a recurring problem due to the normal ebb and flow of coastlines
as well as the effects of severe storm activity. Growing populations in coastal communities and vital beach tourism are
drawing attention to the importance of protecting beachfront assets. Over the past few years, both the federal government
and state and local entities have funded beach projects recognizing the essential role these natural barriers play in
absorbing storm energy and protecting public and private property. The 2023 Disaster Relief Supplemental
Appropriations Act allocated $1.5 billion for infrastructure repairs and beach renourishment projects. This increased
budget and additional funding resulted in a strong bid market in 2024 and we expect to see additional projects in 2025.
The annual bid market for domestic coastal protection over the three-year period ended December 31, 2024 averaged $551
million.
•
Required maintenance of U.S. ports. The channels and waterways leading to U.S. ports have stated depths on which
shippers rely when entering those ports. Due to naturally occurring sedimentation and severe weather, active channels
require maintenance dredging to ensure that stated depths are at authorized levels. Consequently, the need to maintain
channel depth creates a recurring source of dredging work that is non-deferrable if optimal navigability is to be preserved.
The Corps is responsible for federally funded projects related to navigation and flood control of U.S. waterways. The
maritime industry, including the ports, has repeatedly advocated for congressional efforts to ensure that a fully funded,
recurring maintenance program is in place. Additionally, on March 27, 2020, the U.S. government enacted the
Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) which includes a provision that lifts caps on the
HMTF, thereby allowing full access to future annual revenues.
•
Gulf coast restoration. There has been continued focus on restoring the barrier islands and wetlands that provide natural
protection from storms in the Gulf Coast area. Many restoration projects have commenced to repair coastal areas. Several
additional projects are being planned by state and local governments to restore natural barriers. The State of Louisiana
has proposed an update to its master plan calling for a $50 billion investment in its coastal infrastructure. By law, the
Louisiana Coastal Protection and Restoration Authority (“CPRA”) must update its coastal master plan every six years and
let the latest science guide each iteration. The 2023 plan marks the fourth released by the agency since it formed in 2005
following Hurricane Katrina. The 2023 plan contains 73 proposed projects aimed to lower the threat of storm surge and
maintain as much of a natural buffer between communities and the Gulf of America as possible. Most of those specific
projects are for coastal restoration, such as dredging sediment from water bottoms and pumping it elsewhere to create
marsh, ridges or other natural features that provide habitat and storm protection. A handful of the projects involve
diverting Mississippi River water into nearby bays to reconnect to a natural source of fresh water and sediment. Coastal
restoration accounts for half the cost of the plan’s $50 billion aspirations. Many of the Gulf States, including Louisiana,
have previously committed to spending a portion of the nearly $20 billion in fines received from the 2015 BP settlement
of the Deepwater Horizon oil spill to repair the natural resources impacted by the event including coastal restoration
projects that include dredging.
•
Energy projects. The growth in demand for transportation of energy worldwide has driven the need for dredging to
support new terminals, harbors, channels and pipelines. In turn, several LNG, petrochemical and crude oil projects are
creating the need for port development in support of energy exports. Several North American LNG export projects have
been delayed over the past couple of years since the pandemic. However, with the increase in LNG prices and sustained
worldwide demand, LNG projects are expected to grow over the next several years. Additionally, as the offshore energy
market develops in the U.S., port facilities will need to meet specific requirements to be able to service this industry. We
anticipate these ports will require investments for port improvements that will include some dredging in order to serve as
marshaling ports for various offshore energy projects. The Company continues to expect that future global energy demand
will necessitate improvements in the energy infrastructure base and around sources of rich resources and in countries that
import or export global energy.
5
For additional details regarding Operations, including financial information regarding our international and U.S. revenues and
long-lived assets, see Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8.
“Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Customers
The dredging industry’s customers include federal, state and local governments, foreign governments and both domestic and
foreign private concerns, such as utilities and oil and gas and other energy companies. Most dredging projects are competitively bid,
with the award going to the lowest qualified bidder. Customers generally have few economical alternatives to dredging services. The
Corps is the largest dredging customer in the U.S. and has responsibility for federally funded projects related to navigation and flood
control. In addition, the U.S. Coast Guard and the U.S. Navy are responsible for awarding federal contracts with respect to their own
facilities. In 2024, approximately 57% of the Company’s dredging revenues were generated from 33 different contracts with federal
agencies or third parties operating under contracts with federal agencies.
Bidding Process
Most of the Company’s contracts are obtained through competitive bidding on terms specified by the party inviting the bid. The
types of equipment required to perform the specified service, project site conditions, the estimated project duration, seasonality,
location and complexity of a project affect the cost of performing the contract and the price that dredging contractors will bid.
For contracts under its jurisdiction, the Corps typically prepares a fair and reasonable cost estimate based on the specifications
of the project. To be successful, a bidder must be determined by the Corps to be a responsible bidder (i.e., a bidder that generally has
the necessary equipment and experience to successfully complete the project as well as the ability to obtain a surety bid bond) and
submit the lowest responsive bid that does not exceed 125% of the Corps’ original estimate. Contracts for state and local governments
are generally awarded to the lowest qualified bidder. Contracts for private customers are awarded based on, among other things, the
contractor’s experience, equipment and schedule, safety record and contractual terms, as well as price. While substantially all of the
Company’s contracts are competitively bid, some government contracts are awarded through a sole source procurement process
involving negotiation between the contractor and the government, while other projects are bid by the Corps through a “request for
proposal” process. The request for proposal process benefits both Great Lakes and its customers as customers can award contracts
based on factors beyond price, including experience, skill and specialized equipment.
Bonding and Project Guarantees
For most domestic projects and some foreign projects, dredging service providers are required to obtain three types of bonds:
bid bonds, performance bonds and payment bonds. These bonds are typically provided by large insurance companies. A bid bond is
required to serve as a guarantee so that if a service provider’s bid is chosen, the service provider will sign the contract. Bid bonds are
generally obtained for a percentage of bid value and amounts outstanding typically range from $1.0 million to $10.0 million. After a
contract is signed, the bid bond is replaced by a performance bond, the purpose of which is to guarantee that the job will be completed.
If the service provider fails to complete a job, the bonding company would be required to complete the job and would be entitled to be
paid the contract price directly by the customer. Additionally, the bonding company would be entitled to be paid by the service
provider for any costs incurred in excess of the contract price. A service provider’s ability to obtain performance bonds with respect to
a particular contract depends upon the size of the contract, as well as the size of the service provider and its financial position. A
payment bond is required to protect the service provider’s suppliers and subcontractors in the event that the service provider cannot
make timely payments. Payment bonds are generally written at 100% of the contract value.
The Company has bonding agreements with Argonaut Insurance Company, Liberty Mutual Insurance Company, Philadelphia
Indemnity Insurance Company, Ascot Insurance Companies and AXIS Insurance Company, (collectively, the “Sureties”) under which
the Company can obtain performance, bid and payment bonds. The Company also currently has outstanding bonds with ACE
Holdings, Travelers Casualty and Surety Company of America, Berkley Insurance Company and Zurich American Insurance
Company. Great Lakes has never experienced difficulty in obtaining bonding for any of its projects and Great Lakes has never failed
to complete a marine project in its 135 year history.
For certain projects, including foreign, private and offshore energy projects, letters of credit or bank guarantees are required as
security for the performance and, if applicable, bid or advance payment guarantees. The Company obtains its letters of credit under the
ABL Amendment (as defined below). Bid guarantees are usually 2% to 5% of the service provider’s bid. Performance and advance
payment guarantees are each typically 5% to 20% of the contract value.
6
Competition
The U.S. dredging industry is highly fragmented, composed of many small operators, primarily in maintenance dredging. Most
of these dredges are smaller and service the inland, as opposed to coastal waterways, and therefore do not generally compete with
Great Lakes except in our rivers & lakes market. Competition is determined by the size and complexity of the job, equipment bonding
and certification requirements and government regulations. Competition on rivers & lakes projects is determined primarily based on
geographic reach, project execution capability and price. Great Lakes and two other companies comprised approximately 61% of the
Company’s defined bid market related to domestic capital (excluding LNG), coastal protection, maintenance and rivers & lakes over
the three-year period ended December 31, 2024. Within the Company’s bid market, competition is determined primarily on the basis
of price. In addition, the Foreign Dredge Act of 1906 (the “Dredging Act”) and Section 27 of the Merchant Marine Act of 1920 (the
“Jones Act”) provide significant barriers to entry with respect to foreign competition. Together these two laws prohibit foreign-built,
chartered or operated vessels from competing in the U.S. See “Business—Government Regulations” below.
Competition in the international market is dominated by four large European dredging companies all of which operate larger
equipment and fleets that are more extensive than the Company’s fleet. Additionally, a large Chinese dredging company controls most
of its local market and is a key player in the international market. There are also several governmentally supported dredging
companies that operate on a local or regional basis. The Company targets opportunities that are well suited to its equipment and where
it can be most competitive.
Equipment
Great Lakes’ fleet of dredges, material barges and other specialized equipment is the largest and most diverse in the U.S. The
Company operates three principal types of dredging equipment: hopper dredges, hydraulic dredges and mechanical dredges.
Hopper Dredges. Hopper dredges are typically self-propelled and have the general appearance of an ocean-going vessel. The
dredge has hollow hulls, or “hoppers,” into which material is suctioned hydraulically through drag-arms. Once the hoppers are filled,
the dredge sails to the designated disposal site and either (i) bottom dumps the material or (ii) pumps the material from the hoppers
through a pipeline to a designated site. Hopper dredges can operate in rough waters, are less likely than other types of dredges to
interfere with ship traffic, and can be relocated quickly from one project to another. Hopper dredges primarily work on coastal
protection and maintenance projects. The Company took delivery of a 6,500 cubic yard trailing suction hopper dredge, the Galveston
Island, which began operations in February 2024. Additionally, in June 2022 the Company exercised the contract option with the same
builder to build a second 6,500 cubic yard trailing suction hopper dredge, the Amelia Island, with expected delivery in the second half
of 2025. The addition of the new Galveston Island and Amelia Island hopper dredges will provide the Company with added capacity
and the opportunity to potentially retire older dredges.
Hydraulic Dredges. Hydraulic dredges remove material using a revolving cutterhead which cuts and churns the sediment on the
channel or ocean floor and hydraulically pumps the material by pipe to the disposal location. These dredges are very powerful and can
dredge some types of rock. Certain dredged materials can be directly pumped for miles with the aid of multiple booster pumps.
Hydraulic dredges work with an assortment of support equipment, which help with the positioning and movement of the dredge,
handling of the pipelines and the placement of the dredged material. Unlike hopper dredges, relocating hydraulic dredges and all their
ancillary equipment requires specialized vessels and additional time, and their operations can be impacted by ship traffic and rough
waters. Our smaller rivers & lakes hydraulic dredges use pipe sizes ranging from 18” to 22” and operate at between 2,500 and 6,000
total horsepower, while the Company’s other hydraulic dredges use pipe sizes ranging from 18” to 30” and operate at between 1,900
and 16,650 total horsepower. During 2024, the Company retired one of its rivers & lakes hydraulic dredges as part of its ongoing fleet
modernization program.
Mechanical Dredges. There are two basic types of mechanical dredges: clamshell and backhoe. In both types, the dredge uses a
bucket to excavate material from the channel or ocean floor. The dredged material is placed by the bucket into material barges, or
“scows,” for transport to the designated disposal area. The scows are emptied by bottom-dumping, direct pump-out or removal by a
crane with a bucket. The backhoe dredge is capable of removing hard-packed sediments, blasted rock and debris and can work in tight
areas such as along docks or terminals. Clamshell dredges with specialized buckets are ideally suited to handle softer silts and
maintenance material requiring environmentally controlled excavation and disposal. Additionally, the Company owns an electric
clamshell dredge which provides an advantage in those markets with stringent emissions standards. During 2023, the Company retired
one mechanical dredge as part of its ongoing fleet modernization program.
Scows. The Company has the largest fleet of material barges in the domestic industry, which provides cost advantages when
dredged material is required to be disposed far offshore or when material requires controlled disposal. The Company uses scows with
its hydraulic dredges and mechanical dredges. Scows are an efficient and cost-effective way to move material and increase dredging
production. The Company has thirteen scows in its fleet with a capacity ranging from 5,000 to 8,800 cubic yards. The Company
placed into service three new scows during 2022, each 8,800 cubic yards in size. During 2023, the Company entered into a sale
7
leaseback transaction for the three scows placed into service in 2022. The transaction generated gross cash proceeds of $29.5 million.
Additionally in 2023, the Company retired three scows as part of its ongoing fleet modernization program.
Multi Cats. In 2023, the Company took delivery of two Damen multifunctional all-purpose vessels (“Multi Cats”), the Cape
Hatteras and the Cape Canaveral. These vessels will greatly improve the safety and efficiency of pipe and anchor operations. The two
vessels are the first Damen Multi Cats to be built in the U.S. and are fully compliant with the U.S. Coast Guard and the Corps stability
criteria.
The Company has numerous pieces of smaller equipment that support its dredging operations. Great Lakes’ domestic dredging
fleet is typically positioned on the East and Gulf Coasts, with the rivers & lakes dredges on inland rivers and lakes. The mobility of the
fleet enables the Company to move equipment in response to changes in demand.
The Company continually assesses its need to upgrade and expand its dredging fleet to take advantage of improving technology,
to address the changing needs of the dredging market and to retire older, less efficient dredges.
The Company is also committed to a reliability-assured maintenance program, which it believes is reflected in the long lives of
most if its equipment and its low level of unscheduled downtime on jobs. To the extent that market conditions warrant the
expenditures, Great Lakes can prolong the useful life of its vessels.
Certification of equipment by the U.S. Coast Guard and establishment of the permissible loading capacity by the American
Bureau of Shipping (“A.B.S.”) are important factors in the Company’s dredging business. Many projects, such as coastal protection
projects with offshore sand borrow sites and dredging projects in exposed entrance channels or with offshore disposal areas, are
restricted by federal regulations to be performed only by dredges or scows that have U.S. Coast Guard certification and a load line
established by A.B.S. The certifications indicate that the dredge is structurally capable of operating in open waters. The Company has
more certified dredging vessels than any of the Company’s domestic competitors and makes substantial investments to maintain these
certifications.
Seasonality
Seasonality generally does have a significant impact on the Company’s operations. Moreover, many East Coast coastal
protection projects are limited by environmental windows that require work to be performed in winter months to protect wildlife
habitats. The Company can mitigate the impact of these environmental restrictions to a certain extent because the Company has the
flexibility to reposition its equipment to project sites, if available, that are not limited by these restrictions. In addition, rivers and lakes
in the northern U.S. freeze during the winter, significantly reducing the Company’s ability to operate and transport its equipment in
the relevant geographies. Fish spawning and flooding can affect dredging operations as well.
Weather
The Company’s ability to perform its contracts may depend on weather conditions. Inclement or hazardous weather conditions
can delay the completion of a project, can result in disruption or early termination of a project, unanticipated recovery costs or liability
exposure and additional costs. As part of bidding on fixed-price contracts, the Company makes allowances, consistent with historical
weather data, for project downtime due to adverse weather conditions. In the event that the Company experiences adverse weather
beyond these allowances, a project may require additional days to complete, resulting in additional costs and decreased gross profit
margins. Conversely, favorable weather can accelerate the completion of the project, resulting in cost savings and increased gross
profit margins. Typically, Great Lakes is exposed to significant weather in the first and fourth quarters, and certain projects are
required to be performed in environmental windows that occur during these periods. See “Business-Seasonality” above.
Weather is difficult to predict and historical records exist for only the last 100-125 years. Changes in weather patterns may
cause a deviation from project weather allowances on a more frequent basis and consequently increase or decrease gross profit margin,
as applicable, on a project-by-project basis. In a typical year, the Company works on many projects in multiple geographic locations
and experiences both positive and negative deviations from project weather allowances. Recent years have seen a marked change in
weather patterns, particularly in the Northeastern U.S., which has adversely impacted some of our projects.
Backlog
The Company’s contract backlog represents its estimate of the revenues that will be realized under the portion of the contracts
remaining to be performed. These estimates are based primarily upon the time and costs required to mobilize the necessary assets to
and from the project site, the amount and type of material to be dredged and the expected production capabilities of the equipment
performing the work. However, these estimates are necessarily subject to variances based upon actual circumstances. Because of these
factors, as well as factors affecting the time required to complete each job, backlog is not always indicative of future revenues or
profitability. In addition, a significant amount of the Company’s backlog relates to federal government contracts, which can be
canceled at any time without penalty, subject to the Company’s right, in some cases, to recover the Company’s actual committed costs
and profit on work performed up to the date of cancellation. The Company’s backlog may fluctuate significantly from quarter to
8
quarter based upon the type and size of the projects the Company is awarded from the bid market. A quarterly increase or decrease of
the Company’s backlog does not necessarily result in an improvement or a deterioration of the Company’s business. The Company’s
backlog includes only those projects for which the Company has obtained a signed contract with the customer. The components of the
Company’s backlog including dollar amount and other related information are addressed in more detail in Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Bidding Activity and Backlog.”
Human Capital Management
At December 31, 2024, the Company employed 366 full-time salaried and non-exempt personnel in the U.S., including those in
a corporate function. In addition, the Company employs U.S. hourly personnel, most of whom are unionized, on a project-by-project
basis. Crews are generally available for hire on relatively short notice. During 2024, the Company employed an average of
approximately 637 hourly personnel to meet domestic project requirements.
The Company's employees are based across the U.S. with several project locations on the coasts and office locations in Houston,
Texas, Oakbrook Terrace, Illinois, Staten Island, New York and Jacksonville, Florida.
At December 31, 2024, the Company employed 12 foreign nationals and 3 local staff to manage and administer its Middle East
operations.
The Company seeks to attract, select, hire, retain, incentivize and integrate our existing and future employees. To achieve our
goal of attracting and retaining the most talented employees in the industry, we offer a respectful and safe work environment with
competitive compensation and benefits that support employees’ physical, financial and emotional health. The principal objective of
our equity incentive plans is to attract, retain and motivate executives and selected employees through the granting of stock-based
compensation awards. We offer employees benefits including a 401(k) plan with employer contributions; health, life and disability
insurance; additional voluntary insurance; paid time off; parental leave; and paid employee assistance programs.
Safety
Safety is a core value at GLDD, and our Incident & Injury Free® (IIF®) safety approach management program is integrated
into all aspects of our culture. The Company’s safety culture is committed to training, behavioral based awareness and mutual
responsibility for the wellbeing of its employees. The Company’s goal is sustainable safety excellence. Incident prevention in all areas
has top priority in the Company’s business planning, in the overall conduct of its business and in the operation and maintenance of our
equipment (marine and land) and facilities.
Unions
The Company is a party to numerous collective bargaining agreements in the U.S. that govern its relationships with its
unionized hourly workforce. However, two unions represent a large majority of our dredging employees - the International Union of
Operating Engineers (“IUOE”) Local 25 and the Seafarers International Union (“SIU”). The Company’s master and ancillary
contracts with IUOE Local 25 will expire on September 30, 2027. Our agreements with the SIU expire on February 28, 2026. The
Company has not experienced any major labor disputes in the past five years and believes it has good relationships with the unions
that represent a significant number of its hourly employees; however, there can be no assurances that the Company will not experience
labor strikes or disturbances in the future.
Government Regulations
The Company is subject to government regulations pursuant to the Dredging Act, the Jones Act, the Shipping Act, 1916 (the
“Shipping Act”) and the vessel documentation laws set forth in Chapter 121 of Title 46 of the United States Code. These statutes
require vessels engaged in dredging in the navigable waters of the United States to be documented with a coastwise endorsement, and,
among other things, to be owned and controlled by U.S. citizens, to be manned by U.S. crews, and to be built in the United States. The
U.S. citizen ownership and control standards require the vessel-owning entity to be at least 75% U.S. citizen owned and prohibit the
chartering of the vessel to any entity that does not meet the 75% U.S. citizen ownership test.
Environmental Matters
The Company’s operations, facilities and vessels are subject to various environmental laws and regulations related to, among
other things: dredging operations; the disposal of dredged material; protection of wetlands; storm water and waste water discharges;
and air emissions. The Company is also subject to laws designed to protect certain marine species and habitats. Compliance with these
statutes and regulations can delay appropriation and/or performance of particular projects and increase related project costs. Non-
compliance can also result in fines, penalties and claims by third parties seeking damages for alleged personal injury, as well as
damages to property and natural resources.
9
Certain environmental laws such as the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Clean Water Act and the Oil Pollution Act of 1990 impose strict and, under some circumstances joint and several, liability on
owners and operators of facilities and vessels for investigation and remediation of releases and discharges of regulated materials, and
also impose liability for related damages to natural resources. The Company’s past and ongoing operations involve the use, and from
time to time the release or discharge, of regulated materials which could result in liability under these and other environmental laws.
The Company has remediated known releases and discharges as deemed necessary, but there can be no guarantee that additional costs
will not be incurred if, for example, third party claims arise or new conditions are discovered.
The Company’s projects may involve remediation, demolition, excavation, transportation, management and disposal of
hazardous waste and other regulated materials. Various laws strictly regulate the removal, treatment and transportation of hazardous
water and other regulated materials and impose liability for human health effects and environmental contamination caused by these
materials. The Company takes steps to limit its potential liability by hiring qualified subcontractors from time to time to remove such
materials from our projects, and some project contracts require the client to retain liability for hazardous waste generation.
Based on the Company’s experience and available information, the Company believes that the future cost of compliance with
existing environmental laws and regulations (and liability for known environmental conditions) will not have a material adverse effect
on the Company’s business, financial position, results of operations or cash flows. However, the Company cannot predict what
environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be enforced,
administered or interpreted or the amount of future expenditures that may be required to comply with these environmental or health
and safety laws or regulations or to respond to newly discovered conditions, such as future cleanup matters or other environmental
claims.
Information about our Executive Officers
The following table sets forth the names and ages of all of the Company’s executive officers and the positions and offices
currently held by them.
Name
Age
Position
Lasse J. Petterson
68
President, Chief Executive Officer
Scott Kornblau
53
Senior Vice President, Chief Financial Officer
David Johanson
53
Senior Vice President, Project Acquisition & Operations
Christopher G. Gunsten
55
Senior Vice President, Project Services & Fleet Engineering
Eleni Beyko
59
Senior Vice President, Offshore Energy
Vivienne R. Schiffer
65
Senior Vice President, Chief Legal Officer, Chief Compliance Officer & Corporate Secretary
William H. Hanson
68
Senior Vice President, Market Development
Lasse J. Petterson, President, Chief Executive Officer
Mr. Petterson has served as Chief Executive Officer (“CEO”) since May 2017, as a member of our board of directors since 2016
and was also named President in 2020. Mr. Petterson most recently had served as a private consultant to clients in the Oil & Gas sector
and served as Chief Operating Officer (“COO”) and Executive Vice President at Chicago Bridge and Iron (“CB&I”) from 2009 to
2013. Reporting directly to the CEO, he was responsible for all of CB&I’s engineering, procurement and construction project
operations and sales. Prior to CB&I, Mr. Petterson was CEO of Gearbulk, Ltd., a privately held company that owns and operates one
of the largest fleets of gantry craned open hatch bulk vessels in the world. He was also President and COO of AMEC Inc. Americas, a
subsidiary of AMEC plc, a British multinational consulting, engineering and project management company. Prior to joining AMEC,
Mr. Petterson served in various executive and operational positions for Aker Maritime, Inc., the deepwater division of Aker Maritime
ASA of Norway over the course of 20 years. He spent the first nine years of his career in various positions at Norwegian Contractors,
an offshore oil & gas platform contractor. Mr. Petterson holds both master’s and bachelor’s degrees from the Norwegian University of
Technology.
Scott Kornblau, Senior Vice President and Chief Financial Officer
Mr. Kornblau was named Senior Vice President and Chief Financial Officer (“CFO”) when he joined the Company in October
2021, and also served as Treasurer of the Company from January 2022 through April 2024. In his over 25 years of professional
experience prior, Mr. Kornblau has held various finance and leadership positions at Diamond Offshore Drilling, Inc. (“Diamond”),
most recently as Senior Vice President and Chief Financial Officer since July 2018. Prior to Mr. Kornblau’s appointment as CFO, he
held the roles of acting CFO since December 2017 in addition to his Vice President and Treasurer position at Diamond since January
2017. Mr. Kornblau earned a Bachelor of Arts degree in Accounting from the University of Texas at Austin. Mr. Kornblau is a
certified public accountant.
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David Johanson, Senior Vice President, Project Acquisition & Operations
Mr. Johanson was named Senior Vice President, Project Acquisition & Operation in July 2022 after serving as Senior Vice
President, Gulf Region. Before that, Mr. Johanson was promoted to Vice President and Hydraulic Division Manager in 2015 and
served as Vice President Project Director of Charleston Deepening Projects from 2018-2020, which included the largest dredging
contract ever awarded by the U.S. Army Corps of Engineers. He joined the Company in 1994 as a field engineer and has held
positions of increasing responsibility in project management. Mr. Johanson earned a Bachelor of Science degree in Ocean Engineering
from the Virginia Polytechnic Institute & State University and a MBA with a finance specialization from the University of South
Carolina. He is a current board member of the Western Dredging Association Eastern Branch and is a member of American Society of
Civil Engineers.
Christopher G. Gunsten, Senior Vice President, Project Services & Fleet Engineering
Mr. Gunsten was appointed to the position of Senior Vice President, Project Services & Fleet Engineering in July 2022 after
serving as Senior Vice President, Project Services. Previously he served as Vice President, International Operations with responsibility
for acquiring projects, providing estimation data and leading field supervision of work in progress. Mr. Gunsten began his career with
the Company as a field engineer in 1992. His career highlights include serving as Deputy Project Manager for Chevron’s Wheatstone
LNG Project’s Engineering, Procure and Construct dredging subcontract in Onslow, WA, Australia valued at $1.2 billion AUD, as
Project Manager executing a series of capital projects for the USACE New York District’s 45 and 50 Foot Harbor Deepening
Programs and as Operations Manager for the Company's Øresund Fixed Link Project in Copenhagen, Denmark. He received his
Bachelor of Science degree in Civil Engineering from Rutgers University and his MBA from Loyola University Chicago.
Eleni Beyko, Senior Vice President, Offshore Energy
Dr. Beyko joined Great Lakes in January 2021 as Senior Vice President, Offshore Wind and currently serves as the Company’s
Senior Vice President, Offshore Energy. She is responsible for Offshore Energy strategy, business development and operations. Dr.
Beyko has over 20 years’ experience in program engineering, business leadership, and project execution for the automobile and
offshore oil and gas markets. Her experience has also included Engineering, Technical Manager, Research & Development – Offshore
Technology, and offshore projects. She most recently served as Director, Energy Transition for Americas at TechnipFMC. At
TechnipFMC, she was responsible for positioning TechnipFMC to support the transition into new and economically viable wind
energy resources, and managing the Makani wind-borne energy spar offshore platform installation in partnership with Shell and
Google X. Dr. Beyko graduated with a Diploma from National Technical University Athens in Mechanical Engineering, Naval
Architecture & Marine Engineering. She attended the University of Michigan where she earned her MSE, Naval Architecture and
Marine Engineering, MSE Applied Mechanics, Mechanical Engineering, Master of Business Administration (MBA) and Ph.D., Naval
Architecture and Marine Engineering.
Vivienne R. Schiffer, Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary
Ms. Schiffer joined the Company in December 2020 as Senior Vice President, Chief Legal Officer, Chief Compliance Officer
and Corporate Secretary. Ms. Schiffer leads the Company's legal, compliance and human resource organizations, providing legal and
business counsel. Ms. Schiffer’s specific responsibilities include the oversight of corporate governance, policy and regulatory strategy
development, litigation, environmental matters, intellectual property, global corporate compliance, cybersecurity and labor and
employment laws. Ms. Schiffer was a corporate and securities partner in the global firm of Thompson & Knight, LLP, now Holland &
Knight, LLP, from 2003 to 2010. She was of counsel in the firm’s corporate and securities section from 2011 until 2020. She has over
40 years of experience and has held significant legal, business and operational leadership roles in the industrials sector. Ms. Schiffer
earned a Bachelor of Science degree from the University of Central Arkansas and a Juris Doctor degree from Tulane University. A
member of the Asian American Journalists Association, Ms. Schiffer holds a certification in sustainability from Stanford University
Graduate School of Business and a certification in Cybersecurity Governance for the Board of Directors from the Massachusetts
Institute of Technology Sloan School of Management.
William H. Hanson, Senior Vice President, Market Development
Mr. Hanson was named Senior Vice President, Market Development in January 2023 after serving as Senior Vice President -
Government Relations & Business Development, a position he had held since March 2020. He was named Vice President of the
Company in 2004. Mr. Hanson worked for Connolly Pacific of Long Beach, California before joining GLDD in 1988. Prior to his
work at Connolly Pacific, Mr. Hanson was with the U.S. Army Corps of Engineers. Mr. Hanson serves on several Federal Advisory
Committees as well as on boards of groups with national and regional interest to the Company and several academic advisory boards
related to ocean and coastal engineering. Mr. Hanson is an Ocean Engineering graduate of Texas A&M University where he was
named a distinguished alumnus in 2013.
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Availability of Information
You may read and obtain copies of any materials Great Lakes files with the SEC, including without limitation, the Company’s
Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, free of
charge, at the SEC’s website, www.sec.gov. Great Lakes’ SEC filings are also available to the public, free of charge, on our corporate
website, www.gldd.com, at “Investors – Financials & Filings”, as soon as reasonably practicable after Great Lakes electronically files
such material with, or furnishes it to, the SEC. The reference to the Company’s website does not constitute incorporation by reference
of information contained on or accessible through such website.
Item 1A. Risk Factors.
The following risk factors address the material risks and uncertainties concerning our business. You should carefully consider
the following risks and other information contained or incorporated by reference into this Annual Report on Form 10-K when
evaluating our business and financial condition and an investment in our common stock. Should any of the following risks or
uncertainties develop into actual events, such developments could have material adverse effects on our business, financial condition,
cash flows or results of operations. Risks not currently known to the Company or that the Company currently deems to be immaterial
may also materially and adversely affect the Company's business, operating results, financial condition and the actual outcome of
matters as to which forward-looking statements are made in this report.
We have grouped our Risk Factors under captions that we believe describe various categories of potential risk. For the reader’s
convenience, we have not duplicated risk factors that could be considered to be included in more than one category.
Risk Factor Summary
The following is a summary of the principal risks that could adversely affect, or have adversely affected, the Company’s
business, operating results and financial condition:
•
A reduction in government funding for dredging and other contracts, or government cancellation of such contracts, or
the inability of the Corps to let bids to market;
•
Our ability to qualify as an eligible bidder under government contract criteria and to compete successfully against other
qualified bidders in order to obtain government dredging and other contracts;
•
The political environment and governmental fiscal and monetary policies;
•
Cost over-runs, operating cost inflation and potential claims for liquidated damages, particularly with respect to our
fixed-price contracts;
•
The timing of our performance on contracts and new contracts being awarded to us;
•
Significant liabilities that could be imposed were we to fail to comply with government contracting regulations;
•
Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather
patterns;
•
Costs necessary to operate and maintain our existing vessels and the construction of new vessels, including with respect
to changes in applicable regulations or standards;
•
Equipment or mechanical failures;
•
Pandemic, epidemic or outbreak of an infectious disease;
•
Disruptions to our supply chain for procurement of new vessel build materials or maintenance on our existing vessels;
•
Capital and operational costs due to environmental regulations;
•
Market and regulatory responses to climate change, including proposed regulations concerning emissions reporting and
future emissions reduction goals;
•
Contract penalties for any projects that are completed late;
•
Force majeure events, including natural disasters, war and terrorists’ actions;
•
Changes in the amount of our estimated backlog;
•
Significant negative changes attributable to large, single customer contracts;
•
Our ability to obtain financing for the construction of new vessels, including our new offshore energy vessel;
12
•
Our ability to secure contracts to utilize our new offshore energy vessel;
•
Unforeseen delays and cost overruns related to the construction of our new vessels;
•
Any failure to comply with the Jones Act provisions on coastwise trade, or if those provisions were modified, repealed
or interpreted differently;
•
Our ability to comply with anti-discrimination laws, including those pertaining to diversity, equity and inclusion
programs;
•
Fluctuations in fuel prices, particularly given our dependence on petroleum-based products;
•
Impacts of nationwide inflation on procurement of new build and vessel maintenance materials;
•
Our ability to obtain bonding or letters of credit and risks associated with draws by the surety on outstanding bonds or
calls by the beneficiary on outstanding letters of credit;
•
Acquisition integration and consolidation, including transaction expenses, unexpected liabilities and operational
challenges and risks;
•
Divestitures and discontinued operations, including retained liabilities from businesses that we sell or discontinue;
•
Potential penalties and reputational damage as a result of legal and regulatory proceedings;
•
Any liabilities imposed on us for the obligations of joint ventures and similar arrangements and subcontractors;
•
Increased costs of certain material used in our operations due to newly imposed tariffs;
•
Unionized labor force work stoppages;
•
Any liabilities for job-related claims under federal law, which does not provide for the liability limitations typically
present under state law;
•
Operational hazards, including any liabilities or losses relating to personal or property damage resulting from our
operations;
•
Our substantial amount of indebtedness, which makes us more vulnerable to adverse economic and competitive
conditions;
•
Restrictions on the operation of our business imposed by financing terms and covenants;
•
Impacts of adverse capital and credit market conditions on our ability to meet liquidity needs and access capital;
•
Limitations on our hedging strategy imposed by statutory and regulatory requirements for derivative transactions;
•
Foreign exchange risks, in particular, related to the new offshore energy vessel build;
•
Losses attributable to our investments in privately financed projects;
•
Restrictions on foreign ownership of our common stock;
•
Restrictions imposed by Delaware law and our charter on takeover transactions that stockholders may consider to be
favorable;
•
Restrictions on our ability to declare dividends imposed by our financing agreements or Delaware law;
•
Significant fluctuations in the market price of our common stock, which may make it difficult for holders to resell our
common stock when they want or at prices that they find attractive;
•
Changes in previously recorded net revenue and profit as a result of the significant estimates made in connection with
our methods of accounting for recognized revenue;
•
Maintaining an adequate level of insurance coverage;
•
Our ability to find, attract and retain key personnel and skilled labor;
•
Disruptions, failures, data corruptions, cyber-based attacks or security breaches of the information technology systems
on which we rely to conduct our business; and
•
Impairments of our goodwill or other intangible assets.
13
Risks Related to our Business
A reduction in government funding for dredging or other contracts, or government cancellation of such contracts, or the inability
of the Corps to let bids to market could materially adversely affect our business operations, revenues and profits.
A substantial portion of our revenue is derived from federal government contracts, particularly dredging contracts. Revenues
related to dredging contracts with federal agencies or companies operating under contracts with federal agencies and the percentage as
a total of dredging revenue for the years ended December 31, 2024, 2023 and 2022 were as follows:
Year Ended December 31,
2024
2023
2022
Federal government revenue (in US $1,000)
$
430,980
$
438,790
$
431,705
Percent of revenue from federal government
57%
74%
67%
Amounts spent by the federal government on dredging are subject to the budgetary and legislative processes. We would expect
the federal government to continue to improve and maintain ports as it has for many years, which will necessitate a certain level of
federal spending. However, there can be no assurance that the federal government will allocate any particular amount or level of funds
to be spent on dredging projects for any specified period. In addition, Congress must approve budgets that govern spending by many
of the federal agencies we support. When Congress is unable to agree on budget priorities, and thus is unable to pass the annual budget
on a timely basis, Congress typically enacts a continuing resolution. A continuing resolution allows U.S. federal government agencies
to operate at spending levels approved in the previous budget cycle. Under a continuing resolution, funding may not be available for
new projects or may be delayed on current projects. Any such funding delays would likely result in new projects being delayed or
canceled and could have a material adverse effect on our revenue and operating results. Furthermore, a failure to complete the budget
process and fund government operations pursuant to a continuing resolution may result in a U.S. federal government shutdown. An
extended shutdown may result in us incurring substantial costs without reimbursement under our contracts and the delay or
cancellation of key projects, which could have a material adverse effect on our revenue and operating results.
In addition, potential contract cancellations, modifications, protests, suspensions or terminations may arise from resolution of
these issues and could cause our revenues, profits and cash flows to be lower. Federal government contracts can be canceled at any
time without penalty to the government, subject to, in most cases, our contractual right to recover our actual committed costs and
profit on work performed up to the date of cancellation. Accordingly, there can be no assurance that the federal government will not
cancel any federal government contracts that have been or are awarded to us. Even if a contract is not cancelled, the government may
elect to not award further work pursuant to a contract. There is no guarantee that the current presidential administration or Congress
will not divert funds away from the Corps or from our other customers relying on funding from the federal government. There is also
no guarantee that additional national emergencies will not be declared in the future. A significant reduction in government funding for
dredging or remediation contracts could materially adversely affect our business, operations, revenues and profits.
Further, if the Corps is unable to let bids to market, it could adversely affect our business, operations, revenues and profits. In
2022, our business was adversely impacted by the inability of the Corps to let bids to market, and that inability may continue and may
adversely impact our results of operations. If the Corps does not bring higher margin capital projects to market, it may adversely
impact our results of operations.
Our inability to qualify as an eligible bidder for government contracts or to compete successfully with other qualified bidders for
certain contracts could materially adversely affect our business operations, revenues and profits.
The U.S. government and various state, local and foreign government agencies conduct rigorous competitive processes for
awarding many contracts. Some contracts include multiple award task order contracts in which several contractors are selected as
eligible bidders for future work. We will face strong competition and pricing pressures for any additional contract awards from the
U.S. government and other domestic and foreign government agencies, and we may be required to qualify or continue to qualify under
various multiple award task order contract criteria. Further, much of our work depends on our compliance with environmental and
other regulations. Any claim by the government that we have violated any laws or regulations could result in our suspension or
debarment from bidding for or being awarded government contracts. Our inability to qualify as an eligible bidder under government
contract criteria could preclude us from competing for certain government contract awards. In addition, our inability to qualify as an
eligible bidder, or to compete successfully when bidding for certain government contracts and to win those contracts, could materially
adversely affect our business, operations, revenues and profits.
14
Our business and operating results could be adversely affected by the political environment and governmental fiscal and monetary
policies.
An unpredictable or volatile political environment in the United States, including any social unrest and uncertainty as a result of
the 2024 U.S. presidential election, could negatively impact business and market conditions, economic growth, financial stability, and
business, consumer, investor and regulatory sentiments, any one or more of which in turn could cause our business and financial
results to be adversely impacted. It is difficult to predict the legislative and regulatory impacts that may result from the change in
presidential administration or the change in the make-up of either the Senate or House of Representatives, and such changes may
cause broader economic impacts due to shifts in governing ideology and governing style, and we may be subject to new or changing
laws or regulations that may be promulgated in the future. There is no certainty that any presidential administration or Senate and/or
the House of Representatives will maintain the level of federal spending and support for the dredging industry and offshore energy
development. For example, President Trump has recently signed an Executive Order pausing the issuance of new or renewing offshore
wind leases and permits that could have resulted in additional contracted work for the Company. A significant reduction in such
funding or support could materially adversely affect our business and operating results.
Our significant number of fixed-price contracts subjects us to risks associated with cost over-runs, operating cost inflation and
potential claims for liquidated damages. If we are unable to accurately estimate our project costs our profitability could suffer.
We conduct our business under various types of contracts where costs are estimated in advance of our performance. Most
dredging contracts are fixed-price contracts where the customer pays a fixed price per unit (e.g., cubic yard) of material dredged.
Fixed-price contracts carry inherent risks, including risks of losses from underestimating costs, weather delays, operational difficulties
and other changes that can occur over the contract period. If our estimates prove inaccurate, if there are errors or ambiguities as to
contract specifications or if circumstances change due to, among other things, unanticipated conditions or technical problems,
difficulties in obtaining permits or approvals, changes in local laws or labor conditions, inclement or hazardous weather conditions,
changes in cost of equipment or materials or our suppliers’ or subcontractors’ inability to perform, then cost over-runs and delays in
performance are likely to occur. We may not be able to obtain compensation for additional work performed or expenses incurred, or
may be delayed in receiving necessary approvals or payments. Additionally, we may be required to pay liquidated damages upon our
failure to meet schedule or performance requirements of our contracts. If we were to significantly underestimate the costs on one or
more significant contracts, the resulting losses could have a material adverse effect on our business, operating results, cash flows or
financial condition.
Our quarterly and annual operating results may vary significantly based on the timing of contract awards and performance.
Our quarterly and annual results of operations have fluctuated from period to period in the past and may continue to fluctuate in
the future. Accordingly, you should not rely on the results of any past quarter or quarters as an indication of future performance in our
business operations or valuation of our stock. Our operating results could vary greatly from period to period due to factors such as:
•
the timing of contract awards and the commencement or progress of work under awarded contracts;
•
inclement or hazardous weather conditions, including non-historical weather patterns, particularly in the Northeastern
United States, that may result in underestimated delays in dredging, disruption or early termination of projects,
unanticipated recovery costs or liability exposure and additional contract expenses;
•
site conditions that differ from those presented by our customers, which results in delays or slower than anticipated
progress on projects;
•
planned and unplanned equipment downtime, or equipment mobilization to and from projects, including those due to the
impacts of unplanned national health emergencies;
•
our ability to recognize revenue from pending change orders, which is recognized only when the parties to a contract
approve a modification that either creates new, or changes existing, enforceable rights and obligations of the parties to the
contract; and
•
environmental restrictions requiring that certain projects be performed in winter months to protect wildlife habitats.
If our results of operations from quarter to quarter fail to meet the expectations of public market analysts and investors, our
stock price could be negatively impacted. See “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Primary Factors that Determine Operating Profitability.”
15
If we fail to comply with government contracting regulations, we could be subject to significant potential liabilities and loss of
revenue.
Our contracts with federal, state, local and foreign governmental customers are subject to various procurement regulations and
contract provisions. These regulations also subject us to examinations by government auditors and investigators, from time to time, to
ensure compliance and to review costs. Violations of government contracting regulations could result in the imposition of civil and
criminal penalties, which could include termination of contracts, forfeiture of profits, imposition of payments and fines and suspension
or debarment from future government contracting. If we fail to continue to qualify for or are suspended from work under a
government contract for any reason, we could suffer a material adverse effect on our business, operating results, cash flows or
financial condition.
In addition, we may be subject to litigation brought by private individuals on behalf of the government relating to our
government contracts, referred to in this annual report as “qui tam” actions, which could include claims for up to treble damages. Qui
tam actions are sealed by the court at the time of filing. The only parties privy to the information in the complaint are the complainant,
the U.S. government and the court. Therefore, it is possible that qui tam actions have been filed against us and it is possible that we are
subject to liability exposure arising out of qui tam actions.
Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather patterns
have and may continue to impact our ability to perform projects on time and on budget and therefore could materially adversely
affect our business operations, revenues and profits.
The timely and efficient performance of our projects are dependent on weather conditions. Severe storms or other weather-
related problems may deviate from expected historical weather patterns as a result of climate change or other factors, and can, and
have, caused substantial delays on our projects. Delays, such as those we experienced in 2022, may affect our ability to perform on our
projects or increase the cost of our performing certain projects, and may result in our inability to perform certain projects on time and
on budget. We attempt to plan for all scenarios and assign risk when bidding on projects. For example, we have updated our modeling
for current and future weather patterns to better estimate those costs. We expect that the severity of unusual storms and weather
patterns will continue to fluctuate and may continue to adversely impact our ability to complete projects on time and on budget and
therefore could materially adversely affect our business operations, revenues and profits.
Costs necessary to operate and maintain our vessels tend to increase with the age of the vessel, and costs of such maintenance, as
well as costs associated with new build programs, may also increase due to changes in applicable regulations or standards, which
could decrease our profits.
Capital expenditures and other costs necessary to operate and maintain our vessels tend to increase with the age of the vessel.
Accordingly, it is likely that the operating costs of our vessels will increase.
The average age of our more significant vessels as of December 31, 2024, by equipment type, is as follows:
Type of Equipment
Quantity
Average Age in
Years
Hydraulic Dredges
7
47
Hopper Dredges
5
25
Mechanical Dredges
4
52
Unloaders
1
41
Drillboats
1
41
Material and Other Barges
91
25
Total
109
28
Remaining economic life has not been presented, because it is not reasonably quantifiable. That is because, to the extent that
market conditions warrant the expenditures, we can prolong the vessels’ lives. In our domestic market, we operate in an industry
where a significant portion of our competitors’ equipment is of a similar age. It is common in the dredging industry to make
maintenance and capital expenditures in order to extend the economic life of equipment.
In addition, changes in governmental regulations, safety or other equipment standards, as well as compliance with standards
imposed by maritime self-regulatory organizations, standards imposed by vessel classification societies and customer requirements or
competition, may require us to make significant additional expenditures. For example, if the U.S. Coast Guard enacts new standards,
we may be required to incur expenditures for alterations or the addition of new equipment (e.g., more fuel-efficient engines). In order
16
to satisfy any such requirements, we may need to take our vessels out of service for extended periods of time, with corresponding
losses of revenues.
Equipment or mechanical failures could result in increased costs, project delays and reduced revenues.
The successful performance of contracts requires a high degree of reliability of our vessels, barges and other equipment. The
average age of our marine fleet as of December 31, 2024 was 28 years. Breakdowns not only add to the costs of executing a project,
but they can also delay the completion of subsequent contracts, which are scheduled to utilize the same assets. We operate a scheduled
maintenance program in order to keep all assets in good working order, but despite this, breakdowns can and do occur, resulting in
loss of revenue.
A pandemic, epidemic or outbreak of an infectious disease affecting our markets or impacting our facilities or suppliers could
adversely impact our business.
If another pandemic, epidemic or outbreak of an infectious disease or other public health crisis were to affect our markets or
facilities or those of our suppliers, our business could be adversely affected. Another pandemic could cause disruptions in and
restrictions on our ability to travel, and in the future these disruptions and restrictions could restrict our ability to perform work for
future projects in different locations. If an infectious disease were to have a widespread outbreak at one or more of our vessels or
facilities, our operations may be affected significantly, our productivity may be affected, key personnel necessary to conduct our
operations or replacement crew may be unavailable, our ability to complete projects in accordance with our contractual obligations
may be affected and we may incur increased labor and materials costs. If the shipyards with which we contract were affected by an
outbreak of infectious disease, repairs of our vessels as well as new construction may be delayed and we may incur increased labor
and materials costs and our ability to perform our projects on time may be adversely affected. In addition, we may experience
difficulties with certain suppliers or with vendors in their supply chains, and our business could be affected if we become unable to
procure essential supplies or services in adequate quantities and at acceptable prices.
Our clients, which are the Corps, private clients and other federal, state or local agencies, may be impacted by a pandemic, and
if prolonged, these impacts may lead to cancelations or delays in projects. Funds for dredging projects may also be diverted for public
health, economic or other priorities. Overall, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with
respect to our markets or our facilities is difficult to predict and could adversely impact our business.
Disruptions to our supply chain affecting our markets or impacting our facilities or suppliers could prohibit procurement of
materials necessary for maintenance of our existing vessels and new vessel build materials and adversely impact our business.
Supply chain issues could cause disruptions that restrict our ability to perform work for future projects. Our ability to complete
projects in accordance with our contractual obligations may be affected, and we may incur increased labor and materials costs. If the
shipyards with which we contract are affected, regulatory drydocking and repairs and general maintenance of our vessels, as well as
new construction, may be delayed and we may incur increased labor and materials costs. In addition, we may experience difficulties
with certain suppliers or with vendors in their supply chains, and our business could be affected if we become unable to procure
essential supplies or services in adequate quantities and at acceptable prices.
Environmental regulations could force us to incur capital and operational costs.
Our industries, and more specifically, our operations, facilities and vessels and equipment, are subject to various environmental
laws and regulations relating to, among other things: dredging operations; the disposal of dredged material; protection of wetlands;
storm water and waste water discharges; transportation and disposal of hazardous wastes and other regulated materials; air emissions;
and disposal or remediation of contaminated soil, sediments, surface water and groundwater. We are also subject to laws designed to
protect certain marine or land species and habitats. Compliance with these statutes and regulations can delay permitting and/or
performance of particular projects and increase related project costs. These delays and increased costs could have a material adverse
effect on our business, results of operations, cash flows or financial condition. Non-compliance can also result in fines, penalties and
claims by third parties seeking damages for alleged personal injury, as well as damages to property and natural resources and
suspension or debarment from future government contracting.
Certain environmental laws such as the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980
and the Oil Pollution Act of 1990 impose strict and, under some circumstances joint and several, liability on owners and lessees of
land and facilities as well as owners and operators of vessels. Such obligations may include investigation and remediation of releases
and discharges of regulated materials, and also impose liability for related damages to natural resources. Our past and ongoing
operations involve the use, and from time to time the release or discharge, of regulated materials which could result in liability under
17
these and other environmental laws. We have remediated known releases and discharges as deemed necessary, but there can be no
guarantee that additional costs will not be incurred if, for example, third party claims arise or new conditions are discovered.
Our projects may involve excavation, remediation, demolition, transportation, management and disposal of hazardous waste and
other regulated materials. Various laws strictly regulate the removal, treatment and transportation of hazardous waste and other
regulated materials and impose liability for human health effects and environmental contamination caused by these materials. Services
rendered in connection with hazardous substance and material removal and site development may involve professional judgments by
licensed experts about the nature of soil conditions and other physical conditions, including the extent to which hazardous substances
and materials are present, and about the probable effect of procedures to mitigate problems or otherwise affect those conditions. If the
judgments and the recommendations based upon those judgments are incorrect, we may be liable for resulting damages, which may be
material. The failure of certain contractual protections to protect us from incurring such liability, such as staying out of the ownership
chain for hazardous waste and other regulated materials and securing indemnification obligations from our customers or
subcontractors, could have a material adverse effect on our business, results of operations, revenues or profits.
Environmental requirements have generally become more stringent over time, for example in the areas of air emissions controls
for vessels and ballast treatment and handling. New laws or stricter enforcement of existing laws or the discovery of currently
unknown conditions or accidental discharges of regulated materials in the future could cause us to incur additional costs for
environmental matters which might be significant.
We may be affected by market or regulatory responses to climate change.
Increased concern about the potential impact of greenhouse gases (“GHG”), such as carbon dioxide resulting from combustion
of fossil fuels, on climate change has resulted in efforts to regulate their emission. Legislation, international protocols, regulation or
other restrictions on GHG emissions could also affect our customers. Such legislation or restrictions could increase the costs of
projects for our customers or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our
services which could in turn have a material adverse effect on our operations and financial condition. Additionally, in our normal
course of operations, we use a significant amount of fossil fuels. The costs of controlling our GHG emissions or obtaining required
emissions allowances in response to any regulatory change in our industry could increase materially.
Many jurisdictions, including the European Union and California, have regulations which would require us to report emissions
data from our operations. If we were to perform projects in jurisdictions with emissions reporting requirements, it may require a
substantial outlay of capital by the Company, as well as management time and attention to ensure the Company's compliance.
Penalties for late completion of contracts could reduce our profits.
In many instances, including in our fixed-price contracts, we guarantee that we will complete a project by a scheduled date. If
we subsequently fail to complete the project as scheduled, we may be liable for any customer losses resulting from such delay,
generally in the form of contractually agreed-upon liquidated damages. In addition, failure to maintain a required schedule could cause
us to default on our government contracts, giving rise to a variety of potential damages. To the extent that these events occur, the total
costs of the project could exceed our original estimates, and we could experience reduced profits or, in some cases, a loss for that
project.
Force majeure events could negatively impact our business, operations, revenues, cash flows and profits.
Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as
well as terrorist actions, could negatively impact the economies in which we operate. We typically negotiate contract language where
we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure
events in both public and private client contracts. We remain obligated to perform our services after most extraordinary events subject
to relief that may be available pursuant to a force majeure clause.
If a contract contains a force majeure provision, we may be able to obtain an extension of time to complete our obligations
under such contract, but we will still be subject to our other contractual obligations in the event of such an extraordinary event.
Because we cannot predict the length, severity or location of any potential force majeure event, it is not possible to determine the
specific effects any such event may have on us. Depending on the specific circumstances of any particular force majeure event, or if
we are unable to react quickly to such an event, our operations may be affected significantly, our productivity may be affected, our
ability to complete projects in accordance with our contractual obligations may be affected, our payments from customers may be
delayed and we may incur increased labor and materials costs, which could have a negative impact on our financial condition,
relationships with customers or suppliers, and our reputation.
18
The amount of our estimated backlog may change and may not be indicative of future revenues.
Our contract backlog represents our estimate of the revenues that we will realize under the portion of the contracts remaining to
be performed. These estimates are based primarily upon the time and costs required to mobilize the necessary assets to and from the
project site, the amount and type of material to be dredged and the expected production capabilities of the equipment performing the
work. However, these estimates are necessarily subject to variances based upon actual circumstances. From time to time, changes in
project scope may occur with respect to contracts reflected in our backlog and could reduce the dollar amount of our backlog and the
timing of the revenue and profits that we actually earn. Projects may remain in our backlog for an extended period of time because of
the nature of the project and the timing of the particular services or equipment required by the project.
Because of these factors, as well as factors affecting the time required to complete each job, backlog is not necessarily indicative
of future revenues or profitability. In addition, a significant amount of our total backlog (53% as of December 31, 2024) relates to
federal government contracts, which can be canceled at any time without penalty to the government, subject, in most cases, to our
contractual right to recover our actual committed costs and profit on work performed up to the date of cancellation.
Below is our backlog from federal government contracts as of December 31, 2024, 2023, and 2022 and the percentage of those
contracts to total backlog as of the same date.
Year Ended December 31,
2024
2023
2022
Federal government backlog (in US $1,000)
$
662,933
$
350,242
$
290,694
Percentage of total backlog from federal government
53%
32%
77%
Although we do not currently have any international projects, if we were to engage in a new foreign project, we may have
backlog with foreign governments that use local laws and regulations to change the terms of a contract in backlog or to limit our
ability to receive payment on a timely basis. In addition to our United States federal contracts, our other contracts in backlog are with
state and local municipalities or private companies that may have funding constraints or impose restrictions on timing. The
termination, modification or suspension of projects currently in backlog could have a material adverse effect on our business,
operating results, cash flows or financial condition. As of December 31, 2024, approximately 29% of the Company’s total backlog is
from two private customers.
Loss of a single customer contract could significantly decrease revenue.
Our individual customer contracts may relate to large-scale projects that can be responsible for a significant portion of our
revenue and/or backlog. Loss of any current customer contract could significantly decrease our revenue or expected revenue. Lower
utilization, workforce reductions or asset relocations, resulting from the loss of a customer contract or otherwise, could have a material
adverse effect on our business, operating results, cash flows or financial condition.
Inability to obtain secure financing or financing on favorable terms for our new vessels could negatively impact our business,
financial position and/or results of operations.
We have previously disclosed our plans to build new vessels which requires significant capital expenditures. Unforeseen issues
could arise in our ability to obtain secure financing or to obtain secure financing on terms favorable to us for building such vessels.
This includes our new offshore energy vessel, the second new build hopper dredge, and other potential future vessels. The inability to
obtain favorable financing may also impact our ability to bring the new vessels into service within the timeline anticipated by the
Company, which may have an adverse effect on our business, financial position and/or results of operations.
Inability to secure contracts to utilize new offshore energy vessel could adversely impact our business strategy and have a material
adverse effect on our operating results, cash flows or financial condition.
We have previously disclosed the build of our new offshore energy vessel that is in progress. Our ability to obtain customers
and/or contracts on terms favorable to the Company to utilize this new vessel for subsea rock installation for wind turbines could be
impacted by unforeseen market conditions or changing political climates. As the costs to build this new vessel have already been
incurred, the lack of a secure customer base and favorable secure contracts could have a material adverse effect on the Company’s
business, financial position and results of operations. Towards the end of 2023, the Company saw several cancellations of Power
Purchase Agreements (“PPAs”) that were entered into in 2018 and 2019, as inflation and interest rate hikes eroded the profitability of
these PPAs. This led our clients, Equinor and bp, to terminate our Empire Wind II contract and reset their plan for the related wind
farm. Great Lakes may have the opportunity to re-tender this project if Equinor re-bids their PPA for this development. If there are
19
additional cancellations of PPAs, the Company’s ability to utilize its new offshore energy vessel may be adversely impacted. On
January 20, 2025, President Trump issued an Executive Order that temporarily prevents consideration of any area in the Outer
Continental Shelf for any new or renewed wind energy leasing for the purposes of generation of electricity until the Executive Order is
revoked. The Executive Order also requires an immediate review of federal wind leasing and permitting practices. The inability or
unwillingness of our clients and potential clients to commit to or invest in new or existing offshore wind projects due to this policy
change could have a material adverse effect on the Company’s business, financial position and results of operations. Further, the
possibility of future changes to environmental requirements and regulations and changes in the policies of the U.S. presidential
administration could delay or halt plans for U.S. offshore wind projects, which would adversely impact our business strategy and
could have a material adverse effect on the Company’s operating results, cash flows or financial condition.
Unforeseen delays and cost overruns could postpone delivery of or halt plans to build new vessels and, as a result, negatively
impact our business strategy.
We have previously disclosed our plans to build new vessels. Unknown mechanical or engineering issues involving new vessels
could adversely affect the Company’s business, operating results, cash flows or financial condition. Our future revenues and
profitability will also be impacted to some extent by our ability to secure financing for new vessels and bring them into service within
the timeline anticipated by the Company. The Company contracts with shipyards to build new vessels and currently has vessels under
construction. Construction projects are subject to risks of delay and cost overruns resulting from shortages of equipment, materials and
skilled labor; lack of shipyard availability; unforeseen design and engineering problems; work stoppages; weather interference;
unanticipated cost increases; unscheduled delays in the delivery of material and equipment; and financial and other difficulties at
shipyards including labor disputes, shipyard insolvency and inability to obtain necessary certifications and approvals. Delays may also
occur as a result of a shipyard giving priority to other customers. A significant delay in the construction of new vessels or a shipyard’s
inability to perform under the construction contract could negatively impact the Company’s ability to fulfill contract commitments and
to realize timely revenues with respect to vessels under construction. Significant cost overruns or delays for vessels under construction
could also adversely affect the Company’s business, operating results, cash flows or financial condition. For example, the Company
has experienced delays from the shipyard in the build of its in process SRI vessel, now expected to be operational in the first half of
2026. The Company is in discussions with the shipyard to limit any additional delays and are working with our customers to evaluate
and limit any potential negative impacts of such delays, which may include loss of revenues, delays in completion of Company work
under previously negotiated contracts, or increased costs to the Company. Our future revenues and profitability will also be impacted
to some extent if we are unable to bring our new offshore energy vessels into service within the timeline anticipated by the Company
as a result of an inability to obtain favorable steel prices or secure appropriate financing. Changes in governmental regulations, safety
or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customer
requirements or competition, could also substantially increase the cost of such construction beyond what we currently expect such
costs to be.
Our business would be adversely affected if we failed to comply with Jones Act provisions on coastwise trade, or if those provisions
were modified, repealed or interpreted differently.
We are subject to the Jones Act and other federal laws that restrict dredging in U.S. waters and maritime transportation between
points in the United States to vessels operating under the U.S. flag, built in the United States, at least 75% owned and operated by U.S.
citizens and manned by U.S. crews. We are responsible for monitoring the ownership of our common stock to ensure compliance with
these laws. If we do not comply with these restrictions, we would be prohibited from operating our vessels in the U.S. market, and
under certain circumstances we would be deemed to have undertaken an unapproved foreign transfer, resulting in severe penalties,
including permanent loss of U.S. dredging rights for our vessels, fines or forfeiture of the vessels.
In the past, interest groups have unsuccessfully lobbied Congress to modify or repeal the Jones Act to facilitate foreign flag
competition for trades and cargoes currently reserved for U.S. flag vessels under the Jones Act. We believe that continued efforts may
be made to modify or repeal the Jones Act or other federal laws currently benefiting U.S. flag vessels. If these efforts are ever
successful, it could result in significantly increased competition and have a material adverse effect on our business, results of
operations, cash flows or financial condition.
In addition, Customs and Border Protection (“CBP”), the federal agency that interprets the Jones Act, may issue letter rulings
which adversely impact our business. In the past, CBP has issued letter rulings which have the potential to adversely impact Jones Act
qualified vessels to be the exclusive operators in certain sectors of the new United States offshore energy industry. The Company
challenged these CBP letter rulings in federal court in Houston, Texas, citing the “Plain Language” of the Jones Act. The challenge
was rejected at the District Court level and at the 5th Circuit based upon the courts’ findings that the Company lacked standing. These
adverse rulings, as well as other adverse letter rulings by CBP, may adversely impact our competitive advantage in the United States
offshore energy industry, which could have a material adverse effect on our business, results of operations, cash flows or financial
condition.
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If we fail to comply with anti-discrimination laws, including those pertaining to diversity, equity and inclusion programs, we could
be subject to legal action and reputational risk.
On January 21, 2025, President Trump issued an Executive Order prohibiting diversity, equity and inclusion initiatives at
companies that are party to federal contracts to the extent that such initiatives violate applicable federal anti-discrimination laws. The
Executive Order requires federal contractors, including the Company, to agree that such federal contractor’s compliance with federal
anti-discrimination laws is material to the government’s payment decisions and to certify that such federal contractor does not operate
any illegal programs promoting diversity, equity and inclusion that violate any applicable federal anti-discrimination laws. The
Executive Order also provides that the Office of Federal Contract Compliance Programs within the Department of Labor may not
allow federal contractors, including the Company, to engage in workforce balancing on the basis of certain protected characteristics.
While we believe we are in compliance with the Executive Order, if we are not, or if the federal government believes we are not in
compliance, then we could be subject to legal action, including under the False Claims Act, or debarment. Any such action could have
a material adverse effect on our business, results of operations, cash flows or financial condition, as well as impact our ability to
secure contracts with our customers and to hire and retain employees, distract our management team and negatively impact our
reputation in the market and our industry.
Our operating costs depend significantly on the price of petroleum-based products, and price increases could adversely affect our
profits.
Fuel prices fluctuate based on market events outside of our control. We use diesel fuel and other petroleum-based products to
operate our equipment used in our dredging contracts. Fluctuations in supplies relative to demand and other factors can cause
unanticipated increases in their cost. Most of our contracts do not allow us to adjust our pricing for higher fuel costs during a contract
term and we may be unable to secure price increases reflecting rising costs when renewing or bidding contracts. In addition, the
International Maritime Organization issued regulations regarding use of low sulfur fuel, which has increased the demand for low
sulfur fuel. We use low sulfur fuel in many of our domestic operations, and future increases in the costs of fuel and other petroleum-
based products used in our business, particularly if a bid has been submitted for a contract and the costs of those products have been
estimated at amounts less than the actual costs thereof, could result in a lower profit, or even a loss, on one or more contracts.
Our investing and operating costs depend significantly on the prices of new build and general maintenance and repair materials,
and price increases due to high nationwide inflation could adversely affect our profits.
The prices of steel and other materials to build and develop new vessels, as well as to maintain and/or repair our existing
vessels, fluctuate based on market events outside of our control. This had an adverse effect on our results of operations in 2022,
however did not have a material adverse effect on our results of operations in 2023 or 2024. Most of our new build contracts do not
allow us to adjust our pricing for higher material costs during a contract term. When renewing contracts, we may be unable to secure
price increases reflecting the rising costs of inflation or the impact of tariffs. Such future increases in the costs of steel and other
materials used to build new vessels, particularly if a bid or renewal has been submitted for a contract and the costs of the required
products have been estimated at amounts less than the actual costs incurred, could result in a lower profit, or even a loss, on one or
more contracts. Additionally, the increased cost of steel and other materials may adversely impact the cost of general maintenance
and/or repairs of our existing vessels.
An inability to obtain bonding or letters of credit would limit our ability to obtain future contracts, which could, along with
any draws on existing arrangements, adversely affect our business, operating results, cash flows and financial condition.
We are generally required to post bonds in connection with our domestic dredging contracts and bonds or letters of credit with
our foreign dredging contracts, certain private domestic dredging contracts, and offshore energy contracts to ensure job completion if
we ever fail to finish a project. We have entered into bonding agreements with the sureties, or the “Sureties”, pursuant to which the
Sureties issue bid bonds, performance bonds and payment bonds, and provide guarantees required by us in the day-to-day operations
of our dredging business. Historically, we have had a strong bonding capacity, but surety companies issue bonds on a project-by-
project basis and can decline to issue bonds at any time or require the posting of collateral as a condition to issuing any bonds. With
respect to our foreign dredging, certain private domestic dredging and our offshore energy business, we generally obtain letters of
credit under our ABL Credit Agreement. However, access to our senior credit facility under our ABL Credit Agreement may be
limited by failure to meet certain levels of availability or other defined financial or other requirements. If we are unable to obtain
bonds or letters of credit on terms reasonably acceptable to us, our ability to take on future work would be severely limited.
In connection with the sale of our historical demolition business, we were obligated to keep in place the surety bonds on pending
demolition projects for the period required under the respective contract for a project. In 2017, we were notified by Zurich of an
alleged default triggered on a historical demolition surety performance bond in the aggregate amount of approximately $20 million for
failure of the contractor to perform in accordance with the terms of a project. Zurich drew upon the letter of credit in the amount of
$20.9 million. In order to fund the draw on the letter of credit, we had to increase the borrowings on our revolving credit facility. As
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the outstanding letters of credit previously reduced our availability under the revolving credit facility, this draw down on our letter of
credit did not impact our liquidity or capital availability. However, in the future, other defaults (or alleged defaults) triggered under
any of our surety bonds could have a material adverse effect on our business, results of operations, cash flows or financial condition.
Acquisitions involve integration, consolidation and strategic risks and may involve significant transaction expenses and
unexpected liabilities, which could adversely affect our business and results of operations.
We may seek business acquisition activities in the future as a means of broadening our offerings and capturing additional market
opportunities by our business units. We may be exposed to certain additional risks resulting from these activities. Acquisitions may
expose us to operational challenges and risks, including:
•
the effects of valuation methodologies which may not accurately capture the value proposition;
•
the failure to integrate acquired businesses into our operations, financial reporting and controls with the efficiency and
effectiveness initially expected resulting in a potentially significant detriment to our financial results and our operations as
a whole;
•
the management of the growth resulting from acquisition activities;
•
the inability to capitalize on expected synergies;
•
the assumption of liabilities of an acquired business (for example, litigation, tax liabilities, environmental liabilities),
including liabilities that were contingent or unknown at the time of the acquisition and that pose future risks to our
working capital needs, cash flows and the profitability of related operations;
•
the assumption of unprofitable projects that pose future risks to our working capital needs, cash flows and the profitability
of related operations;
•
the risks associated with entering new markets;
•
diversion of management’s attention from our existing business;
•
failure to retain key personnel, customers or contracts of any acquired business;
•
potential adverse effects on our ability to comply with terms and covenants in our existing debt financing;
•
potential impairment of acquired intangible assets; and
•
additional debt financing, which may not be available on attractive terms.
We may not have the appropriate management, financial or other resources needed to integrate any businesses that we acquire.
Any future acquisitions may result in significant transaction expenses and unexpected liabilities.
Divestitures and discontinued operations could negatively impact our business, and any retained liabilities could adversely affect
our financial results.
As part of our strategic process, we review our operations for assets and businesses which may no longer be aligned with our
strategic initiatives and long-term objectives. For example, we have divested our historical environmental & infrastructure business
and historical demolition business. We continue to review our assets and strategy and may pursue additional divestitures. Divestitures
pose risks and challenges that could negatively impact our business, including required separation or carve-out activities and costs,
disputes with buyers or potential impairment charges. We may also dispose of a business at a price or on terms that are less than we
had previously anticipated or fail to close a transaction at all. Dispositions may also involve continued financial involvement, as we
may be required to retain responsibility for, or agree to indemnify buyers against contingent liabilities related to businesses sold, such
as lawsuits, surety obligations, tax liabilities or environmental matters. It may also be difficult to determine whether a claim from a
third party stemmed from actions taken by us or by another party and we may expend substantial resources trying to determine which
party has responsibility for the claim. Under these types of arrangements, performance by the divested businesses or other conditions
outside of our control could affect future financial results and such claims or conditions may divert management attention from our
continuing business.
During the second quarter of 2014, the Company completed the sale of its historical demolition business. In connection with the
sale, the Company retained responsibility for various pre-closing liabilities and obligations and may incur costs and expenses related
to these items and asset recoveries. It is possible that claims, which could be material, could be made against the Company by virtue of
the agreement pursuant to which the Company’s historical demolition business was sold. In connection with the sale of our historical
22
demolition business, we were obligated to keep in place the surety bonds on pending demolition projects for the period required under
the respective contract for a project. As noted above, if there should be a default (or alleged default) triggered under any of the surety
bonds for the historical demolition business, it could have a material adverse effect on our ability to obtain bonds and on our business,
results of operations, cash flows or financial condition.
During the second quarter of 2019, the Company completed the sale of the historical environmental & infrastructure business.
The Company retained responsibility for pre-closing liabilities and indemnification for breaches of our representations and warranties
in the sale agreement. If the buyer made a claim against any of our indemnifications or if any payments became due in connection
with any pre-closing liability, they could be material to results of operations, cash flows or financial condition.
If we do not realize the expected benefits or synergies of any divestiture transaction or if we underestimated the valuation of the
charge related to placing an asset held for sale in discontinued operations, our consolidated financial position, results of operations and
cash flows could be negatively impacted. Any divestiture may result in a dilutive impact to our future earnings if we are unable to
offset the dilutive impact from the loss of revenue associated with the divestiture, as well as significant write-offs, including those
related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial
condition.
We could face liabilities and/or damage to our reputation as a result of legal and regulatory proceedings.
We operate in a highly regulated environment with constantly evolving legal and regulatory frameworks. From time to time, we
are subject to legal and regulatory proceedings in the ordinary course of our business. These include proceedings relating to aspects of
our businesses that are specific to us and proceedings that are typical in the businesses in which we operate.
We are currently a defendant in a number of litigation matters, including those described in Item 3. “Legal Proceedings” of this
Annual Report on Form 10-K. In certain of these matters, the plaintiffs are seeking large and/or indeterminate amounts of damages.
These matters are also subject to many uncertainties, and it is possible that some of these matters could ultimately be decided, resolved
or settled adversely to the Company. An adverse outcome in a legal or regulatory matter could, depending on the facts, have an
adverse effect on our business, results of operations, cash flows or financial condition.
Furthermore, whether the ultimate outcomes are favorable or unfavorable, these matters can also have significant adverse
reputational impacts, including negative publicity and press speculation about us, whether valid or not, which may be damaging to our
business, results of operations, cash flows or financial condition.
Liabilities for the obligations of our joint ventures and similar arrangements and subcontractors could materially decrease our
profitability and liquidity.
Some of our projects are performed through joint ventures and similar arrangements with other parties. In addition to the usual
liability of contractors for the completion of contracts and the warranty of our work, if work is performed through a joint venture or
similar arrangement, we also have potential liability for the work performed by the joint venture or arrangement or a performance or
payment default by another member of the joint venture or arrangement. In these projects, even if we satisfactorily complete our
project responsibilities within budget, we may incur additional unforeseen costs due to the failure of the other party or parties to the
arrangement to perform or complete work, fund expenditures or make payments in accordance with contract specifications. In some
joint ventures and similar arrangements, we may not be the controlling member. In these cases, we may have limited control over the
actions of the joint venture. In addition, joint ventures or arrangements may not be subject to the same requirements regarding internal
controls and internal control over financial reporting that we follow. To the extent the controlling member makes decisions that
negatively impact the joint venture or arrangement or internal control problems arise within the joint venture or arrangement, it could
have a material adverse impact on our business, results of operations, cash flows or financial condition.
Depending on the nature of work required to complete the project, we may choose to subcontract a portion of the project. In our
industries, the prime contractor is often responsible for the performance of the entire contract, including subcontract work. Thus, we
are subject to risks associated with the failure of one or more subcontractors to perform as anticipated. In addition, in some cases, we
pay our subcontractors before our customers pay us for the related services. If we choose, or are required, to pay our subcontractors
for work performed for customers who fail to pay, or delay paying us for the related work, we could experience a material decrease in
profitability and liquidity.
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New tariffs have increased our costs and could adversely affect our business operations, revenues and profits.
In recent years, the United States has imposed Section 232 tariffs and other import taxes on certain steel and aluminum products,
such as imported dredge-related machinery and pipes. These tariffs and other import taxes have increased the prices of these inputs.
Increased prices for imported steel and aluminum products have led domestic sellers to respond with market-based increases to prices
for such inputs as well. We cannot be sure of the ultimate effect such tariffs or any additional import taxes will have on our operating
profits. If we are not able to pass these price increases on to our customers or to secure adequate alternative sources for such inputs on
a timely basis, the tariffs and other import taxes may have a material adverse effect on our business operations, revenues and profits.
The current U.S. presidential administration has increased tariffs on certain imported products and generally on imports from certain
countries. For example, on February 10, 2025, President Trump imposed a 25% tariff on imported steel and aluminum. The Company
does not currently expect a material adverse impact to its operating results, cash flows or financial condition from the tariffs imposed
during the first few weeks of President Trump’s administration. However, any future tariffs imposed could have a material adverse
impact to our operating results, cash flows or financial condition.
Our business could suffer in the event of a work stoppage by our unionized labor force.
We are a party to numerous collective bargaining agreements in the U.S. that govern our industry’s relationships with our
unionized hourly workforce. Two unions represent approximately 73% of our hourly dredging employees—the IUOE Local 25 and
the Seafarers International Union. The Company’s master and ancillary contracts with IUOE Local 25 expire on September 30, 2027.
Our agreements with the Seafarers International Union expire on February 28, 2026. While we expect that the membership will have a
tentative agreement before expiration of the current agreement, we cannot be certain that will occur. The inability to successfully
renegotiate contracts with these unions as they expire, or any future strikes, employee slowdowns or similar actions by one or more
unions could have a material adverse effect on our ability to operate our business.
Liabilities imposed by federal laws for job-related claims by seagoing employees could increase our costs and reduce our
profitability.
Substantially all of our maritime employees are covered by provisions of the Jones Act, the U.S. Longshore and Harbor
Workers’ Compensation Act, the Seaman’s Wage Act and general maritime law. These laws typically operate to make liability limits
established by state workers’ compensation laws inapplicable to these employees and to permit these employees and their
representatives to pursue actions against employers for job-related injuries in federal or state courts. Because we are not generally
protected by the limits imposed by state workers’ compensation statutes with respect to our seagoing employees, we have greater
exposure for claims made by these employees as compared to industries whose employees are not covered by these provisions.
Successful claims could materially increase our costs and reduce our profitability. Further, the number and resolution of these claims
could increase our insurance costs.
The significant operating risks and hazards inherent in the operation of our business could result in personal or property damage,
which could result in losses or liabilities to us.
The dredging business is generally subject to a number of risks and hazards, including environmental hazards, industrial
accidents, encountering unusual or unexpected geological formations, cave-ins below water levels, collisions, disruption of
transportation services, flooding and unexploded ordnance. These risks could result in personal injury, damage to or destruction of
dredges, barges, transportation vessels, other maritime vessels, other structures, buildings or equipment, environmental damage,
performance delays, monetary losses or legal liability to third parties. We may also be exposed to disruption of our operations, early
termination of projects, unanticipated recovery costs and loss of use of our equipment that may materially adversely affect our
business, results of operations, cash flows or financial condition.
Our safety record is an important consideration for our customers. Some of our customers require that we maintain certain
specified safety record guidelines to be eligible to bid for contracts with these customers. Furthermore, contract terms may provide for
automatic termination or forfeiture of some of our contract revenue in the event that our safety record fails to adhere to agreed-upon
guidelines during performance of the contract. As a result, if serious accidents or fatalities occur or our safety record were to
deteriorate, we may be ineligible to bid on certain work, and existing contracts could be terminated or less profitable than expected.
Adverse experience with hazards and claims could have a negative effect on our reputation with our existing or potential new
customers and our prospects for future work.
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Risks Related to our Financing
We have substantial indebtedness, which makes us more vulnerable to adverse economic and competitive conditions.
We currently have a substantial amount of indebtedness. As of December 31, 2024, we had indebtedness of $460.0 million,
consisting of our senior subordinated notes, our second lien credit agreement and borrowings on our revolving credit facility. As of
December 31, 2024, we had approximately $43.5 million of undrawn letters of credit, leaving $221.2 million of additional borrowing
capacity under our revolving credit facility. These figures exclude contingent obligations, including $1.32 billion of performance
bonds outstanding under the Company’s agreements with the Sureties and other bonding agreements. Our level of indebtedness could:
•
require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital and capital expenditures, pay dividends and other general corporate
purposes;
•
limit our flexibility in planning for, or reacting to, changes in our business and our industries;
•
affect our competitiveness compared to our less leveraged competitors;
•
increase our exposure to both general and industry-specific adverse economic conditions; and
•
limit, among other things, our ability to borrow additional funds and issue performance letters of credit.
We and our subsidiaries also may be able to incur substantial additional indebtedness in the future. The terms of our revolving
credit facility and the indenture under which our senior subordinated notes are issued limit, but do not prohibit, us or our subsidiaries
from incurring additional indebtedness. If new indebtedness is added to our current debt levels, the related risks that we and our
subsidiaries now face could intensify.
Terms and covenants in our financing arrangements limit, and other future financing agreements may limit, our ability to operate
our business.
The credit agreements governing our senior revolving credit facility and second lien credit facility, as well as the indenture
governing our senior notes, contain, and any of our other future financing agreements may contain, terms and covenants imposing
operating and financial restrictions on our business.
For example, the maximum borrowing capacity under the ABL Amendment is determined by a formula and may fluctuate
depending on the value of the collateral included in such formula at the time of determination. If the value of our collateral were to
decrease, our borrowing capacity on which we are able to draw additional funds or issue letters of credit could be limited. In addition,
the credit agreement governing our senior revolving credit facility requires us to satisfy a fixed charge coverage ratio under certain
circumstances. If we fail to satisfy such covenant, we would be in default and the lenders (through the administrative agent or
collateral agent, as applicable) could elect to declare all amounts outstanding to be immediately due and payable, enforce their
interests in the collateral pledged and/or restrict our ability to make additional borrowings, as applicable. The covenants in the credit
agreements governing our senior revolving credit facility and second lien credit facility, as well as the indenture governing our senior
notes, subject to specified exceptions and to varying degrees, restrict our ability to, among other things:
•
incur additional indebtedness;
•
create, incur, assume or permit to exist any liens;
•
enter into sale and leaseback transactions;
•
enter into operating and finance leases;
•
make investments, loans and advancements;
•
merge, consolidate or reorganize with, or dispose of all or substantially all assets to, a third party;
•
sell assets;
•
make acquisitions;
•
pay dividends;
•
enter into transactions with affiliates;
25
•
prepay or redeem other indebtedness; and
•
issue certain types of capital stock.
These restrictions may interfere with our ability to obtain financings or to engage in other business activities, which could have
a material adverse effect on our results of operations, cash flows or financial condition.
Adverse capital and credit market conditions may affect our ability to access capital and meet liquidity needs.
The domestic and worldwide capital and credit markets may experience significant volatility, disruptions and dislocations with
respect to price and credit availability. Should we need additional funds or to refinance our existing indebtedness, we may not be able
to obtain such additional funds or refinancing on acceptable terms, or at all.
We need liquidity to pay our operating and capital expenses, interest on our debt and remaining obligations on our new build
program. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. The principal sources of
our liquidity are cash flow from operations and borrowings under our senior revolving credit facility. Earnings from our operations
and our working capital requirements can vary significantly from period to period based primarily on the mix of our projects
underway and the percentage of project work completed during the period. Capital expenditures may also vary significantly from
period to period. While we manage cash requirements for working capital and capital expenditure needs, unpredictability in cash
collections and payments has required us in the past and may in the future require us to borrow on our line of credit from time to time
to meet the needs of our operations.
In the event these resources do not satisfy our liquidity needs, we may have to seek additional financing. The availability of
additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the volume of
trading activities, our credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative
perception of our long- or short-term financial prospects if the level of our business activity decreased due to a market downturn. If
internal sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional financing on favorable
terms, or at all. During the second quarter of 2024, Moody’s Investor Services changed our outlook from negative to stable and
reaffirmed our corporate credit rating at B2. In the third quarter of 2024, S&P Global Ratings upgraded our corporate credit rating
from CCC+ to B- and reaffirmed our outlook as stable. These credit ratings are below investment grade and could raise our cost of
financing. As a consequence, we may not be able to issue additional debt in amounts and/or with terms that we consider to be
reasonable. One or more of these occurrences could limit our ability to pursue other business opportunities.
Regulatory requirements for derivative transactions could adversely impact our ability to hedge interest rate, currency or
commodity risks.
We may enter into interest rate swap agreements to manage the interest rate paid with respect to our fixed rate indebtedness,
foreign exchange forward contracts to hedge currency risk and heating oil commodity swap contracts to hedge the risk that
fluctuations in diesel fuel prices will have an adverse impact on cash flows associated with our domestic dredging contracts. The
Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and regulations adopted by a number of U.S. federal
regulatory agencies created a comprehensive statutory and regulatory framework for derivative transactions, including foreign
currency and other over-the-counter derivative hedging transactions. While a number of provisions of Dodd-Frank have been
implemented, certain key provisions have not yet been implemented or remain subject to uncertainty. Furthermore, certain provisions
of Dodd-Frank may be modified or repealed in the future. Any substantial change in the financial regulatory environment could create
additional new compliance costs for us or cause us to alter the manner in which we manage risk, which could have a materially
adverse effect on our business. The rules adopted or to be adopted under Dodd-Frank may significantly reduce our ability to execute
strategic hedges to manage our interest expense, reduce our fuel commodity uncertainty and hedge our currency risk thus protecting
our cash flows. In addition, the banks and other derivatives dealers who are our contractual counterparties are required to comply with
extensive regulation under Dodd-Frank. The cost of our counterparties’ compliance will likely be passed on to customers such as
ourselves, thus potentially decreasing the benefits to us of hedging transactions and potentially reducing our profitability.
We may be subject to foreign exchange risks, which could result in large cash losses.
We are exposed to market risk associated with changes in foreign currency exchange rates. The primary foreign currencies to
which the Company has exposure are the Bahraini Dinar and the Euro. We have unhedged foreign currency exposure related to the
new inclined fall-pipe vessel for subsea rock installation build. Our international contracts may be denominated in foreign currencies,
which will result in additional risk of fluctuating currency values and exchange rates, hard currency shortages and controls on
currency exchange. Changes in the value of foreign currencies could increase our U.S. dollar costs for, or reduce our U.S. dollar
26
revenues from, our foreign operations. Any increased costs or reduced revenues as a result of foreign currency fluctuations could
affect our profits.
Our investments in, and extensions of payment terms for, privately financed projects could result in significant losses.
We have participated and may continue to participate in privately financed projects that enable state and local governments and
other customers to finance dredging, such as dredging of local navigable waterways and lakes, coastal protection and infrastructure
projects. These projects typically include the facilitation of non-recourse financing and the provision of dredging, environmental,
infrastructure and related services. We may incur contractually reimbursable costs and may accept extended payment terms, extend
debt financing and/or make an equity investment in an entity prior to, in connection with, or as part of project financing, and in some
cases we may be the sole or primary source of the project financing. Project financing may also involve the use of real estate,
environmental, wetlands or similar credits. If a project is unable to obtain other financing on terms acceptable to it in amounts
sufficient to repay or redeem our investments, we could incur losses on our investments and any related contractual receivables. After
completion of these projects, the return on our equity investments can be dependent on the operational success of the project and
market factors or sale of the aforementioned credits, which may not be under our control. As a result, we could sustain a loss of part or
all of our equity investments in such projects or have to recognize the value of the credits at a lower amount than expected in the
contract bid.
Risks Related to our Stock
Our common stock is subject to restrictions on foreign ownership.
We are subject to government regulations pursuant to the Dredging Act, the Jones Act, the Shipping Act and the vessel
documentation laws set forth in Chapter 121 of Title 46 of the United States Code. These statutes require vessels engaged in the
transport of merchandise or passengers, or dredging in the navigable waters of the U.S., to be owned and controlled by U.S. citizens.
The U.S. citizenship ownership and control standards require the vessel-owning entity to be at least 75% U.S.-citizen owned. Our
certificate of incorporation contains provisions limiting non-citizenship ownership of our capital stock. If our board of directors
determines that persons who are not citizens of the U.S. own more than 22.5% of our outstanding capital stock or more than 22.5% of
our voting power, we may redeem such stock. The required redemption price could be materially different from the current price of
our common stock or the price at which the non-citizen acquired the common stock. If a non-citizen purchases our common stock,
there can be no assurance that they will not be required to divest the shares and such divestiture could result in a material loss. Such
restrictions and redemption rights may make our equity securities less attractive to potential investors, which may result in our
common stock having a lower market price than it might have in the absence of such restrictions and redemption rights.
Delaware law and our charter documents may impede or discourage a takeover that our stockholders may consider favorable.
The provisions of our certificate of incorporation and bylaws may deter, delay or prevent a third-party from acquiring us. These
provisions include:
•
limitations on the ability of stockholders to amend our charter documents, including stockholder supermajority voting
requirements;
•
the inability of stockholders to call special meetings;
•
advance notice requirements for nominations for election to the board of directors and for stockholder proposals; and
•
the authority of our board of directors to issue, without stockholder approval, up to 1,000,000 shares of preferred stock
with such terms as the board of directors may determine and to issue additional shares of our common stock.
We are also subject to the protections of Section 203 of the Delaware General Corporation Law, which prevents us from
engaging in a business combination with a person who acquires at least 15% of our common stock for a period of three years from the
date such person acquired such common stock, unless board or stockholder approval was obtained.
These provisions could have the effect of delaying, deferring or preventing a change in control of our company, discourage
others from making tender offers for our shares, lower the market price of our stock or impede the ability of our stockholders to
change our management, even if such changes would be beneficial to our stockholders.
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Our stockholders may not receive dividends because of restrictions in our debt agreements or Delaware law.
Our ability to pay dividends is restricted by the agreements governing our debt, including our ABL Credit Agreement, our
bonding agreements and the indenture governing our senior unsecured notes. In addition, under Delaware law, our board of directors
may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the Delaware
General Corporation Law, or, if we do not have a surplus, it is paid out of our net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. To the extent we do not have adequate surplus or net profits, we will be prohibited from
paying dividends.
Significant fluctuations in the market price of our common stock may affect the ability of holders to resell our common stock at
prices that they find attractive.
The price of our common stock on the NASDAQ Global Market constantly changes. We expect that the market price of our
common stock will continue to fluctuate. The market price of our common stock may fluctuate as a result of a variety of factors, many
of which are beyond our control. These factors include:
•
changes in market conditions;
•
quarterly variations in our operating results;
•
operating results that vary from the expectations of management, securities analysts and investors;
•
changes in expectations as to our future financial performance;
•
announcements of strategic developments, significant contracts, acquisitions and other material events by us or our
competitors;
•
the operating and securities price performance of other companies that investors believe are comparable to us;
•
future sales of our equity or equity-related securities;
•
changes in the economy and the financial markets;
•
departures of key personnel;
•
changes in governmental regulations; and
•
geopolitical conditions, such as acts or threats of terrorism, political instability, civil unrest or military conflicts.
In addition, in recent years, global stock markets have experienced extreme price and volume fluctuations. This volatility has
had a significant effect on the market price of securities issued by many companies for reasons often unrelated to their operating
performance. These broad market fluctuations may adversely affect the market price of our common stock, regardless of our operating
results.
Volatility in the financial markets could cause a decline in our stock price, which could trigger an impairment of the goodwill of
individual reporting units that could be material to our consolidated financial statements. A significant drop in the price of our stock
could also expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management's
attention and resources, which could adversely affect our business. Additionally, volatility or a lack of positive performance in our
stock price may adversely affect our ability to retain key employees, many of whom are awarded equity securities, the value of which
is dependent on the performance of our stock price.
General Risk Factors
Our methods of accounting for recognized revenue involve significant estimates and could result in a change in previously
recorded revenue and profit.
We recognize revenue on our projects using generally accepted accounting principles in the United States (“GAAP”) including
guidance from Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606). The majority of our work is
performed on a fixed-price basis. Contract revenue is recorded over time based on estimates which we develop from information
known to us at the time of recording, but which may change. The cumulative impact of revisions to estimates is reflected in the period
in which these changes are experienced or become known. Given the risks associated with the variables in these types of estimates, it
28
is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded
net revenues and profits.
Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.
We maintain various insurance policies, including hull and machinery, pollution liability, general liability and personal injury.
We partially self-insure risks covered by our policies. While we reserve for such self-insured exposures when appropriate for
accounting purposes, we are not required to, and do not, specifically set aside funds for the self-insured portion of claims. We may not
have insurance coverage or sufficient insurance coverage for all exposures potentially arising from a project. Furthermore, in
situations where there is insurance coverage, if multiple policies are involved, we may be subject to a number of self-retention or
deductible amounts which in the aggregate could have an adverse effect on our business, results of operations, cash flows or financial
condition. At any given time, we are subject to Jones Act personal injury claims and claims from general contractors and other third
parties for personal injuries. Our insurance policies may not be adequate to protect us from liabilities that we incur in our business. We
may not be able to obtain similar levels of insurance on reasonable terms, or at all. Our inability to obtain such insurance coverage at
acceptable rates or at all could have a material adverse effect on our business, results of operations, cash flows or financial condition.
If we are unable to find, attract and retain skilled labor and key personnel, including governance personnel, our business, results
of operations, cash flows or financial condition could be materially and adversely affected.
Our ability to attract and retain reliable, qualified personnel is a significant factor that enables us to successfully bid for and
profitably complete our work. This includes members of our board of directors, management, project managers, estimators, skilled
engineers, supervisors, foremen, equipment operators and laborers. The loss of the services of any of our management could have a
material adverse effect on us. If we do not succeed in retaining our current key employees and attracting, developing and retaining
new highly-skilled employees, our reputation may be harmed and our operations and future earnings may be negatively impacted. We
may not be able to maintain an adequate skilled labor force necessary to operate efficiently and to support our growth strategy. We
have from time to time experienced, and may in the future experience, shortages of certain types of qualified equipment operating
personnel. We have experienced, and may continue to experience, some difficulty finding skilled labor in the current labor shortage
market. The supply of experienced engineers, project managers, field supervisors and other skilled workers may not be sufficient to
meet current or expected demand. If we are unable to hire employees with the requisite skills, we may also be forced to incur
significant training expenses. The occurrence of any of the foregoing could have an adverse effect on our business, results of
operations, cash flows or financial condition.
In addition, any abrupt changes in our management or board of directors may lead to concerns regarding the direction or
stability of our business, which may be exploited by our competitors, result in the loss of business opportunities, cause concern to our
current or potential customers or suppliers, or make it more difficult to retain existing personnel or attract and retain new personnel.
Changes in management or the board could be time-consuming, result in significant additional costs to us and could be disruptive of
our operations and divert the time and attention of management and our employees away from our business operations and executing
on our strategic plan. The unexpected loss of members of our board of directors or senior management team could be disruptive to our
operations, jeopardize our ability to raise additional funding and have an adverse effect on our business. The failure of our directors or
any new members of our board of directors or management to perform effectively could have a significant negative impact on our
business, financial condition and results of operations.
Disruption, failure, data corruption, cyber-based attacks or security breaches of our IT systems could adversely affect our business
and results of operations.
We rely on information technology (“IT”) systems in order to achieve our business objectives, including to transmit and store
electronic information, to capture knowledge of our business including vessel operation systems containing information about
production, efficiency and vessel positioning, to conduct our accounting, financial and treasury activities, to store historical financial,
project and proprietary information, to monitor our vessel maintenance and engine systems and to communicate within the
organization and with customers, suppliers, partners and other third parties. Our portfolio of hardware and software products, solutions
and services and our enterprise IT systems may be vulnerable to damage or disruption caused by circumstances beyond our control
such as catastrophic events, power outages, natural disasters and computer system or network failures. The Company’s IT systems
may also be subject to cybersecurity attacks including malware, other computer viruses or malicious software, spoofing or phishing
email attacks, attempts to gain unauthorized access to our data, the unauthorized release, corruption or loss of our data, loss or damage
to our data delivery systems and other electronic security breaches. The failure or disruption of our IT systems to perform as
anticipated for any reason could disrupt our business and result in decreased performance, significant remediation costs, transaction
errors, loss of data, processing inefficiencies, downtime, failure to properly estimate the work or costs associated with projects,
litigation, the loss of customers or suppliers and enforcement actions by regulatory agencies. A significant disruption or failure could
have a material adverse effect on our business, operating results, cash flows or financial condition.
29
In addition, on January 17, 2025, the U. S. Coast Guard released final rules, to be effective July 16, 2025, on maritime security
regulations by establishing minimum cybersecurity requirements for U.S. flagged vessels. The final rule addresses current and
emerging cybersecurity threats in the marine transportation systems by adding minimum cybersecurity requirements to help detect
risks and respond to and recover from cybersecurity incidents. These include requirements to develop and maintain a Cybersecurity
Plan, designate a Cybersecurity Officer, and take various measures to maintain cybersecurity within the marine transportation system.
As we operate our vessels under the jurisdiction of the U.S. Coast Guard, we are subject to these new regulations. If we do not
satisfactorily comply with the regulations, we may suffer penalties which could have a material adverse effect on our business,
operating results, cash flows or financial condition.
Impairments to our goodwill or other intangible assets could negatively affect our financial condition and results of operations.
Under current accounting guidelines, we must assess, at least annually and potentially more frequently, whether the value of our
goodwill and other intangible assets have been impaired. Any impairment of goodwill or other intangible assets as a result of such
analysis would result in a non-cash charge against earnings, which charge could materially adversely affect our business, operating
results or financial condition. We test goodwill annually for impairment in the third quarter of each year, or more frequently should
circumstances dictate. A significant and sustained decline in our future cash flows, a significant adverse change in the economic
environment, slower growth rates or our stock price falling below our net book value per share for a sustained period could result in
the need to perform additional impairment analysis in future periods. If we were to conclude that a future write-down of goodwill or
other intangible assets is necessary, then we would be required to record a non-cash charge against earnings, which, in turn, could
have a material adverse effect on our business, results of operations or financial condition.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Our process of assessing, identifying and managing material risks from cybersecurity threats is integrated into our overall
enterprise risk management (“ERM”) process. The audit committee of the board of directors (the “Audit Committee”) oversees our
ERM framework, including cybersecurity and other information technology risks. This involves collaboration with key personnel,
including the Chief Financial Officer (“CFO”), the Chief Information Security Officer (“CISO”), IT operational management and
Internal Audit. We also have a cross-functional team led by the CISO, which meets weekly with a fixed agenda to discuss mitigation
and action-items related to ERM cyber risk updates, cyber statistics dashboards and threat vectors. Our CISO has a comprehensive
background in various enterprise-wide information technology and cybersecurity leadership roles within the global energy and oil and
gas sectors and strategy consulting. The Audit Committee receives a report from our Director of Internal Audit on the ERM risk
register at least three times a year.
The CISO and Chief Legal Officer (“CLO”) are key members of management responsible for strategic cybersecurity leadership.
They lead tactical threat assessment, keep an updated risk register and develop and maintain governance and procedures. The CISO
reports to the CFO and presents at least annually to the Audit Committee and the full board of directors on cybersecurity processes.
The CLO reports to the CEO, and to the Audit Committee and the full board of directors with regard to significant cybersecurity
incidents, as further described below. Our CLO has specific training in cybersecurity awareness and holds a certificate of
Cybersecurity Governance for the Board of Directors from the Massachusetts Institute of Technology Sloan School of Management.
To help manage cybersecurity risks, we have implemented a cybersecurity program consisting of security risk assessments,
testing, continuous surveillance, dynamic incident response services and business continuity planning. Our cybersecurity program
utilizes the guidelines of the National Institute of Standards and Technology Cybersecurity Framework to define material risks and
establish controls designed to protect, detect, respond to and recover from cybersecurity incidents. In addition, we engage consultants
to assess our resilience against applicable practices and standards for our industry.
We use threat intelligence, vulnerability scanning and security assessments to identify and classify risks and impact. We engage
multiple third-party cybersecurity services and experts who collaborate with our internal team to provide a multilayered approach for
real-time threat detection across cloud services, networks and endpoints. Our security measures are under continuous scrutiny, with
regular enhancements and updates to our policies and operational protocols integrated with a feedback loop from tabletop exercises.
Our business continuity and response plan outlines our plans, procedures and policies governing our general information security
program. As part of our business continuity plan and security awareness, we conduct tabletop exercises and regular mandatory training
for all employees. We have also implemented a cybersecurity enhancement program, focusing on special initiatives which include
automating security incident response, including systems that can provide quicker business recovery from multi-geographical
locations, strengthening the governance framework, upgrading the hybrid server environment on our vessels and improving wireless
30
communication system resilience. In addition, we have a process in place to manage cybersecurity risks associated with third-party
service providers. We are in the process of imposing the new regulatory security requirements upon our suppliers, which will include:
maintaining an effective security management program, abiding by information handling and asset management requirements and
notifying us in the event of any known or suspected cyber incident.
The status of our cybersecurity is reported to senior management as needed, and formal incident reports are made for incidents
with risk of significant impact to the Company. Such incidents are escalated to our Incident Response Team, led by the Business
Continuity Coordinator (“BCC”), which follows our business continuity plan and includes executive summary for management, along
with compliance reports to regulators within the required timeframes. The BCC is responsible for providing timely information to the
CLO, who reports to the Audit Committee and the full board of directors.
Although we have not experienced any material cybersecurity events to date, new advanced cybersecurity threats and attack
vectors could materially affect our business strategy, results of operation or financial condition, as further discussed in the risk factors
“Disruption, failure, data corruption, cyber-based attacks or security breaches of our IT systems could adversely affect our business
and results of operations” in Part I, Item 1A of this Annual Report on Form 10-K.
Item 2. Properties.
The Company owns or leases the properties described below. The Company believes that its existing facilities are adequate for
its operations.
The Company’s headquarters are located at 9811 Katy Freeway, Suite 1200, Houston, Texas 77024 with approximately 31,336
square feet of office space that it leases with a term expiring in 2030. As of December 31, 2024, the Company owns or leases the
following additional facilities:
Location
Type of
Facility
Size
Leased or
Owned
Staten Island, NY
Yard
4.4
Acres
Owned
Morgan City, LA
Yard
6.4
Acres
Owned
Norfolk, VA
Yard
15.3
Acres
Owned
Norfolk, VA
Yard
16.2
Acres
Leased
Little Rock, AR
Yard
11.8
Acres
Leased
Cape Girardeau, MO
Office
726
Square feet
Owned
Cape Girardeau, MO
Storage
7,200
Square feet
Owned
Cape Girardeau, MO
Yard
18.4
Acres
Owned
Jacksonville, FL
Office
4,171
Square feet
Leased
Oakbrook Terrace, IL
Office
30,448
Square feet
Leased
Item 3. Legal Proceedings.
For additional discussion of certain litigation involving the Company, see the disclosures under “Legal proceedings and other
contingencies” included within Note 12, “Commitments and contingencies,” to the Company’s consolidated financial statements.
Item 4. Mine Safety Disclosures.
Not applicable.
31
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is traded under the symbol “GLDD” on the NASDAQ Global Market.
The graph below shows the cumulative total return to stockholders of the Company’s common stock during a five year period
ended December 31, 2024, the last trading day of our 2024 fiscal year, compared with the return on the NASDAQ Composite Index
and a group of our peers which we use internally as a benchmark for our performance. The graph assumes initial investments of $100
each on December 31, 2019, in GLDD stock (assuming reinvestment of all dividends paid during the period), the NASDAQ
Composite Index and the peer group companies, collectively.
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
12/31/2024
Great Lakes Dredge & Dock Corp
$
100.00
$
116.24
$
138.75
$
52.52
$
67.78
$
99.65
Peer Average (see below)
100.00
83.32
71.68
77.80
104.33
153.26
NASDAQ Composite Index
100.00
143.64
174.36
116.65
167.30
215.22
32
The peer group in the graph above is composed of the following member companies:
Company
Ticker
Ameresco
AMRC
Argan, Inc.
AGX
Badger Infrastructure Solutions Ltd.
BADFF
Construction Partners Inc
ROAD
Forum Energy Technologies, Inc.
FET
Helix Energy Solutions Group, Inc.
HLX
KLX Energy Services Holdings, Inc.
KLXE
Limbach Holdings
LMB
Logistec Corporation
LGT
Matrix Service Company
MTRX
Mistras Group
MG
Northwest Pipe Company
NWPX
NPK International Inc.
NPKI
NV5 Global Inc
NVEE
Oil States International, Inc.
OIS
Orion Marine Group, Inc.
ORN
ProPetro Holding Corp.
PUMP
Sterling Construction Company, Inc.
STRL
Team, Inc.
TISI
Tidewater Inc.
TDW
Given the usage of this peer group for compensation purposes and the fact that each peer is a capital-intensive business, the
Company deems it appropriate to also use this peer group for showing the comparative cumulative total return to stockholders of Great
Lakes.
Holders of Record
As of February 17, 2025, the Company had approximately 16 shareholders of record of the Company’s common stock. A
substantial number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares are held of
record by banks, brokers and other financial institutions.
Dividends
The Company does not currently pay dividends to its common stockholders. The declaration and payment of future dividends
will be at the discretion of Great Lakes’ board of directors and depends on many factors, including general economic and business
conditions, the Company’s strategic plans, financial results and condition, legal requirements including restrictions and limitations
contained in the Company’s senior credit agreement, bonding agreements and the indenture relating to the senior unsecured notes and
other factors the board of directors deems relevant. Accordingly, the Company cannot ensure the size of any such dividend or that the
Company will pay any future dividend.
Issuer Purchases of Equity Securities
The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2024.
Item 6. [Reserved]
Not applicable.
33
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Great Lakes is the largest provider of dredging services in the United States which is complemented with a long history of
performing significant international projects. The Company is also fully engaged in expanding its core business into the offshore
energy industry. The Company operates in one operating segment, which is also the Company’s one reportable segment and reporting
unit.
Dredging generally involves the enhancement or preservation of the navigability of waterways or the protection of shorelines
through the removal or replenishment of soil, sand or rock. Domestically, our work generally is performed in coastal waterways and
deep water ports. The U.S. dredging market consists of four primary types of work: capital, coastal protection, maintenance and rivers
& lakes. Capital dredging consists primarily of port expansion projects, which involve the deepening of channels and berthing basins
to allow access by larger, deeper draft ships and the provision of land fill used to expand port facilities. In addition to port work,
capital projects also include coastal restoration and land reclamations, trench digging for pipelines, tunnels, and cables and other
dredging related to the construction of breakwaters, jetties, canals and other marine structures. Coastal protection projects generally
involve moving sand from the ocean floor to shoreline locations where erosion threatens shoreline assets. Maintenance dredging
consists of the re-dredging of previously deepened waterways and harbors to remove silt, sand and other accumulated sediments. Due
to natural sedimentation, most channels generally require maintenance dredging every one to three years, thus creating a recurring
source of dredging work that is typically non-deferrable if optimal commercial navigability is to be maintained. In addition, severe
weather such as hurricanes, flooding and droughts can also cause the accumulation of sediments or severe erosion and drive the need
for maintenance and coastal protection dredging. Rivers & lakes dredging and related operations typically consist of lake and river
dredging, flood control dredging, inland levee and construction dredging, environmental restoration and habitat improvement and
other marine construction projects.
The Company’s bid market is defined as the aggregate dollar value of domestic dredging projects on which we bid or could
have bid if not for capacity constraints or other considerations (“bid market”). We experienced an average combined bid market share
in the U.S. of 31% over the three-year period ended December 31, 2024, including 28%, 59%, 19% and 16% of the domestic capital,
coastal protection, maintenance and rivers & lakes sectors, respectively.
The Company’s largest domestic customer is the U.S. Army Corps of Engineers (the “Corps”), which has responsibility for
federally funded projects related to navigation and flood control of U.S. waterways. Multi-jurisdictional cost sharing arrangements
allow the Corps to utilize funds from sources other than the federal budget to prioritize additional projects where waterway
infrastructure improvements can have an impact to large regions. Although some of a project’s funding may ultimately be derived
from multiple sources, the Corps maintains the authority over the project and is our customer. In 2024, our revenues earned from
contracts with federal government agencies were approximately 57% of total revenue, down from the average of the three-year period
ended December 31, 2023 of 74%. The decrease in the federal government revenue percentage is a result of additional revenues from
state and local governments and private customers during 2024.
The Company’s fleet, which includes 16 dredges, 13 material transportation barges, one drillboat, and numerous other support
vessels, is the largest and most diverse fleet of any U.S. dredging company. Our fleet of dredging equipment can be utilized on one or
many types of work and in various geographic locations. This flexible approach to our fleet utilization, driven by the project scope and
equipment, enables us to move equipment in response to changes in demand for dredging services to take advantage of the most
attractive opportunities.
The Company’s vessels are subject to periodic regulatory dry dock inspections to verify that the vessels have been maintained in
accordance with the rules of the U.S. Coast Guard and the American Bureau of Shipping (“ABS”) and that recommended repairs have
been satisfactorily completed. Regulatory dry dock frequency is a statutory requirement mandated by the U.S. Coast Guard and the
ABS. The Company’s vessels undergo regulatory dry-docks every two to three years or every five years, depending on the vessel type
and may also go into dry dock on an as-needed basis for upgrades, maintenance and/or repairs. The Company did not commence any
regulatory dry dock inspections during the fourth quarter of 2024, but did return to work the vessel that was dry docked for regulatory
inspections as of September 30, 2024. During the fourth quarter of 2023, the Company returned to work the vessel that was dry
docked for regulatory inspections as of September 30, 2023.The Company experienced regulatory dry dock inspections on 4 dredges
in both 2024 and 2023.
As of the end of the fourth quarter of 2024, the Company had one dredge cold stacked. We expect this cold stacked equipment
can be easily reactivated when market conditions are favorable for the Company. During 2024, the Company began the reactivation of
one of the previously cold stacked vessels in anticipation of commencing a contract in 2025.
34
While the Company continues to reinvest in our core dredging business and renew our dredging fleet, we remain steadfast in our
commitment to executing a long-term strategy that maximizes growth opportunities for the Company.
We believe that Great Lakes has established a unique business position with our subsea rock installation (“SRI”) vessel, the
Acadia, the first and only Jones Act SRI vessel being constructed in the United States, targeting the offshore wind, oil and gas and
telecommunication industries, both domestically and internationally. The Acadia has secured offshore wind rock placement contracts
for Equinor’s Empire Wind 1 and Ørsted’s Sunrise Wind projects to protect foundations and cables. In addition, during the fourth
quarter, we signed a vessel reservation agreement for the Acadia for another wind project in the United States. All three of these
projects are fully permitted and we believe will not be directly impacted by the President’s Executive Order pausing issuance of new
offshore wind leases and permits.
Despite the Executive Order signed by President Trump earlier this year pausing the issuance of new wind leases and permits,
we believe offshore wind remains an important part of the array of technologies required for the U.S. to achieve future energy
independence. The latest BloombergNEF offshore wind market outlook shows global offshore wind expected to grow tenfold by 2040
with a forecast exceeding 700GW of installed power. In addition, according to industry sources, market expectations for
telecommunication and oil and gas scour protection projects globally are estimated to require the capacity of approximately 10 rock
placement vessels of Acadia’s class. We believe there is an undersupply of SRI vessels and we are pursuing opportunities in a number
of markets, which are expected to provide the Acadia with work planned for 2026 and beyond.
In addition to targeting domestic offshore wind projects, the Acadia is also well suited for work outside of U.S. offshore wind
and over the past year we have been broadening our target markets for the Acadia to include international offshore wind projects, as
well as projects to protect critical subsea infrastructure such as oil and gas pipelines and telecommunication and power cables. These
additional markets pave the way for the rebranding of our offshore wind division to Offshore Energy. Entering the Offshore Energy
market offers us the opportunity to diversify our client base, enter different markets and grow our bottom line.
We expect to continue to build our offshore energy capabilities, bid on SRI projects and position the Company for growth in the
offshore energy markets, as many of our European competitors have done in the international offshore energy markets.
Contract Revenues
Most of the Company’s contracts are obtained through competitive bidding on terms specified by the party inviting the bid. The
types of equipment required to perform the specified service, project site conditions, the estimated project duration, seasonality,
location and complexity of a project affect the cost of performing the contract and the price that contractors will bid.
Fixed-price contracts, which comprise substantially all of the Company’s revenue, will most often represent a single
performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the
contracts and, therefore, not distinct. We capitalize certain pre-contract and pre-construction costs, and defer recognition over the life
of the contract. Our performance obligations are satisfied over time and revenue is recognized using contract fulfillment costs incurred
to date compared to total estimated costs at completion, also known as cost-to-cost, to measure progress towards completion. Contract
modifications are changes in the scope or price (or both) of a contract that are approved by the parties to the contract. We recognize a
contract modification when the parties to a contract approve a modification that either creates new, or changes existing, enforceable
rights and obligations of the parties to the contract. Contract modifications are included in the transaction price only if it is probable
that the modification estimate will not result in a significant reversal of revenue. Revisions in estimated gross profit percentages are
recorded in the period during which the change in circumstances is experienced or becomes known. As the duration of most of our
contracts are one year or less, the cumulative net impact of these revisions in estimates, individually and in the aggregate across our
projects, does not significantly affect our results across annual reporting periods. Provisions for estimated losses on contracts in
progress are made in the period in which such losses are determined.
Costs and Expenses
The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and
long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor generally is hired on a project-
by-project basis. The Company is a party to numerous collective bargaining agreements in the U.S. that govern our relationships with
our unionized hourly workforce.
35
Primary Factors that Determine Operating Profitability
The Company’s results of operations for an annual or quarterly period are generally determined by the following three factors:
•
Bid wins and dredge employment— The Company recognizes backlog upon a project being awarded. We begin to
recognize revenues when a dredging contract commences a major activity on the project. The period prior to the
commencement of a major activity for dredging projects can range from 45 days to six months depending on the
complexity of the project and environmental work windows. Although our dredging fleet is subject to downtime for
scheduled periodic maintenance and regulatory dry dockings, we seek to maximize our revenues by employing our
dredging fleet on a full-time basis. If a dredge is idle (i.e., the dredge is not employed on a dredging project or undergoing
scheduled periodic maintenance and repair), we do not earn revenue with respect to that dredge during the time period for
which it is idle.
•
Project and dredge mix — The Company’s domestic dredging projects generally involve capital, maintenance, coastal
protection and rivers & lakes work, while our foreign dredging projects generally involve capital work. In addition, our
projects vary in duration which is generally driven by the type of work undertaken. In general, projects of longer duration
result in less dredge downtime in a given period. For example, capital deepening projects generally span several years due
to their complexity and environmental windows. Moreover, our dredges have different physical performance capabilities
and typically work on certain types of dredging projects. Accordingly, our dredges have different daily revenue generating
capacities.
We generally expect to achieve different levels of gross profit margin (i.e., gross profit divided by revenues) for work
performed on the different types of dredging projects and for work performed by different types of dredges. Our expected
gross margin for a project is based upon our estimates at the time of the bid. Although we seek to bid on and win projects
that will maximize our gross margin, we cannot control the type of dredging projects that are available for bid from time
to time, the type of dredge that is needed to complete these projects, the competitive landscape at the time of bid or the
time schedule upon which these projects are required to be completed. As a result, in some quarters the Company works
on a mix of dredging projects that, in the aggregate, have relatively high expected gross margins (based on project type
and dredges employed) and in other quarters, we work on a mix of dredging projects that, in the aggregate, have relatively
low expected gross margins (based on project type and dredges employed).
•
Project execution—The Company seeks to execute all of our projects consistent with or at a higher production than our
as-bid project estimates. In general, our ability to achieve our project estimates depends upon many factors including soil
conditions, weather, variances from estimated project conditions, equipment mobilization time periods, unplanned
equipment downtime or other events or circumstances beyond our control. If we experience any of these events and
circumstances, the completion of a project will often be accelerated or delayed, as applicable, and, consequently, we will
experience project results that are better or worse than our as-bid project estimates. We do our best to estimate for events
and circumstances that are not within our control; however, these situations are inherent in dredging.
Critical Accounting Policies and Estimates
The Company’s significant accounting policies are discussed in the Notes to the consolidated financial statements included in
Item 15 of this Annual Report on Form 10-K. The application of certain of these policies requires significant judgments or an
estimation process that can affect our results of operations, financial position and cash flows, as well as the related footnote
disclosures. We base our estimates on historical experience and other assumptions that we believe are reasonable. If actual amounts
are ultimately different from previous estimates, the revisions are included in our results of operations for the period in which the
actual amounts become known. The following accounting policies comprise those that management believes are the most critical to
aid in fully understanding and evaluating our reported financial results.
Cost-to-cost method of revenue recognition— Revenue is recognized using contract fulfillment costs incurred to date compared
to total estimated costs at completion, also known as cost-to-cost, to measure progress towards completion. Additionally, we capitalize
certain pre-contract and pre-construction costs and defer recognition over the life of the contract. In preparing estimates, we draw on
our extensive experience in the dredging businesses. We use this experience in conjunction with the project specifications to select
equipment and to design a production technique for a project. We also utilize our database of historical dredging information which
includes daily costs, mobilization and dredge production references on the same or similar projects to ensure that our estimates are as
accurate as possible, given current circumstances. The daily costs and project duration are significant factors in our cost estimates to
complete the project. Weather events, mechanical delays or other unplanned downtime instances may cause the actual costs to
complete the project to differ from these estimates.
Contract modifications are changes in the scope or price (or both) of a contract that are approved by the parties to the contract.
We recognize a contract modification when the parties to a contract approve a modification that either creates new, or changes
36
existing, enforceable rights and obligations of the parties to the contract. Contract modifications are included in the transaction price
only if it is probable that the modification estimate will not result in a significant reversal of revenue. Contract modifications are
routine in the performance of the Company’s contracts. In most instances, contract modifications are for services that are not distinct,
and, therefore, are accounted for as part of the existing contract. Revisions in estimated gross profit percentages are recorded in the
period during which the change in circumstances is experienced or becomes known. As the duration of most of the Company’s
contracts is one year or less, the cumulative net impact of these revisions in estimates, individually and in the aggregate across
projects, does not significantly affect results across annual reporting periods. Provisions for estimated losses on contracts in progress
are made in the period in which such losses are determined.
Impairment of goodwill—Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual
tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its
carrying value. The Company believes that this estimate is a critical accounting estimate because: (i) goodwill is a material asset and
(ii) the impact of an impairment could be material to the consolidated balance sheet and consolidated statement of operations. We
perform our annual impairment test as of July 1 each year.
When conducting the annual impairment test for goodwill, the Company can choose to assess qualitative factors to determine
whether it is more likely than not the fair value of the reporting unit is below its carrying value. Qualitative factors considered include
macroeconomic, industry and market environments, overall financial performance and market indications of value. If a qualitative
assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test.
Otherwise, no further analysis is required. The Company also may elect to forego this step and just perform the quantitative
impairment test.
When performing a quantitative impairment test, the Company assesses the fair values of its reporting unit using both an
income-based approach and a market-based approach. Under the income approach, the fair value of the reporting unit is based on the
present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of
expected future revenue, profitability and capital expenditures related to our new build program, future market growth trends,
forecasted revenues and expenses, working capital assumptions, appropriate discount rates and other variables. The market approach
measures the value of a reporting unit through comparison to comparable companies. Under the market approach, the Company uses
the guideline public company method by applying estimated market-based enterprise value multiples to the reporting unit’s estimated
trailing and forward Adjusted EBITDA. The Company analyzes companies that performed similar services or are considered peers.
Due to the fact that there are no public companies that are direct competitors, the Company weighs the results of this approach less
than the income approach.
In 2024, the Company performed a qualitative goodwill impairment test. The Company performed its annual test of impairment
as of July 1, 2024 with no indication of impairment as of the test date. The Company assessed qualitative factors for any indications of
potential impairment of the reporting unit. Upon completing this assessment, it was determined that the fair value of the reporting unit
is more likely than not greater than its carrying value as of the assessment date and, as a result, a quantitative test was not performed.
The Company will continue to monitor for changes in facts or circumstances that may impact its estimates. The Company will
perform its next scheduled annual test of goodwill in the third quarter of 2025 should no triggering events occur which would require a
test prior to the next annual test. At December 31, 2024 and 2023, our goodwill was $76.6 million.
37
Results of Operations—Fiscal Years Ended December 31, 2024, 2023 and 2022
The following table sets forth the components of net income (loss) from continuing operations and Adjusted EBITDA, as
defined below, as a percentage of contract revenues for the years ended December 31 2024, 2023 and 2022. The selected financial
data presented below have been derived from the Company’s consolidated financial statements; items may not sum due to rounding.
2024
2023
2022
Contract revenues
100.0 %
100.0 %
100.0 %
Costs of contract revenues
(78.9)
(86.8)
(95.2)
Gross profit
21.1
13.2
4.8
General and administrative expenses
9.3
9.7
7.9
Other (gains) losses
(0.4)
(1.3)
1.2
Operating income (loss)
12.2
4.8
(4.3)
Interest expense—net
(2.3)
(2.1)
(2.2)
Other income (expense)
0.1
0.4
(0.2)
Income (loss) before income taxes
10.0
3.1
(6.7)
Income tax (provision) benefit
(2.4)
(0.7)
1.4
Net income (loss)
7.6
2.4
(5.3)
Adjusted EBITDA
17.8 %
12.4 %
2.6 %
Adjusted EBITDA, as provided herein, represents net income (loss) from continuing operations of Great Lakes Dredge & Dock
Corporation, adjusted for net interest expense, income taxes, depreciation and amortization expense, debt extinguishment, accelerated
maintenance expense for new international deployments, goodwill or asset impairments and gains on bargain purchase acquisitions.
Adjusted EBITDA from continuing operations is not a measure derived in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). The Company presents Adjusted EBITDA as an additional measure by which to evaluate
our operating trends. We believe that Adjusted EBITDA is a measure frequently used to evaluate performance of companies with
substantial leverage and that our primary stakeholders (i.e., its stockholders, bondholders and banks) use Adjusted EBITDA to
evaluate our period to period performance. Additionally, management believes that Adjusted EBITDA provides a transparent measure
of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and
identify strategies to improve operating performance. For this reason, we use a measure based upon Adjusted EBITDA to assess
performance for purposes of determining compensation under our incentive plan. Adjusted 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
Adjusted 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 accelerated maintenance expense for new international deployments, goodwill or asset
impairments, gains on bargain purchase acquisitions, net interest expense and income tax 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 our business. For these reasons, we use net income (loss) to
measure our operating performance and use Adjusted EBITDA only as a supplement. For the years ended December 31, 2024, 2023
and 2022, the Company did not have any adjustments to EBITDA as defined herein. As such, the amounts presented as Adjusted
EBITDA herein also represent EBITDA for the periods presented. The following is a reconciliation of Adjusted EBITDA to net
income (loss) from continuing operations of Great Lakes Dredge & Dock Corporation (in thousands):
2024
2023
2022
(in thousands)
Net income (loss)
$
57,265
$
13,906
$
(34,055)
Adjusted for:
Interest expense—net
17,880
12,140
14,108
Income tax provision (benefit)
18,120
4,406
(9,360)
Depreciation and amortization
42,699
42,525
46,273
Adjusted EBITDA
$
135,964
$
72,977
$
16,966
38
Components of Contract Revenues
The following table sets forth, by type of work, the Company’s contract revenues for the years ended December 31, 2024, 2023
and 2022 (in thousands):
Revenues (in thousands)
2024
2023
2022
Dredging:
Capital—U.S.
$
348,085
$
186,715
$
342,461
Coastal protection
253,360
196,343
192,567
Maintenance
158,882
187,586
98,077
Rivers & lakes
2,366
16,318
15,527
Capital—foreign
-
-
149
Total dredging revenues
762,693
586,962
648,781
Offshore energy
-
2,663
-
Total revenues
$
762,693
$
589,625
$
648,781
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Total revenue was $762.7 million in 2024, an increase of $173.1 million, or 29%, from 2023 total revenue of $589.6 million.
The increase in revenues from the prior year was largely attributable to a significant increase in domestic capital and coastal protection
revenues, due to a significant increase in capital and coastal protection project awards and the delivery of the Galveston Island, the
Company’s newest hopper dredge which began operations in February 2024. These increases were partially offset by decreases in
maintenance and rivers & lakes revenues.
Domestic capital dredging revenues increased $161.4 million, or 86%, to $348.1 million in 2024 when compared to 2023
revenues of $186.7 million. The increase in domestic capital dredging revenues was mostly due to a higher amount of revenue earned
on projects in Texas in the current year when compared to prior year. These increases were partially offset by lower revenue earned on
projects in Virginia and Florida in the current year.
Coastal protection revenues were $253.4 million in 2024, an increase of $57.1 million, or 29%, from $196.3 million in 2023.
The increase in coastal protection revenues for the year ended December 31, 2024 was mainly attributable to an increase in revenue
earned on projects in Florida and Alabama in the current year when compared to the prior year. This increase was partially offset by
lower revenue earned on projects in New York and New Jersey in the current year.
Revenues from maintenance dredging projects in 2024 were $158.9 million, a decrease of $28.7 million, or 15%, from $187.6
million in 2023. The decrease in maintenance revenues during the current year was primarily attributable to a decrease in revenue
earned on projects in North Carolina, South Carolina and Alabama when compared with prior year. This decrease was offset by an
increase in revenue earned on projects in Louisiana, Mississippi and Puerto Rico in the current year.
Rivers & lakes revenues were $2.4 million for 2024, a decrease of $13.9 million, or 86%, from $16.3 million in 2023. The
decrease in rivers & lakes revenue during the current year was mostly attributable to a decrease in revenue earned on projects in
Tennessee and Arkansas as compared to 2023.
We did not earn revenues from foreign dredging operations in 2024 or 2023. Revenues from foreign dredging operations in
2022 were $0.1 million. In 2022, we moved out of foreign operations to focus on domestic projects and do not anticipate any foreign
capital project revenue in the immediate future.
The Company did not earn revenues from offshore energy in 2024. In 2023, the Company recognized revenues of $2.7 million
related to the termination of an offshore energy contract.
Consolidated gross profit for the year ended December 31, 2024 increased by $82.9 million, or 107%, to $160.6 million from
$77.7 million for the year ended December 31, 2023. Gross profit margin (gross profit divided by revenue) for the full year 2024
increased to 21.1%, compared to the prior year's gross profit margin of 13.2%. The higher gross profit and gross profit margin for
2024 were driven by increased revenues as well as improved utilization and project performance in the current year. Additionally, the
project mix during the current year include a larger proportion of higher margin capital and coastal protection projects than prior year.
General and administrative expenses totaled $70.8 million for the year ended December 31, 2024, up from $57.1 million for the
year ended December 31, 2023. The increase was mainly attributable to higher incentive compensation and employee benefit
expenses, partially offset by lower severance and office expenses.
39
Other gains and losses for the year ended December 31, 2024 was a gain of $3.0 million, as compared to a gain of $7.5 million
for the year ended December 31, 2023. The gain in 2024 was mainly attributable to gains on disposals of assets. The gain in 2023 was
primarily the result of a $7.4 million gain recognized that was associated with the termination of an offshore energy contract.
Operating income was $92.8 million and $28.2 million for the years ended December 31, 2024 and 2023, respectively. The
$64.6 million increase was a result of higher gross profit in the current year when compared to prior year, partially offset by higher
general and administrative expenses in the current year when compared to prior year.
The Company’s net interest expense for 2024 totaled $17.9 million compared to $12.1 million in 2023. The increase in net
interest expense was primarily due to higher borrowings from the Second Lien Credit Agreement which was executed during the
second quarter of 2024, partially offset by a decrease in interest expense from lower borrowings under the ABL Credit Agreement.
Income tax provision in 2024 was $18.1 million, compared to $4.4 million in 2023. The increased expense was due to the
increase in pretax net income. The effective tax rate for the year ended December 31, 2024 was 24.0% compared to 24.1% for the year
ended December 31, 2023.
For the year ended December 31, 2024, net income was $57.3 million compared to $13.9 million for the year ended December
31, 2023. The increase in net income of $43.4 million, or 312% from 2023, was primarily driven by the substantial improvement to
operating income in the current year when compared to prior year, partially offset by increases in net interest expense and the income
tax provision in the current year when compared to prior year.
Adjusted EBITDA (as defined and reconciled on page 37) was $136.0 million and $73.0 million for the years ended December
31, 2024 and 2023, respectively. The increase in Adjusted EBITDA of $63.0 million, or 86% from 2023, was driven by the increase in
gross profit, excluding depreciation, partially offset by an increase in general and administrative expense.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
For a discussion comparing our consolidated operating results from the year ended December 31, 2023 with the year ended
December 31, 2022, refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation
– Year Ended December 31, 2023 Compared to Year Ended December 31, 2022” in our Annual Report on Form 10-K for the year
ended December 31, 2023, which was filed with the Commission on February 16, 2024.
Bidding Activity and Backlog
The following table sets forth, by type of work, the Company’s backlog as of the dates indicated (in thousands):
Backlog (in thousands)
2024
2023
2022
Dredging:
Capital - U.S.
$
799,565
$
741,839
$
148,429
Coastal protection
328,073
138,394
97,819
Maintenance
60,243
152,104
125,671
Rivers & lakes
6,318
6,765
5,221
Total Dredging Backlog
1,194,199
1,039,102
377,140
Offshore energy
44,945
44,604
-
Total Backlog
$
1,239,144
$
1,083,706
$
377,140
Total backlog does not include $282.1 million of domestic low bids pending formal award and additional phases (“options”)
pending on projects currently in dredging backlog and $12.7 million of offshore energy options pending at December 31, 2024. The
Company expects to perform on its offshore energy contracts using the Acadia, an inclined fall-pipe vessel for subsea rock installation
currently under construction, which is expected to be delivered and operational in 2026.
40
The Company’s contract backlog represents our estimate of the revenues that will be realized under the portion of the contracts
remaining to be performed. These estimates are based primarily upon the time and costs required to mobilize the necessary assets to
and from the project site, the amount and type of material to be dredged and the expected production capabilities of the equipment
performing the work. However, these estimates are necessarily subject to variances based upon actual circumstances. Because of these
factors, as well as factors affecting the time required to complete each job, backlog is not always indicative of future revenues or
profitability. Also, 56% of our December 31, 2024 dredging backlog relates to federal government contracts, which can be canceled at
any time without penalty to the government, subject to our contractual right to recover our actual committed costs and profit on work
performed up to the date of cancellation. Our backlog may fluctuate significantly from quarter to quarter based upon the type and size
of the projects we are awarded from the bid market. A quarterly increase or decrease of our backlog does not necessarily result in an
improvement or a deterioration of our business. Our backlog includes only those projects for which we have obtained a signed
contract with the customer.
Approximately 60% of the Company’s dredging backlog at December 31, 2024 is expected to be completed and converted to
revenue in 2025 with the remainder to be completed in 2026. This amount may fluctuate as vessel schedules are adjusted in the future.
The 2024 domestic dredging bid market, excluding LNG projects, totaled $2.93 billion, an increase of $710 million, or 32.0%,
compared to the 2023 bid market total of $2.22 billion. The total domestic dredging bid market for the current year period included
awards for eighteen domestic capital projects in Alabama, Florida, Georgia, Louisiana, Maine, Texas, and Virginia, twenty three
coastal protection projects in Florida, Massachusetts, New Jersey, New York, North Carolina, and South Carolina, forty seven
maintenance projects in Alabama, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, New Jersey, New York, North Carolina,
Oregon, and Texas, and three rivers & lakes projects in Alabama, Mississippi, and Tennessee. The Company won 33% of the overall
2024 domestic bid market, consistent with the 34% win rate of the overall 2023 domestic bid market and with the win rate of 31%
over the three-year period ended December 31, 2024. Variability in contract wins from period to period is not unusual. We believe
trends in our win rate over the prior three-year periods provide a historical background against which current year results can be
compared.
The Company’s December 31, 2024 contracted dredging backlog was $1.19 billion. This represents an increase of $155.1
million, or 14.9%, over our December 31, 2023 dredging backlog of $1.04 billion. Total dredging backlog at the end of 2024 does not
reflect approximately $44.9 million of performance obligations related to offshore energy contracts or approximately $282.1 million
of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog and
$12.7 million of offshore energy options pending at December 31, 2024. Included in the Company’s backlog at December 31, 2024
are two LNG projects, including the Brownsville Ship Channel project for Next Decade Corporation’s Rio Grande LNG project,
which is the largest project undertaken in the Company's history, and the Port Arthur LNG Phase 1 project for Marine Dredging and
Disposal. Dredging on both projects began during the third quarter of 2024.
The Water Resources Development Act (“WRDA”) is on a two-year renewal cycle and includes legislation that authorizes the
financing of Corps’ projects for studies, flood and hurricane protection, dredging, ecosystem restoration and other construction
projects aimed at improving rivers and harbors in the United States. WRDA 2022 included funding for deepening the New York and
New Jersey shipping channels to 55 feet, as well as the Coastal Texas Protection and Restoration Program, which aims to protect the
Texas Gulf Coast from hurricanes. On January 4, 2025, then President Biden signed the WRDA of 2024 (“WRDA 2024”) into law,
which includes several capital projects and projects designed to enhance flood protection, improve coastal resilience and support
ecosystem restoration.
The 2024 Energy and Water Appropriations Bill provided a record $8.7 billion in total funding to the Corps. Additionally, the
2023 Disaster Relief Supplemental Appropriations Act allocated $1.5 billion for infrastructure repairs and beach renourishment
projects. This increased budget and additional funding have supported a record bid market in 2024 of $2.9 billion, which included a
robust beach renourishment market and thirteen capital projects.
The 2025 Corps’ budget is expected to be another record appropriation. On June 28, 2024, the U.S. House of Representatives
(the “House”) Energy and Water Appropriations Subcommittee passed their 2025 Appropriations Bill providing the Corps with a
budget of $9.96 billion, which was $2.7 billion above the President’s Budget request. The bill includes $5.7 billion for Operations and
Maintenance projects, of which $3.1 billion is from the Harbor Maintenance Trust Fund. On August 1, 2024, the Senate Appropriation
Committee approved its draft of the 2025 Energy and Water spending bill which provides $10.3 billion in total funding for the Corps.
However, these appropriations bills have not yet been passed by the full House or Senate. On December 20, 2024, Congress approved
a continuing resolution to provide funding at previously enacted levels through March 14, 2025.
The Company won 37%, or $389.1 million, of the domestic capital dredging projects awarded in 2024, compared to 36%, or
$241.8 million, in the prior year. Domestic capital dredging work made up $799.6 million, or 67%, of our December 31, 2024
contracted dredging backlog. During 2024, the Company was awarded four domestic capital dredging projects in Florida, Alabama,
41
Virginia and Texas. During 2024, the Company continued to earn revenue from deepening projects in Virginia and Texas, which were
in dredging backlog at December 31, 2023. These deepenings continue the trend of ensuring all East Coast and Gulf of America ports
will be able to accommodate the deeper draft vessels currently used on several trade routes. The nation’s governors continue to show
commitment to their respective ports through engagement and funding. Finally, Congress has also shown a commitment to ports and
waterways, providing record annual budgets for the Corps for port deepening and channel maintenance. In addition to this port work, a
greater amount of coastal restoration and rehabilitation projects are being funded in the Gulf Coast region as the states utilize available
monies for ecosystem priorities, a portion of which is allocated to dredging. We expect approximately 44% of our domestic capital
dredging backlog at December 31, 2024 to be performed in 2025, with the remainder performed in 2026.
The Company won 63%, or $557.8 million, of the coastal protection projects awarded in 2024, compared to 52%, or $213.8
million, in the prior year. During 2024, the Company was awarded eleven coastal protection projects in New Jersey, New York,
Massachusetts, Florida and South Carolina. We have contracted dredging backlog related to coastal protection of $328.1 million at
December 31, 2024 compared to $138.4 million at the end of 2023. During the year ended December 31, 2024, the Company
continued to earn revenue on coastal protection projects in New York, New Jersey, Alabama and Florida which were in dredging
backlog at December 31, 2023. We expect approximately 87% of our coastal protection dredging backlog at December 31, 2024 to be
performed in 2025, with the remainder performed in 2026. Coastal protection and storm impacts continue to provide the major
impetus for coastal project investment at federal and state levels. Strong hurricane and storm seasons have resulted in an increase in
beach erosion and other damage which adds to the recurring nature of our business and the need for more frequent coastal protection
and port maintenance projects.
The Company won 2%, or $18.1 million, of the maintenance dredging projects awarded in 2024 compared to 30%, or $292.8
million, in 2023. The decrease in the Company’s maintenance project awards in 2024 is primarily the result of the increase in capital
and coastal protection projects awarded to the Company during the same period. During 2024 the Company was awarded two
maintenance projects in Florida and Texas. During the year ended December 31, 2024, the Company continued to earn revenue on
projects in Louisiana, Texas, Mississippi, Puerto Rico and Florida which were in dredging backlog at December 31, 2023. Our
contracted maintenance dredging backlog at December 31, 2024 of $60.2 million is $91.9 million lower than the backlog of $152.1
million at December 31, 2023. We expect substantially all of our maintenance dredging backlog at December 31, 2024 to be
performed in 2025. Past WRDA bills called for full use of the HMTF for its intended purpose of maintaining future access to the
waterways and ports that support our nation’s economy. On March 27, 2020, the U.S. government enacted the CARES Act which
includes a provision that lifts caps on the HMTF, thereby allowing full access to future annual revenues. Through the increased
appropriation of HMTF monies, the Company has seen increased funding for harbor maintenance projects to be let for bid throughout
2024 and expects this trend to continue in 2025.
The Company did not win any of the rivers & lakes projects awarded in the markets where the group operates during the current
year or prior year. We have contracted dredging backlog related to rivers & lakes of $6.3 million at December 31, 2024, which is $0.5
million lower than the backlog of $6.8 million at December 31, 2023. We expect all of our rivers & lakes dredging backlog at
December 31, 2024 to be performed in 2025. During 2024, the Company continued to earn revenue on a project Arkansas which was
in dredging backlog at December 31, 2023.
Liquidity and Capital Resources
The Company’s principal sources of liquidity are net cash flows provided by operating activities, availability under our
revolving credit facility and proceeds from issuances of long-term debt. See Note 6, “Long-term debt,” to our consolidated financial
statements included in Item 15 of this Annual Report on Form 10-K. Our principal uses of cash are to meet debt service requirements,
finance capital expenditures, and provide working capital and other general corporate purposes.
The Company’s net cash provided by operating activities for the years ended December 31, 2024, 2023 and 2022 totaled $70.1
million, $47.4 million and $1.7 million, respectively. Normal increases or decreases in the level of working capital relative to the level
of operational activity impact cash flow from operating activities. The increase in cash provided by operating activities during 2024
relates primarily to significantly higher earnings in 2024, as well as increases in deferred income taxes, amortization of capitalized
contract costs and a decrease in prepaid expenses and other current assets, partially offset by the increases in accounts receivable and
decreases in billings in excess of contract revenues and other changes in working capital compared to the prior year. The increase in
cash provided by operating activities during 2023 compared to 2022 was driven by a increases in net income and billings in excess of
contract revenues offset by an increase in accounts receivable during 2023 when compared to 2022.
The Company’s net cash flows used in investing activities for the years ended December 31, 2024, 2023 and 2022 totaled
$115.7 million, $120.1 million and $140.9 million, respectively. Investing activities in all periods primarily relate to investments in
our new build program, normal course upgrades and capital maintenance of our dredging fleet. The Company took delivery of a 6,500
cubic yard trailing suction hopper dredge, the Galveston Island, which began operations in February 2024. Additionally, in June 2022
42
the Company exercised the contract option with the same builder to build a second 6,500 cubic yard trailing suction hopper dredge,
the Amelia Island, with expected delivery in the second half of 2025. The delivery of the new Galveston Island and Amelia Island
hopper dredges will provide the Company with added capacity and the opportunity to potentially retire older dredges. In November
2021, the Company entered into a $197 million contract with Philly Shipyard to build the Acadia, the first U.S. flagged Jones Act
compliant, inclined fall-pipe subsea rock installation vessel to support the offshore energy industry, which is expected to be delivered
and operational in the first half of 2026. During the year ended December 31, 2024, the Company invested $5.4 million and $41.0
million in the Galveston Island and Amelia Island, respectively, and $72.7 million in the Acadia. The Company anticipates that
remaining new build program payments will be made with cash on hand, future cash flows generated from operations, revolver
availability, and possible future financing transactions. In 2024, 2023 and 2022, we received $9.5 million, $30.7 million and $2.1
million, respectively, in proceeds from dispositions of property and equipment.
The Company’s net cash flows provided by financing activities for the year ended December 31, 2024 totaled $32.1 million.
The Company’s net cash flows provided by financing activities for the year ended December 31, 2023 totaled $89.9 million. The
Company’s net cash flows used in financing activities for the year ended December 31, 2022 totaled $1.7 million. The decrease in net
cash flows provided by financing activities is primarily due to net borrowings under the Company’s revolving debt facility and Second
Lien Credit Agreement during 2024 of $45.0 million, compared to net borrowings of $90.0 million on the Company’s revolving debt
facility during 2023. On April 24, 2024, the Company and certain of its subsidiaries entered into a $150.0 million second lien credit
agreement (as amended, supplemented or otherwise modified from time to time, the “Second Lien Credit Agreement”) with
Guggenheim Corporate Funding, LLC, on behalf of one or more clients, as the lender, and Guggenheim Credit Services, LLC as
Administrative Agent, Collateral Agent and Lead Arranger. The Company borrowed $100.0 under the Second Lien Credit Agreement
on the closing date and has the option to borrow an additional $50.0 million for a period of 12 months following the closing date of the
initial loan. The net proceeds from the Second Lien Credit Agreement were used to repay amounts outstanding under the ABL Credit
Agreement, to pay fees and expenses associated with the Second Lien Credit Agreement and ABL Amendment and for general
corporate purposes, including to fund upcoming new build payments. Additionally, the deferred financing fees associated with the
Second Lien Credit Agreement of approximately $11.6 million increased the net cash flows used in financing activities during 2024.
As of February 17, 2025, the Company had no borrowings under its revolving debt facility. The cash provided by financing activities
in 2023 primarily relates to $208.0 million of revolving debt facility borrowings, partially offset by $118.0 million of revolving debt
facility repayments.
The Company expects to spend between approximately $140 million and $160 million on capital expenditures in 2025, inclusive
of capitalized interest, which is comprised of vessels in our new build program and maintenance capital expenditures. The Company
anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations,
revolver availability and potential new sources of financing.
The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of
credit, the volume of trading activities, our credit ratings and credit capacity, as well as the possibility that customers or lenders could
develop a negative perception of our long- or short-term financial prospects if the level of our business activity decreased due to a
market downturn. If internal sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional
financing on favorable terms, or at all. During the second quarter of 2024, Moody’s Investor Services changed our outlook from
negative to stable and reaffirmed our corporate credit rating at B2. In the third quarter of 2024, S&P Global Ratings upgraded our
corporate credit rating from CCC+ to B- and reaffirmed our outlook as stable. These credit ratings are below investment grade and
could raise our cost of financing. As a consequence, we may not be able to issue additional debt in amounts and/or with terms that we
consider to be reasonable. One or more of these occurrences could limit our ability to pursue other business opportunities.
Commitments, contingencies and liquidity matters
Refer to Note 6, “Long-term debt,” in the Company’s consolidated financial statements for discussion of the Company’s ABL
Credit Agreement and Senior Notes. Refer to Note 4, “Leases,” in the Company’s consolidated financial statements for discussion of
the Company’s leases. Additionally, refer to Note 12, “Commitments and contingencies,” in the consolidated financial statements for
discussion of the Company’s surety agreements.
Other
The future declaration and payment of dividends will be at the discretion of the Company’s board of directors and will depend
on many factors, including general economic and business conditions, our strategic plans, our financial results and condition and legal
requirements, including restrictions and limitations contained in the ABL Credit Agreement, surety bonding agreement and the
indenture relating to our senior notes. Accordingly, we cannot make any assurances as to the size of any such dividend or that it will
pay any such dividend in future quarters.
43
The Company believes its cash and cash equivalents, its anticipated cash flows from operations and availability under its
revolving credit facility and the option to borrow additional funds under the Second Lien Credit Agreement will be sufficient to fund
the Company’s operations, capital expenditures and the scheduled debt service requirements for the next twelve months. Beyond the
next twelve months, the Company’s ability to fund its working capital needs, planned capital expenditures, scheduled debt payments
and dividends, if any, and to comply with all the financial terms and covenants required under the ABL Amendment, Second Lien
Credit Agreement and bonding agreements, depends on its future operating performance and cash flows, which in turn are subject to
prevailing economic conditions and to financial, business and other factors, some of which are beyond the Company’s control.
Contractual Obligations
Additional information related to contractual obligations can be found within this Item 7 in our “Liquidity and Capital
Resources” section and also in Note 6, “Long-term debt,” and Note 4, “Leases” and Note 12, “Commitments and contingencies,” to
our consolidated financial statements.
Other Off-Balance Sheet and Contingent Obligations
The Company had outstanding letters of credit relating to contract guarantees and insurance payment liabilities totaling $43.5
million at December 31, 2024. We have granted liens on a substantial portion of the owned operating equipment as security for
borrowings and letter of credits under the ABL Credit Agreement and other indebtedness.
At December 31, 2024, the Company had outstanding performance bonds with a notional amount of $1.32 billion. The revenue
value remaining in backlog related to the projects totaled $904.1 million.
Certain foreign projects performed by the Company have warranty periods, typically spanning no more than one to three years
beyond project completion, whereby we retain responsibility to maintain the project site to certain specifications during the warranty
period. Generally, any potential liability of the Company is mitigated by insurance, shared responsibilities with consortium partners,
and/or recourse to owner-provided specifications.
The Company considers it unlikely that it would have to perform under any of its contingent obligations.
44
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
In May 2021, the Company sold $325.0 million of unsecured 5.25% Senior Notes due June 1, 2029 pursuant to a private
offering. The Company used the net proceeds from the offering, together with cash on hand, to redeem all $325.0 million aggregate
principal amount of its prior outstanding 8% Notes. The 2029 Notes were priced to investors at par and will mature on June 1, 2029.
At December 31, 2024, the Company had long-term senior notes outstanding with a recorded face value of $325.0 million. The fair
value of these existing notes, which bear interest at a fixed rate of 5.25%, was $301.5 million at December 31, 2024 based on market
prices. Assuming a 10% decrease in interest rates from the rates at December 31, 2024 the fair value of this fixed rate debt would have
increased to $309.8 million.
We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate indebtedness. As of
December 31, 2024 we had $135.0 million of variable rate indebtedness, $75 million of which is hedged by interest rate swaps to
convert a portion of our variable rate debt into fixed-rate debt. All of the outstanding borrowings under the revolving credit facility are
at variable rates based on the Secured Overnight Financing Rate (“SOFR”). At December 31, 2024 our weighted average interest rate
on our variable rate indebtedness, after adjusting for the effects of interest rate swaps, was 10.4%. A hypothetical 10% increase in the
weighted average interest rate on our variable rate indebtedness as of December 31, 2024 would increase our annual interest cost by
approximately $0.5 million. A 10% increase in interest rate would result in $0.5 million change in the fair value of the Interest Rate
Swaps outstanding at December 31, 2024.
A significant operating cost for the Company is diesel fuel, which represents approximately 10% of our costs of contract
revenues. We use fuel commodity forward contracts, typically with durations of less than one year, to reduce the impacts of changing
fuel prices on operations. We do not purchase fuel hedges for trading purposes. Based on our 2025 projected domestic fuel
consumption, an approximate 10% increase in the average price per gallon of fuel would have a $0.8 million effect on fuel expense,
after the effect of fuel commodity contracts in place at December 31, 2024. At December 31, 2024 we had outstanding arrangements
to hedge the price of a portion of our fuel purchases related to domestic dredging work in backlog, representing approximately 80% of
its anticipated domestic fuel requirements through May 2026. As of December 31, 2024, there were 17.8 million gallons remaining on
these contracts. Under these agreements, we will pay fixed prices ranging from $2.18 to $2.90 per gallon. At December 31, 2024, the
fair value liabilities on these contracts was $1.1 million, based on quoted market prices and is recorded in accrued liabilities. A 10%
change in forward fuel prices would result in a $4.2 million change in the fair value of fuel hedges outstanding at December 31, 2024.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements (including financial statement schedules listed under Item 15 of this Report) of the
Company called for by this Item, together with the Report of Independent Registered Public Accounting Firm dated February 20,
2025, are set forth on pages 51 to 77 inclusive, of this Report, and are hereby incorporated by reference into this Item. Financial
statement schedules not included in this Report have been omitted because they are not applicable or because the information called
for is shown in the consolidated financial statements or notes thereto.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures.
a)
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the Company’s disclosure controls and procedures, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the
“Exchange Act”) as of December 31, 2024. Our disclosure controls and procedures are designed to ensure that information required to
be disclosed in the reports that we file or submit under the Exchange Act (a) is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure and
(b) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s
rules and forms.
Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s
disclosure controls and procedures, as designed and implemented, were effective as of December 31, 2024. Notwithstanding the
foregoing, a control system, no matter how well designed, implemented and operated can provide only reasonable, not absolute,
assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth
in our periodic reports.
45
b)
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
c)
Management’s annual report on internal control over financial reporting
The management of Great Lakes Dredge & Dock Corporation, including its Chief Executive Officer and Chief Financial
Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-
15(f), and 15d-15(f) under the Securities Exchange Act of 1934). Management has used the framework set forth in the report entitled
Internal Control—Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) to evaluate the effectiveness of the Company’s internal control over financial reporting.
The phrase “internal control over financial reporting” refers to the process designed by, or under the supervision of, our Chief
Executive Officer and Chief Financial Officer, and overseen by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and includes those policies and procedures that:
•
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with general accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and
•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on the financial statements.
Neither internal control over financial reporting nor disclosure controls and procedures can provide absolute assurance of
achieving financial reporting objectives because of their inherent limitations. Internal control over financial reporting and disclosure
controls are processes that involve human diligence and compliance, and are subject to lapses in judgment and breakdowns resulting
from human failures. Internal control over financial reporting and disclosure controls also can be circumvented by collusion or
improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented, detected
or reported on a timely basis by internal control over financial reporting or disclosure controls. However, these inherent limitations are
known features of the financial reporting process. Therefore, it is possible to design safeguards for these processes that will reduce,
although may not eliminate, these risks.
Our independent registered public accounting firm, Deloitte & Touche LLP, who audited Great Lakes’ consolidated financial
statements included in this Annual Report on Form 10-K, has issued a report on Great Lakes’ internal control over financial reporting,
which is included herein.
Management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Great Lakes Dredge & Dock Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Great Lakes Dredge & Dock Corporation and subsidiaries (the
“Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated
February 20, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 20, 2025
47
Item 9B. Other Information.
Securities Trading Plans of Executive Officers and Directors
Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables pre-arranged transactions in securities in a
manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic
information. Our Securities Trading and Disclosure of Confidential Information policy permits our officers and directors to enter into
trading plans designed to comply with Rule 10b5-1.
On November 25, 2024, Lasse Petterson, Director and President and Chief Executive Officer, adopted a Rule 10b5-1 trading
arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1 (c) and provides for the sale of up to 250,000 shares of
our common stock by May 25, 2025. On November 13, 2024, Eleni Beyko, Senior Vice President, Offshore Energy, adopted a Rule
10b5-1 trading plan arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1 (c) and provides for the sale of 50%
of the net shares of our common stock delivered to Dr. Beyko upon the vesting of certain of her outstanding equity awards prior to
December 31, 2025.
During the quarterly period ended December 31, 2024, none of our other officers (as defined in Rule 16a-1(f) under the
Exchange Act) or directors adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading
arrangement (as defined in Item 408(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
48
Part III
Item 10. Directors, Executive Officers and Corporate Governance.
Information regarding our executive officers is incorporated by reference herein from the discussion under Item 1. “Business—
Information about our Executive Officers” in this Annual Report on Form 10-K.
Code of Ethics
The Company has adopted a written code of business conduct and ethics that applies to all of our employees, including our
principal executive officer, principal financial officer, principal accounting officer, controller, and persons performing similar
functions. The Company’s code of business conduct and ethics can be found on our website at www.gldd.com. We will post on our
website any amendments to or waivers of the code of business conduct and ethics for executive officers or directors, in accordance
with applicable laws and regulations.
Insider Trading Policy
The Company has adopted a statement of policy concerning securities trading and disclosure of confidential information (the
“Insider Trading Policy”) governing the purchase and sale and other disposition of GLDD common stock and the disclosure of
confidential information, in each case, by our directors, executive officers and certain non-executive officers, key employees and
associated family members, and has implemented related processes for the Company and its subsidiaries. The Company believes that
the Insider Trading Policy and the Company’s processes are reasonably designed to promote compliance with insider trading laws,
rules and regulations, and the Nasdaq listing standards. The foregoing summary of the Insider Trading Policy is not complete and is
qualified in its entirety by reference to the Insider Trading Policy attached hereto as Exhibit 19.
The remaining information called for by this Item 10 is incorporated by reference herein from the discussions under the
principal headings “Election of Directors,” “Corporate Governance,” “Security Ownership of Certain Beneficial Owners and
Management” and “Delinquent Section 16(a) Reports” in the definitive Proxy Statement for the 2025 Annual Meeting of
Stockholders.
Item 11. Executive Compensation.
The information required by Item 11 of Form 10-K including information about the Company’s executive and director
compensation and certain related matters is incorporated by reference herein from the discussions under the principal headings
“Corporate Governance” and “Compensation Discussion and Analysis,” including under the subheadings “Executive Compensation
Tables” and “CEO Pay Ratio” in the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by Item 12 of Form 10-K including with respect to the security ownership of certain beneficial owners
and management and certain equity compensation plan information is incorporated by reference herein from the discussion under the
principal headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan
Information” in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by Item 13 of Form 10-K is incorporated by reference herein from the discussions under the principal
headings “Corporate Governance,” “Certain Relationships and Related Transactions” and “Compensation Discussion and Analysis,”
including under subheading “Potential Payments Upon Termination or Change in Control” in the definitive Proxy Statement for the
2025 Annual Meeting of Stockholders.
Item 14. Principal Accounting Fees and Services.
Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34).
The information required by Item 14 of Form 10-K is incorporated by reference herein from the discussion under the principal
heading “Ratification of Independent Registered Public Accounting Firm,” including under subheading “Matters Related to
Independent Registered Public Accounting Firm” in the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders.
49
Part IV
Item 15.
Exhibits, Financial Statement Schedules.
(a) Documents filed as part of this report
1. Financial Statements
The financial statements are set forth on pages 51 to 77 of this Report and are incorporated by reference in Item 8 of this Report.
2. Financial Statement Schedules
All other schedules, except Schedule II—Valuation and Qualifying Accounts on page 78, are omitted because they are not
required or the required information is shown in the financial statements or notes thereto.
3. Exhibits
The exhibits required to be filed by Item 601 of Regulation S-K are listed in the “Exhibit Index” which is attached hereto and
incorporated by reference herein.
Item 16.
Form 10-K Summary.
None.
50
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
51
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND 2023, AND FOR THE YEARS
ENDED DECEMBER 31, 2024, 2023 AND 2022
Consolidated Balance Sheets
53
Consolidated Statements of Operations
54
Consolidated Statements of Comprehensive Income (Loss)
55
Consolidated Statements of Equity
56
Consolidated Statements of Cash Flows
57
Notes to Consolidated Financial Statements
58
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Great Lakes Dredge & Dock Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Great Lakes Dredge & Dock Corporation and subsidiaries (the
“Company”) as of December 31, 2024 and December 31, 2023, the related consolidated statements of operations, comprehensive
income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the
schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with
accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to
the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
Revenue Recognition – Estimated Costs at Completion— Refer to Notes 1 and 10 to the financial statements
Critical Audit Matter Description
During 2024, the Company’s contract revenues were $762.7 million, all of which represented revenue recognized over time as work
progressed on individual contracts. The Company recognizes revenue on its contracts utilizing the cost-to-cost method for determining
progress toward completion of each contract. Revenue is recognized using contract fulfillment costs incurred to date compared to total
estimated fulfillment costs at completion. Daily costs and project duration are significant factors in the estimates of fulfillment costs at
completion to complete the project.
We identified estimated contract fulfillment costs at completion used in revenue recognition as a critical audit matter because of the
judgments inherent in management’s estimates related to contracts that were in progress at December 31, 2024. This required
extensive audit effort and a high degree of auditor judgment when performing audit procedures on the total estimated contract
fulfillment costs which underlie management’s determination of revenue on contracts in progress.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management's total estimated contract fulfillment costs at completion for contracts in progress
included the following, among others:
52
•
We tested the effectiveness of internal controls over revenue recognition, including management's internal controls over
estimated contract fulfillment costs at completion.
•
We selected a sample of contracts with customers, and we performed the following:
Tested management's process of determining the estimated contract fulfillment costs at completion and evaluated
management's ability to achieve the total estimated contract fulfillment costs by obtaining relevant support and
inquiring with the Company's project managers and engineers, comparing the estimates to management's work
plans, and comparing expected profit margins to those achieved on similar contracts to evaluate whether the
estimates were within an acceptable range.
For a selection of contracts, we performed in-person site visits and held meetings with the project site managers and
project sponsors, who are part of the Company's operations outside of the accounting and finance function, to
discuss the contract activities. Further, we utilized a marine global positioning system tracking technology to
validate equipment deployed on-site.
•
We evaluated management's ability to accurately estimate contract fulfillment costs at completion by performing a
hindsight analysis using historical projects and comparing the margin at contract inception compared to the margin at
contract completion.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 20, 2025
We have served as the Company's auditor since 1991.
53
Great Lakes Dredge & Dock Corporation and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2024 and 2023
(in thousands, except per share amounts)
2024
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
10,216
$
22,841
Accounts receivable—net
118,030
54,810
Contract revenues in excess of billings
74,197
68,735
Inventories
29,866
33,912
Prepaid expenses
2,828
1,486
Other current assets
28,281
44,544
Total current assets
263,418
226,328
PROPERTY AND EQUIPMENT—Net
703,252
614,608
OPERATING LEASE ASSETS
96,099
88,398
GOODWILL
76,576
76,576
INVENTORIES—Noncurrent
95,269
86,325
OTHER
20,489
18,605
TOTAL
$
1,255,103
$
1,110,840
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable
$
101,309
$
83,835
Accrued expenses
41,640
37,361
Operating lease liabilities
47,268
28,687
Billings in excess of contract revenues
25,796
29,560
Total current liabilities
216,013
179,443
LONG-TERM DEBT
448,216
412,070
OPERATING LEASE LIABILITIES—Noncurrent
50,432
61,444
DEFERRED INCOME TAXES
78,985
62,232
OTHER
12,547
10,103
Total liabilities
806,193
725,292
COMMITMENTS AND CONTINGENCIES (Note 12)
EQUITY:
Common stock—$.0001 par value; 170,000 shares authorized, 67,280 shares issued
and outstanding at December 31, 2024; 90,000 shares authorized, 66,623 shares issued
and outstanding at December 31, 2023.
7
6
Additional paid-in capital
322,383
317,337
Accumulated retained earnings
127,485
70,220
Accumulated other comprehensive loss
(965)
(2,015)
Total equity
448,910
385,548
TOTAL
$
1,255,103
$
1,110,840
See notes to consolidated financial statements.
54
Great Lakes Dredge & Dock Corporation and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31, 2024, 2023 and 2022
(in thousands, except per share amounts)
2024
2023
2022
Contract revenues
$
762,693
$
589,625
$
648,781
Costs of contract revenues
602,117
511,893
617,608
Gross profit
160,576
77,732
31,173
General and administrative expenses
70,769
57,056
51,117
Other (gains) losses
(2,998)
(7,543)
7,792
Operating income (loss)
92,805
28,219
(27,736)
Interest expense—net
(17,880)
(12,140)
(14,108)
Other income (expense)
460
2,233
(1,571)
Income (loss) before income taxes
75,385
18,312
(43,415)
Income tax (provision) benefit
(18,120)
(4,406)
9,360
Net income (loss)
$
57,265
$
13,906
$
(34,055)
Basic earnings (loss) per share
$
0.85
$
0.21
$
(0.52)
Basic weighted average shares
67,085
66,469
66,051
Diluted earnings (loss) per share
$
0.84
$
0.21
$
(0.52)
Diluted weighted average shares
67,847
66,957
66,051
See notes to consolidated financial statements.
55
Great Lakes Dredge & Dock Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2024, 2023 and 2022
(in thousands)
2024
2023
2022
Net income (loss)
$
57,265
$
13,906
$
(34,055)
Net change in cash flow derivative hedges—net of tax (1)
1,050
(1,824)
(331)
Comprehensive income (loss)
$
58,315
$
12,082
$
(34,386)
(1)
Net of income tax provision of $355 for the year ended December 31, 2024, and net of income tax benefit of $616 and $112 for
the years ended December 31, 2023 and 2022, respectively.
See notes to consolidated financial statements.
56
Great Lakes Dredge & Dock Corporation and Subsidiaries
Consolidated Statements of Equity
For the Years Ended December 31, 2024, 2023 and 2022
(in thousands)
Accumulated
Shares of
Additional
Other
Common
Common
Paid-In
Retained
Comprehensive
Stock
Stock
Capital
Earnings
Loss
Total
BALANCE—January 1, 2022
65,746
$
6
$ 308,482
$
90,369
$
140
$ 398,997
Share-based compensation
49
-
4,288
-
-
4,288
Vesting of restricted stock units and impact of
shares withheld for taxes
214
-
(1,827)
-
-
(1,827)
Exercise of options and purchases from employee
stock plans
179
-
1,148
-
-
1,148
Net loss
-
-
-
(34,055)
-
(34,055)
Other comprehensive loss—net of tax
-
-
-
-
(331)
(331)
BALANCE— December 31, 2022
66,188
$
6
$ 312,091
$
56,314
$
(191) $ 368,220
Share-based compensation
56
-
5,231
-
-
5,231
Vesting of restricted stock units and impact of
shares withheld for taxes
156
-
(1,019)
-
-
(1,019)
Exercise of options and purchases from employee
stock plans
223
-
1,034
-
-
1,034
Net income
-
-
-
13,906
-
13,906
Other comprehensive loss—net of tax
-
-
-
-
(1,824)
(1,824)
BALANCE—December 31, 2023
66,623
$
6
$ 317,337
$
70,220
$
(2,015) $ 385,548
Share-based compensation
37
1
4,751
-
-
4,752
Vesting of restricted stock units and impact of
shares withheld for taxes
411
-
(1,332)
-
-
(1,332)
Exercise of options and purchases from employee
stock plans
209
-
1,627
-
-
1,627
Net income
-
-
-
57,265
-
57,265
Other comprehensive income—net of tax
-
-
-
-
1,050
1,050
BALANCE—December 31, 2024
67,280
$
7
$ 322,383
$
127,485
$
(965) $ 448,910
See notes to consolidated financial statements.
57
Great Lakes Dredge & Dock Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024, 2023 and 2022
(in thousands)
2024
2023
2022
OPERATING ACTIVITIES:
Net income (loss)
$
57,265
$
13,906
$
(34,055)
Adjustments to reconcile net income (loss) to net cash flows provided
by operating activities:
Depreciation and amortization
42,699
42,525
46,273
Deferred income taxes
16,398
3,733
(9,270)
(Gain) loss on sale of assets
(2,897)
(485)
7,792
Amortization of capitalized contract costs
21,895
11,474
11,148
Amortization of deferred financing fees
2,581
965
1,299
Share-based compensation expense
8,580
6,316
4,288
Changes in assets and liabilities:
Accounts receivable
(63,220)
(9,921)
38,064
Contract revenues in excess of billings
(5,462)
(2,813)
(26,078)
Inventories
(4,898)
(11,000)
(14,255)
Prepaid expenses and other current assets
(7,510)
(21,724)
(18,784)
Accounts payable and accrued expenses
8,689
1,376
(1,966)
Billings in excess of contract revenues
(3,764)
19,647
(4,900)
Other noncurrent assets and liabilities
(294)
(6,574)
2,097
Cash provided by operating activities
70,062
47,425
1,653
INVESTING ACTIVITIES:
Purchases of property and equipment
(125,145)
(150,840)
(143,006)
Proceeds from dispositions of property and equipment
9,450
30,699
2,100
Cash used in investing activities
(115,695)
(120,141)
(140,906)
FINANCING ACTIVITIES:
Deferred financing fees
(11,564)
—
(981)
Taxes paid on settlement of vested share awards
(1,332)
(1,019)
(1,827)
Exercise of options and purchases from employee stock plans
1,627
1,034
1,148
Borrowings under revolving loans
86,000
208,000
10,000
Borrowings under Second Lien Credit Agreement
100,000
—
—
Repayments of revolving loans
(141,000)
(118,000)
(10,000)
Payments on finance lease obligations
(1,643)
(84)
—
Cash provided by (used in) financing activities
32,088
89,931
(1,660)
Net (decrease) increase in cash, cash equivalents and restricted cash
(13,545)
17,215
(140,913)
Cash, cash equivalents and restricted cash at beginning of period
23,761
6,546
147,459
Cash, cash equivalents and restricted cash at end of period
$
10,216
$
23,761
$
6,546
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents
$
10,216
$
22,841
$
6,546
Restricted cash included in other long-term assets
—
920
—
Cash, cash equivalents and restricted cash at end of period
$
10,216
$
23,761
$
6,546
Supplemental Cash Flow Information
Cash paid for interest
$
29,729
$
20,738
$
17,742
Cash paid for income taxes
$
2,489
$
132
$
1,264
Non-cash Investing and Financing Activities
Property and equipment purchased but not yet paid
$
13,211
$
6,000
$
8,686
See notes to consolidated financial statements.
58
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF December 31, 2024 AND 2023 AND FOR THE
YEARS ENDED December 31, 2024, 2023 AND 2022
(In thousands, except per share amounts or as otherwise noted)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization—Great Lakes Dredge & Dock Corporation and its subsidiaries (the “Company” or “Great Lakes”) are in the
business of marine construction, primarily dredging. The Company is the largest provider of dredging services in the United States
which is complemented with a long history of performing significant international projects. In addition, the Company is fully engaged
in expanding its core business into the offshore energy industry. The mobility of the Company’s fleet enables the Company to move
equipment in response to changes in demand for dredging services.
Principles of Consolidation and Basis of Presentation—The consolidated financial statements include the accounts of Great
Lakes Dredge & Dock Corporation and its majority-owned subsidiaries. All intercompany accounts and transactions are eliminated in
consolidation. The equity method of accounting is used for investments in unconsolidated investees in which the Company has
significant influence, but not control. Other investments, if any, are carried at cost.
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Revenue and Cost Recognition on Contracts—Revenue is recognized using contract fulfillment costs incurred to date
compared to total estimated costs at completion, also known as cost-to-cost, to measure progress towards completion. Additionally,
the Company capitalizes certain pre-contract and pre-construction costs, and defers recognition over the life of the contract. The
Company’s performance obligations are satisfied over time and revenue is recognized using the cost-to-cost method, described above.
Contract modifications are changes in the scope or price (or both) of a contract that are approved by the parties to the contract. The
Company recognizes a contract modification when the parties to a contract approve a modification that either creates new, or changes
existing, enforceable rights and obligations of the parties to the contract. Contract modifications are routine in the performance of the
Company’s contracts. In most instances, contract modifications are for services that are not distinct, and, therefore, are accounted for
as part of the existing contract. Contract modifications are included in the transaction price only if it is probable that the modification
estimate will not result in a significant reversal of revenue. Revisions in estimated gross profit percentages are recorded in the period
during which the change in circumstances is experienced or becomes known. As the duration of most of the Company’s contracts is
one year or less, the cumulative net impact of these revisions in estimates, individually and in the aggregate across projects, does not
significantly affect results across annual reporting periods. Provisions for estimated losses on contracts in progress are made in the
period in which such losses are determined.
The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and
long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor generally is hired on a project-
by-project basis. The Company is a party to numerous collective bargaining agreements in the U.S. that govern its relationships with
its unionized hourly workforce.
Classification of Current Assets and Liabilities—The Company includes in current assets and liabilities amounts realizable
and payable in the normal course of contract completion, unless completion of such contracts extends significantly beyond one year.
Cash Equivalents—The Company considers all highly liquid investments with a maturity at purchase of three months or less to
be cash equivalents.
Accounts Receivable—Accounts receivable represent amounts due or billable under the terms of contracts with customers,
including amounts related to retainage. The Company anticipates collection of retainage generally within one year, and accordingly
presents retainage as a current asset. The Company provides an allowance for estimated uncollectible accounts receivable based on
historical and expected losses and when events or conditions indicate that amounts outstanding are not recoverable.
Inventories—Inventories consist of pipe and spare parts used in the Company’s dredging operations. Pipe and spare parts are
purchased in large quantities; therefore, a certain amount of pipe and spare part inventories is not anticipated to be used within the
59
current year and is classified as long-term. Spare part inventories are stated at weighted average historical cost, and are charged to
expense when used in operations. Pipe inventory is recorded at cost and amortized to expense over the period of its use.
Property and Equipment—Capital additions, improvements, and major renewals are classified as property and equipment and
are carried at depreciated cost. Maintenance and repairs that do not significantly extend the useful lives of the assets or enhance the
capabilities of such assets are charged to expenses as incurred. Depreciation is recorded over the estimated useful lives of property and
equipment using the straight-line method and the mid-year depreciation convention. The estimated useful lives by class of assets are:
Class
Useful Life (years)
Buildings and improvements
10
Furniture and fixtures
5-10
Vehicles, dozers, and other light operating equipment and systems
3-5
Heavy operating equipment (dredges and barges)
10-30
Leasehold improvements are amortized over the shorter of their remaining useful lives or the remaining terms of the leases.
Goodwill—Goodwill represents the excess of acquisition cost over fair value of the net assets acquired. Goodwill is tested
annually for impairment in the third quarter of each year, or more frequently should circumstances dictate. GAAP requires that
goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying amount.
When conducting the annual impairment test for goodwill, the Company can choose to assess qualitative factors to determine
whether it is more likely than not the fair value of the reporting unit is below its carrying value. Qualitative factors considered include
macroeconomic, industry and market environments, overall financial performance and market indications of value. If a qualitative
assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test.
Otherwise, no further analysis is required. The Company also may elect to forego this step and just perform the quantitative
impairment test.
When performing a quantitative impairment test, the Company assesses the fair values of its reporting unit using both an
income-based approach and a market-based approach. Under the income approach, the fair value of the reporting unit is based on the
present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of
expected future revenue, profitability and capital expenditures related to our new build program, future market growth trends,
forecasted revenues and expenses, working capital assumptions, appropriate discount rates and other variables. The market approach
measures the value of a reporting unit through comparison to comparable companies. Under the market approach, the Company uses
the guideline public company method by applying estimated market-based enterprise value multiples to the reporting unit’s estimated
trailing and forward Adjusted EBITDA. The Company analyzes companies that performed similar services or are considered peers.
Due to the fact that there are no public companies that are direct competitors, the Company weighs the results of this approach less
than the income approach.
The Company has one operating segment which is also the Company’s one reportable segment and reporting unit of which the
Company tests goodwill for impairment. In 2024, the Company performed a qualitative goodwill impairment test. The Company
performed its annual test of impairment as of July 1, 2024 with no indication of impairment as of the test date. The Company assessed
qualitative factors for any indications of potential impairment of the reporting unit. Upon completing this assessment, it was
determined that the fair value of the reporting unit is more likely than not greater than its carrying value as of the assessment date and,
as a result, a quantitative test was not performed. The Company will continue to monitor for changes in facts or circumstances that
may impact its estimates. The Company will perform its next scheduled annual test of goodwill in the third quarter of 2025 should no
triggering events occur which would require a test prior to the next annual test.
Long-Lived Assets—Long-lived assets are comprised of property and equipment subject to depreciation. Long-lived assets to
be held and used are reviewed for possible impairment whenever events indicate that the carrying amount of such assets may not be
recoverable. Recoverability of long-lived assets is measured by comparing the projected undiscounted cash flows associated with the
assets to their carrying amounts. If an asset is considered impaired, the carrying amount would be reduced to its fair value. No
triggering events were identified in 2024 or 2023. If long-lived assets are to be disposed, depreciation is discontinued, if applicable,
and the assets are reclassified as held for sale at the lower of their carrying amounts or fair values less estimated costs to sell.
Other Gains and Losses—Other gains and losses include gains and losses on property and equipment that has been retired or
otherwise disposed of and the transfer of control is complete. This also includes any impairment expense related to assets that have
been designated as held for sale whose carrying amounts exceed their fair values. In 2024, the Company recognized $2.9 million in
60
gains primarily on disposals of assets and $0.1 million in adjustments to the gain associated with the early termination of an offshore
energy contract in 2023. In 2023, the Company recognized $0.1 million in gains on disposals of assets. Additionally, the Company
recognized a $7.4 million gain associated with the early termination of an offshore energy contract. In 2022, the Company recorded an
$8.2 million loss related to the retirement of an asset which was classified as held for sale at December 31, 2022. This amount was
offset by gains on disposals of assets during 2022 of $0.4 million.
Self-insurance Reserves—The Company self-insures costs associated with its seagoing employees covered by the provisions of
Jones Act, workers’ compensation claims, hull and equipment liability, and general business liabilities up to certain limits. Insurance
reserves are established for estimates of the loss that the Company may ultimately incur on reported claims, as well as estimates of
claims that have been incurred but not yet reported. In determining its estimates, the Company considers historical loss experience and
judgments about the present and expected levels of cost per claim. Trends in actual experience are a significant factor in the
determination of such reserves.
Income Taxes—The provision for income taxes includes federal, foreign, and state income taxes currently payable and those
deferred because of temporary differences between the financial statement and tax basis of assets and liabilities. Recorded deferred
income tax assets and liabilities are based on the estimated future tax effects of differences between the financial and tax basis of
assets and liabilities, given the effect of currently enacted tax laws. Refer to Note 8, Income Taxes.
Hedging Instruments—At times, the Company designates certain derivative contracts as a cash flow hedge as defined by
GAAP. Accordingly, the Company formally documents, at the inception of each hedge, all relationships between hedging instruments
and hedged items, as well as its risk-management objective and strategy for undertaking hedge transactions. This process includes
linking all derivatives to highly-probable forecasted transactions.
The Company formally assesses, at inception and on an ongoing basis, the effectiveness of hedges in offsetting changes in the
cash flows of hedged items. Hedge accounting treatment may be discontinued when (1) it is determined that the derivative is no longer
highly effective in offsetting changes in the cash flows of a hedged item (including hedged items for forecasted future transactions),
(2) the derivative expires or is sold, terminated or exercised, (3) it is no longer probable that the forecasted transaction will occur or
(4) management determines that designating the derivative as a hedging instrument is no longer appropriate. If management elects to
stop hedge accounting, it would be on a prospective basis and any hedges in place would be recognized in accumulated other
comprehensive income (loss) until all the related forecasted transactions are completed or are probable of not occurring.
Recently Issued Accounting Pronouncements—In December 2023, Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740)” (“ASU 2023-09”). The amendments in ASU 2023-09
address investor requests for more transparency about income tax information through improvements to income tax disclosures
primarily related to the rate reconciliation and income taxes paid information. One of the amendments in ASU 2023-09 includes
disclosure of, on an annual basis, a tabular rate reconciliation of (i) the reported income tax expense (or benefit) from continuing
operations, to (ii) the product of the income (or loss) from continuing operations before income taxes and the applicable statutory
federal income tax rate of the jurisdiction of domicile using specific categories, including separate disclosure for any reconciling items
within certain categories that are equal to or greater than a specified quantitative threshold of 5%. ASU 2023-09 also requires
disclosure of, on an annual basis, the year to date amount of income taxes paid (net of refunds received) disaggregated by federal,
state, and foreign jurisdictions, including additional disaggregated information on income taxes paid (net of refunds received) to an
individual jurisdiction equal to or greater than 5% of total income taxes paid (net of refunds received). The amendments in ASU 2023-
09 are effective for annual periods beginning after December 15, 2024, and should be applied prospectively. Management is currently
evaluating the impact of this guidance.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280)” (“ASU 2023-07”). The amendments in
ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis
for all public entities to enable investors to develop more decision-useful financial analyses. Topic 280 requires a public entity to
report a measure of segment profit or loss that the chief operating decision maker (CODM) uses to assess segment performance and
make decisions about allocating resources. Topic 280 also requires other specified segment items and amounts, such as depreciation,
amortization, and depletion expense, to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or
remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its
operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.
The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal
years beginning after December 15, 2024, adopted retrospectively. The Company adopted ASU 2023-07 as of December 31, 2024.
Refer to required disclosures in Note 13, Segment Information.
61
Reclassifications—Certain reclassifications have been made to prior period consolidated statements of cash flows to conform to
current period presentation. These reclassifications have no effect on net cash flows.
2. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-
average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to
basic earnings (loss) per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to
issue common stock were exercised or converted into common stock.
The computations for basic and diluted earnings (loss) per share for the years ended December 31, 2024, 2023 and 2022 are as
follows:
2024
2023
2022
Net income (loss)
$
57,265
$
13,906
$
(34,055)
Weighted-average common shares outstanding — basic
67,085
66,469
66,051
Effect of stock options and restricted stock units
762
488
—
Weighted-average common shares outstanding — diluted
67,847
66,957
66,051
Basic earnings (loss) per share
$
0.85
$
0.21
$
(0.52)
Diluted earnings (loss) per share
$
0.84
$
0.21
$
(0.52)
For the year ended December 31, 2022 the dilutive effect of 462 thousand of non-qualified stock options (“NQSO”) and
restricted stock units (“RSU”) were excluded from the diluted weighted-average common shares outstanding as the Company incurred
a loss during the period.
For the years ended December 31, 2024, 2023 and 2022, 57 thousand, 430 thousand and 351 thousand, respectively, NQSO and
RSUs were excluded from the calculation of diluted earnings per share based on the application of the treasury stock method, as such
NQSOs and RSUs were determined to be anti-dilutive.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2024 and 2023 are as follows:
2024
2023
Land
$
9,348
$
9,348
Buildings and improvements
1,315
1,314
Furniture and fixtures
21,197
20,090
Operating equipment
922,402
803,954
Construction in progress
264,525
264,674
Total property and equipment
1,218,787
1,099,380
Accumulated depreciation
(515,535)
(484,772)
Property and equipment—net
$
703,252
$
614,608
The Company had no assets classified as held for sale as of December 31, 2024. Operating equipment of $2,227 was classified
as held for sale, excluded from property and equipment, as of December 31, 2023. Other (gains) losses in the consolidated statement
of operations for the year ended December 31, 2023 includes $886 of loss related to the retirement of assets which were classified as
held for sale as of December 31, 2023.
Depreciation expense was $42.7 million, $42.5 million and $46.3 million, for the years ended December 31, 2024, 2023 and
2022, respectively.
62
4. LEASES
The Company leases certain operating equipment and office facilities under long-term operating leases expiring at various dates
through 2030. Leases with an initial term greater than twelve months are recorded on the Company’s balance sheet as an operating or
finance lease asset and operating or finance lease liability. Operating leases are included in operating lease assets, operating lease
liabilities, and operating lease liabilities noncurrent in the Company's consolidated balance sheets. Finance leases are included in other
assets, lease liabilities, and other in the Company's consolidated balance sheets and are measured at the present value of lease
payments over the lease term. Substantially all of the Company’s leases are classified as operating leases. Leases with an initial term
of twelve months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on
the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The equipment leases contain renewal or purchase options that specify prices at the then fair value upon the expiration of the
lease terms. The leases also contain default provisions that are triggered by an acceleration of debt maturity under the terms of the
Company’s ABL Credit Agreement, or, in certain instances, cross default to other equipment leases and certain lease arrangements
require that the Company maintain certain financial ratios comparable to those required by its ABL Credit Agreement. Additionally,
the leases typically contain provisions whereby the Company indemnifies the lessors for the tax treatment attributable to such leases
based on the tax rules in place at lease inception. The tax indemnifications do not have a contractual dollar limit. To date, no lessors
have asserted any claims against the Company under these tax indemnification provisions.
The exercise of lease renewal options is at the Company’s sole discretion and is considered in the measurement of operating
lease assets and operating lease liabilities when it is reasonably certain the Company will exercise the option. Certain leases also
include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected
lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
On November 1, 2023, the Company entered into a purchase agreement to sell certain vessels (the “Property”) for gross cash
proceeds of $29.5 million. Concurrent with the sale of these certain vessels, the Company entered into a seven-year lease at an annual
rental rate of approximately $4.2 million. The Company determined that the transactions represented a sale and leaseback and,
accordingly, established new operating lease right of use assets and operating lease liabilities. The lease did not include an implicit
rate of return; therefore, the Company used an incremental borrowing rate. Under the leaseback agreement, the Company has the
option to i) purchase the Property after six years with an early buyout option; ii) purchase the Property at the end of the lease at the
then fair value; iii) renew the lease at the then fair market value or iv) return the Property to the purchaser.
Lease costs
The Company’s lease costs are recorded in costs of contract revenues and general and administrative expenses. For the years
ended December 31, 2024, 2023 and 2022, respectively, lease costs are as follows:
Lease terms and commitments
2024
2023
2022
Operating lease costs
$
34,663
$
29,945
$
24,224
Finance lease costs
Amortization of finance lease assets
1,792
95
—
Interest expense on lease liabilities
380
24
—
Short-term lease costs
61,139
68,119
94,842
Total lease cost
$
97,974
$
98,183
$
119,066
As recorded on the balance sheet, the Company’s maturity analysis of its operating lease liabilities as of December 31, 2024 is
as follows:
Operating
Finance
2025
$
50,484
$
2,089
2026
19,718
2,014
2027
13,986
572
2028
9,663
165
2029
7,676
—
Thereafter
4,732
—
Minimum lease payments
106,259
4,840
Imputed interest
(8,559)
(546)
Present value of minimum lease liabilities
$
97,700
$
4,294
63
As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the
information available at commencement date in determining the present value of lease payments.
Additional information related to the Company’s leases as of December 31, 2024, 2023 and 2022 respectively, is as follows:
2024
2023
2022
Operating
Weighted average remaining lease term (years)
3.2
4.5
4.2
Weighted average discount rate
6.5%
5.6%
4.7%
Finance
Weighted average remaining lease term (years)
2.3
3.3
—
Weighted average discount rate
7.9%
7.9%
—
Supplemental balance sheet information related to finance leases as of December 31, 2024 and 2023 respectively, is as follows:
2024
2023
Finance lease assets:
Other noncurrent assets
$
6,020
$
3,757
Accumulated depreciation
(1,887)
(95)
Total other noncurrent assets
$
4,133
$
3,662
Finance lease liabilities:
Accrued expenses
1,829
1,047
Other noncurrent liabilities
2,465
2,626
Total finance lease liabilities
$
4,294
$
3,673
Supplemental cash flow information related to leases during the years ended December 31, 2024, 2023 and 2022 respectively, is
as follows:
2024
2023
2022
Operating cash flows from operating leases
$
(31,970)
$
(29,016)
$
(22,775)
Operating cash flows from finance leases
(380)
(24)
—
Financing cash flows from finance leases
(1,643)
(84)
—
Lease liabilities arising from obtaining new operating lease
assets
39,539
24,808
57,618
Lease liabilities arising from obtaining new finance lease assets
2,264
3,757
—
5. ACCRUED EXPENSES
Accrued expenses at December 31, 2024 and 2023 were as follows:
December 31,
December 31,
2024
2023
Payroll and employee benefits
$
20,140
$
11,986
Insurance
13,832
12,521
Interest
1,783
2,388
Fuel hedge contracts
1,065
2,918
Income and other taxes
2,130
1,900
Finance lease liabilities
1,829
1,047
Contract reserves
148
3,964
Other
713
637
Total accrued expenses
$
41,640
$
37,361
64
6. LONG-TERM DEBT
Long-term debt at December 31, 2024 and 2023 were as follows:
2024
2023
Revolving credit facility
$
35,000
$
90,000
Second lien credit agreement
90,597
—
2029 Notes
322,619
322,070
Total
$
448,216
$
412,070
Second lien credit agreement
On April 24, 2024, the Company, Great Lakes Dredge & Dock Company, LLC, NASDI Holdings, LLC, Great Lakes
Environmental & Infrastructure Solutions, LLC, Great Lakes U.S. Fleet Management, LLC, and Drews Services LLC (collectively,
the “Credit Parties”) entered into a $150.0 million second lien credit agreement (as amended, supplemented or otherwise modified
from time to time, the “Second Lien Credit Agreement”) with Guggenheim Corporate Funding, LLC, on behalf of one or more clients,
as the lender, and Guggenheim Credit Services, LLC as Administrative Agent, Collateral Agent and Lead Arranger (“GCS”). The
material terms of the Second Lien Credit Agreement are summarized below.
The Second Lien Credit Agreement provides for (i) a senior secured second-lien term loan facility in an aggregate principal
amount of $100.0 million, which was funded in full on the initial closing date (the “Closing Date”) and (ii) a senior secured second-
lien delayed draw term loan facility in the aggregate principal amount up to $50.0 million, which is available to the Company for a
period of 12 months following the Closing Date, subject to the terms and conditions as set forth therein. Net proceeds to the Company,
after payment of original discount on the initial loans, a closing fee on the delayed draw facility and other debt issuance costs,
including those associated with the ABL Amendment described below, were approximately $88.7 million.
The Second Lien Credit Agreement contains customary representations, mandatory prepayments and affirmative and
negative covenants, including a minimum liquidity covenant that requires the Credit Parties to maintain consolidated liquidity of (a)
$12.5 million at any time the fixed charge coverage ratio for the most recently ended four fiscal quarter period is less than 1.10 to 1.00
and (b) $50.0 million at any time the fixed charge coverage ratio for the most recently ended four fiscal quarters is greater than or
equal to 1.10 to 1.00. For the first 18 months following the Closing Date, the Company may prepay all or a part of the loans under the
Second Lien Credit Agreement by paying the principal amount of the loans to be prepaid plus a customary “make-whole” premium,
subject to a make-whole carveout of up to $25.0 million (less the amount of any undrawn delayed draw term loan commitments at
such time) at 103% with proceeds from a qualifying Maritime Administration (“MARAD”) financing. Thereafter, the Company may
prepay all or a part of the loans under the Second Lien Credit Agreement by paying, (i) in months 19-30 following the Closing Date,
103% of the principal amount of the loans to be prepaid, plus accrued and unpaid interest and (ii) in months 31 to 42 after the Closing
Date, 101% of the principal amount of loans to be prepaid, plus accrued and unpaid interest.
The Second Lien Credit Agreement also contains customary events of default (including non-payment of principal or interest
on any material debt and breaches of covenants) as well as events of default relating to certain actions by the Company’s surety
bonding providers. The obligations of the Credit Parties under the Second Lien Credit Agreement are unconditionally guaranteed, on a
joint and several basis, by each borrower (other than the Company) and subsidiary guarantor under the ABL Credit Agreement (as
defined below), each existing or future issuer or guarantor under the indenture governing the Company’s 5.25% Senior Notes due
2029, and each other existing and subsequently acquired or formed material direct or indirect wholly-owned domestic subsidiary of
the Company.
The loans under the Second Lien Credit Agreement funded on the Closing Date were used to repay amounts outstanding
under the ABL Credit Agreement, to pay fees and expenses associated with the transactions and for general corporate purposes,
including to fund upcoming new build payments. The delayed draw portion of the term loans, if funded, will be used to fund future
new build payments, ongoing working capital and for other general corporate purposes. The Second Lien Credit Agreement matures
on the earlier of April 24, 2029 and the date that is ninety-one (91) days prior to the scheduled maturity date of the Company’s 5.25%
Senior Notes due 2029.
The obligations under the Second Lien Credit Agreement are secured on a second-priority basis by substantially all of the
assets of the Credit Parties. The outstanding obligations thereunder shall be secured by a valid second priority perfected lien on
substantially all of the U.S. flagged and located vessels of the Credit Parties and a valid perfected lien on all domestic accounts
receivable and substantially all other assets of the Credit Parties, subject to the permitted liens and interests of other parties (including
the Company’s surety bonding providers). Pursuant to the terms of that certain Intercreditor Agreement dated as of April 24, 2024, (as
65
amended, restated, supplemented, or otherwise modified from time to time, the “Intercreditor Agreement”), by and between PNC
Bank, National Association, as first lien agent, and GCS, as second lien agent, the obligations under the Second Lien Credit
Agreement are subordinated to the first-priority liens securing the obligations under the ABL Credit Agreement described below.
Interest on the term loan facility under the Second Lien Credit Agreement is equal to either a base rate option (“Base Rate
Loan”) or a Secured Overnight Financing Rate (“SOFR”) option (“Term SOFR Loan”) at the Company’s election. In the case of a
Base Rate Loan, interest on the unpaid principal amount shall equal (i) the greatest of (a) the “Prime Rate” in the United States as
quoted from time to time by The Wall Street Journal or the highest per annum rate of interest published by the Federal Reserve Board,
(b) the federal funds effective rate (but not less than zero) plus 0.50% and (c) Term SOFR for a one-month interest period on such day,
plus 1.00%, plus (ii) 6.75%. In the case of a Term SOFR Loan, interest on the unpaid principal amount shall equal the Term SOFR
Reference Rate on the day that is two business days prior to the first day of such applicable interest period, plus 7.75%. In addition,
the Company is required to pay a quarterly fee of 1.00% per annum on the undrawn commitments in respect of the delayed draw term
loan facility.
The Company had $100.0 million borrowings on the Second Lien Credit Agreement as of December 31, 2024. The interest
rate on the Second Lien Credit Agreement borrowings as of December 31, 2024 is 12.09%.
Credit agreement
On April 24, 2024, the Credit Parties, PNC Bank, National Association (“PNC”), as agent for the lenders, and certain
financial institutions party thereto entered into an amendment to the ABL Credit Agreement described below (the “ABL
Amendment”). The ABL Amendment (w) eliminates the Company’s ability to increase the commitments under the senior secured
revolving credit facility (x) modifies the pricing of loans and undrawn commitments as summarized below, (y) adds a minimum
liquidity covenant, for so long as the Second Lien Credit Agreement has not been prepaid and terminated, that requires the Credit
Parties to maintain consolidated liquidity of (a) $12.5 million at any time the fixed charge coverage ratio for the most recently ended
four fiscal quarter period is less than 1.10 to 1.00 and (b) $50.0 million at any time the fixed charge coverage ratio for the most
recently ended four fiscal quarters is greater than or equal to 1.10 to 1.00 and (z) makes certain other customary changes in connection
with the Credit Parties’ entry into the Second Lien Credit Agreement. The Company has availability of up to $200.0 million for the
issuance of letters of credit under the ABL Amendment.
The ABL Amendment modifies the Applicable Margin for Advances as follows: (i) following the ABL Amendment closing
date through and including the date immediately prior to the date on which the Borrowing Base Certificate is required to be delivered
for most recently completed fiscal quarter (commencing with the fiscal quarter ending on September 30, 2024) (the “Adjustment
Date”), (a) the Applicable Margin for Domestic Rate Loans Advances is 1.50% and (b) the Applicable Margins for Term SOFR Rate
Loans Advances is 2.50%, (ii) beginning as of the Adjustment Date, to the extent the quarterly average undrawn availability for the
prior fiscal quarter is (x) greater than 66.7% of the Maximum Revolving Advance Amount, (a) the Applicable Margin for Domestic
Rate Loans Advances is 1.25% and (b) the Applicable Margins for Term SOFR Rate Loans Advances is 2.25%; (y) to the extent the
quarterly average undrawn availability for the prior fiscal quarter is less than or equal to 66.7% of the Maximum Revolving Advance
Amount but greater than 33.3%, (a) the Applicable Margin for Domestic Rate Loans Advances is 1.50% and (b) the Applicable
Margins for Term SOFR Rate Loans Advances is 2.50%; and (z) to the extent the quarterly average undrawn availability for the prior
fiscal quarter is less than or equal to 33.3% of the Maximum Revolving Advance Amount, (a) Applicable Margin for Domestic Rate
Loans Advances is 1.75% and (b) the Applicable Margin for Term SOFR Rate Loans Advances is 2.75%. Additionally, the Company
has an option to borrow at Green Loan Advance Rates, each of which will be 0.05% lower than the corresponding applicable rate if
the Company certifies that it will use such proceeds to invest in renewable energy and clean transportation projects and it complies
with green loan principles.
On July 29, 2022, the Credit Parties entered into a second amended and restated revolving credit and security agreement (as
amended by the ABL Amendment and as may be further amended, supplemented or otherwise modified from time to time, the “ABL
Credit Agreement”) with certain financial institutions from time to time party thereto as lenders, PNC Bank, National Association, as
Agent (the “Agent”), PNC Capital Markets, CIBC Bank USA, Bank of America, N.A. and Truist Securities, Inc., as Joint Lead
Arrangers and Joint Bookrunners, CIBC Bank USA and Truist Bank as Co-Syndication Agents, Bank of America, N.A., as
Documentation Agent and PNC Bank National Association, as Green Loan Coordinator. The ABL Credit Agreement amends and
restates the prior ABL Credit Agreement dated as of May 3, 2019 by and among the financial institutions from time to time party
thereto as lenders, the Agent and the Credit Parties party thereto such that the terms and conditions of the prior credit agreement have
been subsumed and replaced in their entirety by the terms and conditions of the ABL Credit Agreement, including the amount
available under the revolving credit facility. The terms of the ABL Credit Agreement are summarized below.
66
The ABL Credit Agreement provides for a senior secured revolving credit facility in an aggregate principal amount of up to
$300.0 million. The maximum borrowing capacity under the ABL Credit Agreement is determined by a formula and may fluctuate
depending on the value of the collateral included in such formula at the time of determination.
The ABL Credit Agreement contains a green loan option where the Company can borrow at the lower interest rates described
below so long as such funds are used to fund capital investments related to renewable energy and clean transportation projects and are
consistent with green loan principles. The green loan option is subject to a $35.0 million sublimit.
The ABL Credit Agreement contains customary representations and affirmative and negative covenants, including a
springing financial covenant that requires the Credit Parties to maintain a fixed charge coverage ratio (ratio of earnings before income
taxes, depreciation and amortization, net interest expenses, non-cash charges and losses and certain other non-recurring charges, minus
capital expenditures, income and franchise taxes, to net cash interest expense plus scheduled cash principal payments with respect to
debt plus restricted payments paid in cash) of not less than 1.10 to 1.00. The springing financial covenant is triggered when the
undrawn availability of the ABL Credit Agreement is less than 12.5% of the maximum loan amount for five consecutive days. The
ABL Credit Agreement also contains customary events of default (including non-payment of principal or interest on any material debt
and breaches of covenants) as well as events of default relating to certain actions by the Company’s surety bonding providers. The
obligations of the Credit Parties under the ABL Credit Agreement are unconditionally guaranteed, on a joint and several basis, by each
existing and subsequently acquired or formed material direct and indirect domestic subsidiary of the Company. Borrowings under the
ABL Credit Agreement will be used to pay fees and expenses related to the ABL Credit Agreement, finance acquisitions permitted
under the ABL Credit Agreement, finance ongoing working capital, for other general corporate purposes, and with respect to any
green loan, fund capital investments related to renewable energy and clean transportation projects. The ABL Credit Agreement
matures on the earlier of July 29, 2027 or the date that is ninety-one (91) days prior to the scheduled maturity date of the Company’s
unsecured senior notes, which is currently June 1, 2029, if the Company fails to refinance its unsecured senior notes prior to their
scheduled maturity date but only if such scheduled maturity date is prior to the maturity date of the ABL Credit Agreement.
The obligations under the ABL Credit Agreement are secured by substantially all of the assets of the Credit Parties. The
outstanding obligations thereunder shall be secured by a valid first priority perfected lien on substantially all of the U.S. flagged and
located vessels of the Credit Parties and a valid perfected lien on all domestic accounts receivable and substantially all other assets of
the Credit Parties, subject to the permitted liens and interests of other parties (including the Company’s surety bonding providers).
The Company had $35.0 million and $90.0 million borrowings on the revolver as of December 31, 2024 and 2023, respectively.
There were $43.5 million and $49.8 million of letters of credit outstanding as of December 31, 2024 and 2023, respectively. The
Company had $221.2 million and $122.3 million of net availability under the ABL Amendment as of December 31, 2024 and 2023,
respectively. The availability under the ABL Amendment was suppressed by $0.3 million and $37.9 million as of December 31, 2024
and 2023, respectively, as a result of certain limitations of borrowing related to reserves and compliance with the Company's
obligations set forth in the ABL Credit Agreement or the prior credit agreement. Based on the aforementioned variable interest rate
components, the weighted average interest rate on the revolver borrowings is 6.70% and 6.71% as of December 31, 2024 and 2023,
respectively.
Senior notes and subsidiary guarantors
In May 2021, the Company sold $325.0 million of unsecured 5.25% Senior Notes (the “2029 Notes”) pursuant to a private
offering. The 2029 Notes were priced to investors at par and will mature on June 1, 2029. The Company used the net proceeds from
the offering, together with cash on hand, to redeem all $325.0 million aggregate principal amount of its outstanding 8.00% Senior
Notes due 2022.
The Company’s obligations under these 2029 Notes are guaranteed by each of the Company’s existing and future 100% owned
domestic subsidiaries that are co-borrowers or guarantors under the ABL Credit Agreement. Such guarantees are full, unconditional
and joint and several. The parent company issuer has no independent assets or operations and all non-guarantor subsidiaries have been
determined to be minor.
The weighted average interest rate on the Company’s total outstanding borrowings, after adjusting for the effects of interest rate
swaps, was 6.77%, and 5.57% as of December 31, 2024 and 2023, respectively.
67
Other
The scheduled principal payments through the maturity date of the Company’s long-term debt at December 31, 2024, are as
follows:
Years Ending December 31,
2025
$
—
2026
—
2027
35,000
2028
—
2029
425,000
Thereafter
—
Total
$
460,000
The Company incurred amortization of deferred financing fees for its long-term debt of $2.6 million, $1.0 million and $1.1
million for each of the years ended December 31, 2024, 2023 and 2022. Such amortization is recorded as a component of net interest
expense.
7. FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. A fair value hierarchy has been established by GAAP that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance describes three levels of
inputs that may be used to measure fair value:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term
of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities.
The Company is exposed to counterparty credit risk associated with non-performance of its various derivative instruments. The
Company’s risk would be limited to any unrealized gains on current positions. To help mitigate this risk, the Company transacts only
with counterparties that are rated as investment grade or higher. In addition, all counterparties are monitored on a continuous basis.
The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses
prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. At times,
the Company holds certain derivative contracts that it uses to manage foreign currency risk or commodity price risk. The Company
does not hold or issue derivatives for speculative or trading purposes. The fair values of these financial instruments are summarized as
follows:
Fair Value at
Fair Value
Hierarchy
December 31, 2024
December 31, 2023
Levels
Assets
Liabilities
Assets
Liabilities
Derivatives designated as cash
flow hedging instruments:
Fuel hedge contracts
2
$
—
$
1,065
$
—
$
2,918
Foreign currency exchange hedge
contracts
2
—
—
358
—
Interest rate swaps
2
217
—
—
—
Total derivatives
$
217
$
1,065
$
358
$
2,918
68
Fuel hedge contracts
The Company is exposed to certain market risks, primarily commodity price risk as it relates to the diesel fuel purchase
requirements, which occur in the normal course of business. The Company enters into heating oil commodity swap contracts to hedge
the risk that fluctuations in diesel fuel prices will have an adverse impact on cash flows associated with its domestic dredging
contracts. The Company’s goal is to hedge approximately 80% of the eligible fuel requirements for work in domestic dredging
backlog.
As of December 31, 2024, the Company was party to various swap arrangements to hedge the price of a portion of its diesel fuel
purchase requirements for work in its backlog to be performed through May 2026. As of December 31, 2024, there were 17.8 million
gallons remaining on these contracts representing forecasted domestic fuel purchases through May 2026. Under these swap
agreements, the Company will pay fixed prices ranging from $2.18 to $2.90 per gallon.
At December 31, 2024 and 2023, the fair value liability of the fuel hedge contracts were estimated to be $1.1 million and $2.9
million, respectively, and is recorded in accrued expenses. For fuel hedge contracts considered to be highly effective, the losses
reclassified to earnings from changes in fair value of derivatives, net of cash settlements and taxes, for the year ended December 31,
2024 were $1.6 million. The remaining gains and losses included in the accumulated other comprehensive income (loss) at December
31, 2024 will be reclassified into earnings over the next twelve months, corresponding to the period during which the hedged fuel is
expected to be utilized. Changes in the fair value of fuel hedge contracts not considered highly effective are recorded as costs of
contract revenues in the Statement of Operations. The fair value of fuel hedges are corroborated using inputs that are readily
observable in public markets; therefore, the Company determines fair values of these fuel hedges using Level 2 inputs.
Foreign currency exchange hedge contracts
The Company is exposed to certain market risks, including foreign currency exchange rate risks related to the purchase of new
vessel build materials in Europe. The Company enters into foreign currency exchange forward contracts to hedge the risk that
fluctuations in the Euro in relation to the Dollar could have an adverse impact on cash flows associated with its equipment builds.
The Company did not have any foreign currency exchange hedge contracts as of December 31, 2024. As of December 31, 2023,
the Company was party to various foreign exchange forward contract arrangements to hedge the purchase of materials through
November 2024. As of December 31, 2023 there were 18.6 million Euro of payments remaining on these hedge contracts. Under these
hedge contracts, the Company paid fixed prices ranging from $1.01 to $1.13 per Euro.
At December 31, 2023, the fair value asset of foreign currency exchange hedge contracts were estimated to be $358, and is
recorded in other current assets. For foreign currency exchange hedge contracts considered to be highly effective, the losses
reclassified to earnings from changes in fair value, net of cash settlements and taxes, for the year ended December 31, 2024 were
$208. For foreign currency exchange hedge contracts considered to be highly effective, the gains reclassified to earnings from changes
in fair value of derivatives, net of cash settlements and taxes, for the year ended December 31, 2023 were $289. The fair values of
foreign currency exchange hedges are corroborated using inputs that are readily observable in public markets; therefore, the Company
determines the fair value of these foreign currency exchange hedges using Level 2 inputs.
Interest rate swaps
The Company is exposed to certain market risks, including interest rate risks related to the floating interest rates on its variable
rate debt. The Company has entered into interest rate swaps to convert a portion of its variable rate debt into fixed-rate debt and hedge
the risk that fluctuations in interest rates could have an adverse impact on net interest expense.
As of December 31, 2024, the Company was party to two interest rate swaps with a total notional value of $75 million effective
August 5, 2024 and a maturity date of August 24, 2026. Under these interest rate swaps, the Company will pay a weighted average
fixed rate of 3.873% on the notional amount and receive payments from the counterparty based on the 30-day SOFR rate, effectively
modifying the Company’s exposure to interest rate risk by converting a portion of its floating-rate debt to a weighted average fixed
interest rate of 11.623%.
As of December 31, 2024 the fair value asset of the Company’s interest rate swaps was $217 and is recorded in other current
assets in the consolidated balance sheets. For interest rate swaps considered to be highly effective, the gains reclassified to earnings
from changes in fair value of derivatives, net of cash settlements and taxes, for the year ended December 31, 2024 were $233. The
remaining gains and losses included in accumulated other comprehensive loss at December 31, 2024 will be reclassified into earnings
over the next twenty months, corresponding to the period during which the interest rate swap is expected to be utilized. Changes in the
fair value of interest rate swaps not considered highly effective are recorded as interest expense in the consolidated statements of
69
operations. The fair values of interest rate swaps are corroborated using inputs that are readily observable in public markets; therefore,
the Company determines the fair value of these interest rate swaps using Level 2 inputs.
Assets and liabilities measured at fair value on a nonrecurring basis
All other nonfinancial assets and liabilities measured at fair value in the financial statements on a nonrecurring basis are subject to fair
value measurements and disclosures. Nonfinancial assets and liabilities included in the consolidated balance sheets and measured on a
nonrecurring basis consist of goodwill and long-lived assets. Goodwill and long-lived assets are measured at fair value to test for and
measure impairment, if any, at least annually for goodwill or when necessary for both goodwill and long-lived assets.
Accumulated other comprehensive income (loss)
Changes in the components of the accumulated balances of other comprehensive income (loss) are as follows:
2024
2023
2022
Derivatives:
Fuel Hedge Contracts
Reclassification of derivative losses (gains) to earnings—net of
tax
$
1,593
$
861
$
(10,629)
Change in fair value of derivatives—net of tax
(208)
(2,565)
9,681
Net change in cash flow derivative fuel hedges—net of tax
$
1,385
$
(1,704)
$
(948)
Foreign Currency Exchange Hedge Contracts
Reclassification of derivative losses (gains) to earnings—net of
tax
$
208
$
(400)
$
116
Change in fair value of derivatives—net of tax
(705)
280
501
Net change in cash flow derivative foreign currency hedges—net of
tax
$
(497)
$
(120)
$
617
Interest Rate Swaps
Reclassification of derivative gains to earnings—net of tax
$
(233)
$
—
$
—
Change in fair value of derivatives—net of tax
395
—
—
Net change in cash flow derivative foreign currency hedges—net of
tax
$
162
$
—
$
—
Total net change in cash flow derivative hedges - net of tax
$
1,050
$
(1,824)
$
(331)
Adjustments reclassified from accumulated balances of other comprehensive income (loss) to earnings are as follows:
Statement of Operations Location
2024
2023
2022
Derivatives:
Fuel hedge contracts
Costs of contract revenues
$
2,132
$
1,152
$
(14,219)
Foreign currency exchange hedge contracts
Other income (expense)
278
—
—
Interest rate swaps
Interest expense—net
(312)
—
—
Income tax (provision) benefit
530
291
(3,590)
$
1,568
$
861
$
(10,629)
70
Other financial instruments
The carrying value of financial instruments included in current assets and current liabilities approximates fair value due to the
short-term maturities of these instruments. Based on timing of the cash flows and comparison to current market interest rates, the
carrying values of the ABL Amendment and Second Lien Credit Agreement approximate fair value at December 31, 2024. In May
2021, the Company sold $325.0 million of the 2029 Notes pursuant to a private offering, which were outstanding at December 31,
2022 (See Note 6, Long-Term Debt). The 2029 Notes were priced to investors at par and will mature on June 1, 2029. The 2029 Notes
are senior unsecured obligations of the Company and its subsidiaries that guarantee the 2029 Notes. The fair value of the 2029 Notes
was $301.5 million at December 31, 2024, which is a Level 1 fair value measurement as the senior notes value was obtained using
quoted prices in active markets. It is impracticable to determine the fair value of outstanding letters of credit or performance, bid and
payment bonds due to uncertainties as to the amount and timing of future obligations, if any.
8. INCOME TAXES
The Company’s income tax provision (benefit) for the years ended December 31, 2024, 2023 and 2022 are as follows:
2024
2023
2022
Income tax (provision) benefit
$
18,120
$
4,406
$
(9,360)
The Company’s income (loss) before income tax from domestic and foreign operations for the years ended December 31, 2024,
2023 and 2022 are as follows:
2024
2023
2022
Domestic operations
$
77,285
19,549
$
(43,179)
Foreign operations
(1,900)
(1,237)
(236)
Total income (loss) before income taxes
$
75,385
$
18,312
$
(43,415)
The provision (benefit) for income taxes as of December 31, 2024, 2023 and 2022 is as follows:
2024
2023
2022
Federal:
Current
$
156
$
—
$
—
Deferred
15,814
3,292
(9,754)
State:
Current
1,780
422
(90)
Deferred
584
442
484
Foreign:
Current
(214)
250
—
Deferred
—
—
—
Total
$
18,120
$
4,406
(9,360)
The Company’s income tax provision (benefit) reconciles to the provision (benefit) at the statutory U.S. federal income tax rate
of 21% for the years ended December 31, 2024, 2023 and 2022, as follows:
2024
2023
2022
Tax provision (benefit) at statutory U.S. federal income tax
rate
$
15,831
$
3,846
$
(9,117)
State income tax — net of federal income tax benefit
1,990
774
(3,952)
Adjustment to deferred tax depreciation
—
—
—
Stock based compensation
132
315
(414)
Nondeductible officer compensation
894
178
244
Research and development tax credits
(600)
(796)
(518)
Changes in valuation allowance
—
—
4,365
Other
(127)
89
32
Income tax provision (benefit)
$
18,120
$
4,406
$
(9,360)
At December 31, 2024 and 2023, the Company had loss carryforwards for federal income tax purposes of $2.9 million and
$14.0 million respectively. The loss carryforwards at December 31, 2024 may be carried forward indefinitely. The Company also has
71
indefinite life carryforwards as a result of interest limitations. Starting in 2022, the Company has research costs attributable to research
and development that are currently expensed but are required to be capitalized for U.S. tax purposes and amortized primarily over 5 or
15 years.
At December 31, 2024 and 2023, the Company had gross net operating loss carryforwards for state income tax purposes totaling
$184.5 million and $182.4 million, respectively, which expire between 2029 and 2044. The Company has established a valuation
allowance that was $7.3 million and $6.6 million as of December 31, 2024 and 2023, respectively. The Company believes that the
remaining net operating losses, net of the valuation allowance, will be fully utilized in future periods.
The Company also has no foreign gross net operating loss carryforwards as of December 31, 2024 and 2023, respectively
The Company does not expect that total unrecognized tax benefits will significantly increase or decrease within the next 12
months.
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of
December 31, 2024, 2023 and 2022 the Company had no interest and penalties recorded.
The Organisation for Economic Co-operation and Development has proposed a global minimum tax of 15% of reported profits
(“Pillar 2”) that has been agreed upon in principle by over 140 countries. During 2023, many countries took steps to incorporate Pillar
2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax,
countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives
in response to Pillar 2. The Company will continue to analyze the law to determine potential impacts. At this time, the Company does
not expect the Pillar 2 legislation to have a material impact on its consolidated financial statements.
The Company files income tax returns at the U.S. federal level and in various state and foreign jurisdictions. U.S. federal
income tax years prior to 2021 are closed and no longer subject to examination. With few exceptions, the statute of limitations in state
taxing jurisdictions in which the Company operates has expired for all years prior to 2020. In foreign jurisdictions in which the
Company operates, years prior to 2018 are closed and are no longer subject to examination.
The Company’s deferred tax assets (liabilities) at December 31, 2024 and 2023 are as follows:
2024
2023
Deferred tax assets:
Operating lease assets
$
25,753
$
23,685
Accrued liabilities
5,030
7,378
Federal NOLs and interest limitations
4,364
4,979
State NOLs
10,216
9,953
Research costs
7,681
5,193
Tax credit carryforwards
5,292
5,457
Valuation allowance
(7,315)
(6,558)
Total deferred tax assets
51,021
50,087
Deferred tax liabilities:
Depreciation and amortization
(104,643)
(88,906)
Operating lease liabilities
(25,308)
(23,245)
Other liabilities
(55)
(168)
Total deferred tax liabilities
(130,006)
(112,319)
Net noncurrent deferred tax liabilities
$
(78,985) $
(62,232)
Deferred tax assets relate primarily to reserves and other liabilities for costs and expenses not currently deductible for tax
purposes as well as net operating loss and other carryforwards. Deferred tax liabilities relate primarily to the cumulative difference
between book depreciation and amounts deducted for tax purposes. The Company evaluates its ability to realize deferred tax assets by
considering all available positive and negative evidence. This evidence includes its cumulative earnings or losses in recent years. The
Company further considers the impact on these cumulative earnings or losses of discontinued operations and other divested operations
and joint ventures, restructuring charges and other nonrecurring adjustments that are not indicative of its ability to generate taxable
income in future periods. The Company also considers sources of taxable income, such as the amount and timing of realization of its
deferred tax liabilities relative to the timing of expiration of loss carryforwards. When it is estimated to be more likely than not that all
72
or some portion of deferred tax assets will not be realized, the Company establishes a valuation allowance for the amount of such
deferred tax assets considered to be unrealizable. After evaluating the positive and negative evidence for future realization of deferred
tax assets, the Company recorded valuation allowances for foreign net operating loss carryforwards and certain state net operating loss
carryforwards to reduce the balance of these deferred tax assets at December 31, 2024 and 2023 as it was more likely than not that the
balance of these tax items would not be realized. By contrast, after evaluating the positive and negative evidence, the Company
concluded that it was more likely than not that the deferred federal income tax asset and remaining state net operating loss
carryforwards recorded at December 31, 2024 and 2023 would ultimately be realized and determined that no valuation allowance was
required.
9. SHARE-BASED COMPENSATION
On May 5, 2021, the Company’s stockholders approved the Great Lakes Dredge & Dock Corporation 2021 Long-Term
Incentive Plan (the “Incentive Plan”), which previously had been approved by the Company’s board of directors subject to stockholder
approval. The Incentive Plan replaces the 2017 Long-Term Incentive Plan (the “Prior Plan”) and is largely based on the Prior Plan, but
with updates to the available shares and other administrative changes. The Incentive Plan permits the granting of stock options, stock
appreciation rights, restricted stock and restricted stock units to the Company’s employees and directors for up to 1.5 million shares of
common stock, plus the number of shares that remained available for future grant under the Prior Plan as of the effectiveness of the
Incentive Plan. The Company may also issue share-based compensation as inducement awards to new employees upon approval of the
board of directors and/or the applicable committee or committees thereof, as may be required.
Compensation cost charged to expense related to share-based compensation arrangements was $8.6 million, $6.3 million and
$4.3 million, for the years ended December 31, 2024, 2023 and 2022, respectively.
Non-qualified stock options
The NQSO awards were granted with an exercise price equal to the market price of the Company’s common stock at the date of
grant. The option awards generally vest in three equal annual installments commencing on the first anniversary of the grant date, and
have ten year exercise periods.
The fair value of the NQSOs was determined at the grant date using a Black-Scholes option pricing model, which requires the
Company to make several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected
term of the option at the time of grant. The annual dividend yield on the Company’s common stock is based on estimates of future
dividends during the expected term of the NQSOs. The expected life of the NQSOs was determined from historical exercise data
providing a reasonable basis upon which to estimate the expected life. The volatility assumptions were based on historical volatility of
Great Lakes. There is not an active market for options on the Company’s common stock and, as such, implied volatility for the
Company’s stock was not considered. Additionally, the Company’s general policy is to issue new shares of registered common stock
to satisfy stock option exercises or grants of restricted stock. No NQSO awards were granted in 2024, 2023 and 2022. The aggregate
intrinsic value of stock options represents the difference between market value on the date of exercise and the option price. The
aggregate intrinsic value of stock options exercised during 2024 was $0.1 million. No stock options were exercised during 2023. The
aggregate intrinsic value of stock options exercised during 2022 was $0.2 million.
A summary of stock option activity under the Incentive Plan as of December 31, 2024, and changes during the year ended
December 31, 2024, is presented below:
Options
Shares
Weighted Average
Exercise Price
Weighted-Average
Remaining
Contract Term (yrs)
Aggregate Intrinsic
Value ($000's)
Outstanding as of January 1, 2024
65
$
7.62
Granted
—
—
Exercised
(58)
7.62
Forfeited or Expired
(7)
7.62
Outstanding as of December 31, 2024
—
$
—
—
$
—
Vested at December 31, 2024
—
$
—
—
$
—
73
Restricted stock units
RSUs primarily vest in equal portions over the three-year vesting period. The fair value of RSUs was based upon the
Company’s stock price on the date of grant. A summary of the status of the Company’s non-vested RSUs as of December 31, 2024,
and changes during the year ended December 31, 2024, is presented below:
Non-vested Restricted Stock Units
Shares
Weighted-
Average
Grant-Date Fair
Value
Outstanding as of January 1, 2024
1,610
$
8.68
Granted
869
9.31
Vested
(699)
9.03
Forfeited
(134)
13.79
Outstanding as of December 31, 2024
1,646
$
8.61
Expected to vest at December 31, 2024
1,654
$
8.69
As of December 31, 2024, there was $8.5 million of total unrecognized compensation cost related to non-vested RSUs granted
under the Incentive Plan. That cost for non-vested RSUs is expected to be recognized over a weighted-average period of 2.3 years.
The Incentive Plan permits the employee to use vested shares from RSUs to satisfy the grantee’s U.S. federal income tax
liability resulting from the issuance of the shares through the Company’s retention of that number of common shares having a market
value as of the vesting date equal to such tax obligation up to the minimum statutory withholding requirements. The amount related to
shares used for such tax withholding obligations was approximately $2.5 million, $0.6 million and $2.2 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
Director compensation
The Company uses a combination of cash and share-based compensation to attract and retain qualified candidates to serve on its
board of directors. Compensation is paid to non-employee directors. Directors who are employees receive no additional compensation
for services as members of the board of directors or any of its committees. Share-based compensation is paid pursuant to the Incentive
Plan. Each non-employee director of the Company receives an annual retainer of $160, payable quarterly in arrears, and is generally
paid 50% in cash and 50% in common stock or deferred restricted stock units of the Company. Directors may elect to receive some or
all of the cash retainer in common stock or deferred restricted stock units. In 2024, the Chairman of the Board received an additional
$100 of annual compensation, paid 100% in common stock.
In the years ended December 31, 2024, 2023 and 2023, 37 thousand, 56 thousand and 106 thousand shares, respectively, of the
Company’s common stock or restricted stock units were issued to non-employee directors under the Incentive Plan.
10. REVENUE
The Company’s revenue is derived from contracts for services with federal, state, local and foreign governmental entities and
private customers. Revenues are generally derived from the enhancement or preservation of navigability of waterways or the
protection of shorelines through the removal or replenishment of soil, sand or rock.
Performance obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of
account upon which the Company’s revenue is calculated. A contract’s transaction price is allocated to each distinct performance
obligation and recognized as revenue as the performance obligation is satisfied. Fixed-price contracts, which comprise substantially all
of the Company’s revenue, will most often represent a single performance obligation as the promise to transfer the individual services
is not separately identifiable from other promises in the contracts and, therefore, not distinct.
The Company’s performance obligations are satisfied over time and revenue is recognized using contract fulfillment costs
incurred to date compared to total estimated costs at completion, also known as cost-to-cost, to measure progress towards completion.
As the Company’s performance creates an asset that the customer controls, this method provides a faithful depiction of the transfer of
an asset to the customer. Generally, the Company has an enforceable right to payment for performance completed to date.
74
The majority of the Company’s contracts are completed in a year or less. At December 31, 2024, the Company had $1.19 billion
of remaining performance obligations, which the Company refers to as total dredging backlog. Total dredging backlog does not
include $44.9 million of performance obligations related to offshore energy contracts. The Company expects to perform on its
offshore energy contracts using the inclined fall-pipe vessel for subsea rock installation which is expected to be delivered and
operational in the 2026. We anticipate that approximately 60% of the Company’s dredging backlog will be completed in 2025.
Transaction price
The transaction price is calculated using the Company’s estimated costs to complete a project. These costs are based on the
types of equipment required to perform the specified service, project site conditions, the estimated project duration, seasonality,
location and complexity of a project.
The nature of the Company’s contracts gives rise to several types of variable consideration, including pay on quantity dredged
for dredging projects and dredging project contract modifications. Estimated pay quantity is the amount of material the Company
expects to dredge for which it will receive payment. Estimated quantity to be dredged is calculated using engineering estimates based
on current survey data and the Company’s knowledge based on historical project experience.
Revenue by category
Domestically, the Company’s work generally is performed in coastal waterways and deep-water ports. The U.S. dredging
market consists of four primary types of work: capital, coastal protection, maintenance and rivers & lakes. Foreign projects typically
involve capital work.
The following table sets forth, by type of work, the Company’s contract revenues for the years ended December 31, 2024, 2023
and 2022:
Revenues
2024
2023
2022
Dredging:
Capital—U.S.
$
348,085
$
186,715
$
342,461
Coastal protection
253,360
196,343
192,567
Maintenance
158,882
187,586
98,077
Rivers & lakes
2,366
16,318
15,527
Capital—foreign
—
—
149
Total dredging revenues
$
762,693
$
586,962
$
648,781
Offshore energy
—
2,663
—
Total revenues
$
762,693
$
589,625
$
648,781
The following table sets forth, by type of customer, the Company’s contract revenues for the years ended December 31, 2024,
2023 and 2022:
Revenues
2024
2023
2022
Dredging:
Federal government
$
430,980
$
438,790
$
431,705
State and local government
154,427
129,583
207,033
Private
177,286
18,589
9,894
Foreign
—
—
149
Total dredging revenues
$
762,693
$
586,962
$
648,781
Offshore energy
—
2,663
—
Total revenues
$
762,693
$
589,625
$
648,781
Contract balances
Billings on contracts are generally submitted after verification with the customers of physical progress and are recognized as
accounts receivable in the balance sheet. For billings that do not match the timing of revenue recognition, the difference between
amounts billed and recognized as revenue is reflected in the balance sheet as either contract revenues in excess of billings or billings in
excess of contract revenues. Certain pre-contract and pre-construction costs are capitalized and reflected as contract assets in the
balance sheet. Customer advances, deposits and commissions are reflected in the balance sheet as contract liabilities.
75
Accounts receivable at December 31, 2024 and 2023 are as follows:
2024
2023
Completed contracts
$
660
$
2,920
Contracts in progress
105,159
40,743
Retainage
12,575
11,511
118,394
55,174
Allowance for credit losses
(364)
(364)
Total accounts receivable—net
$
118,030
$
54,810
The components of contracts in progress at December 31, 2024 and 2023 are as follows:
2024
2023
Costs and earnings in excess of billings:
Costs and earnings for contracts in progress
$
206,933
$
206,330
Amounts billed
(153,208)
(196,520)
Costs and earnings in excess of billings for contracts in
progress
53,725
9,810
Costs and earnings in excess of billings for completed
contracts
20,472
58,925
Total contract revenues in excess of billings
$
74,197
$
68,735
Current portion of contract revenues in excess of billings
$
74,197
$
68,735
Long-term contract revenues in excess of billings
—
—
Total contract revenues in excess of billings
$
74,197
$
68,735
Billings in excess of costs and earnings:
Amounts billed
$
(303,810) $
(258,948)
Costs and earnings for contracts in progress
278,014
229,388
Total billings in excess of contract revenues
$
(25,796) $
(29,560)
At December 31, 2024 and 2023, costs to fulfill contracts with customers recognized as other current assets were $10.3 million
and $22.2 million, respectively. At December 31, 2024 and 2023, costs to fulfill contracts with customers recognized as other
noncurrent assets were $7.6 million and $4.0 million, respectively. These costs relate to pre-contract and pre-construction activities.
During the years ended December 31, 2024 and 2023 the company amortized pre-contract and pre-construction costs of $21.9 million
and $11.5 million, respectively. The Company recognized $27.7 million in revenues during the year ended December 31, 2024 that
was recorded as billings in excess of contract revenues as of December 31, 2023.
The Company’s largest domestic customer is the U.S. Army Corps of Engineers (the “Corps”), which has responsibility for
federally funded projects related to navigation and flood control of U.S. waterways. In 2024, 2023 and 2022, 57%, 75% and 67%,
respectively, of contract revenues were earned from contracts with federal government agencies, including the Corps, as well as other
federal entities such as the U.S. Coast Guard and U.S. Navy. At December 31, 2024 and 2023, approximately 19% and 35%
respectively, of accounts receivable, including contract revenues in excess of billings and retainage, were due on contracts with federal
government agencies. The Company depends on its ability to continue to obtain federal government contracts, and indirectly, on the
amount of federal funding for new and current government dredging projects. Therefore, the Company’s operations can be influenced
by the level and timing of federal funding.
The Company derived revenues and gross loss from foreign project operations for the years ended December 31, 2024, 2023,
and 2022, as follows:
2024
2023
2022
Contract revenues
$
—
$
—
$
149
Costs of contract revenues
(1,808)
(1,142)
(341)
Gross loss
$
(1,808)
$
(1,142)
$
(192)
76
In 2022, foreign revenues were primarily from work done in the Middle East. The majority of the Company’s long-lived assets
are marine vessels and related equipment. At any point in time, the Company may employ certain assets outside of the U.S., as
needed, to perform work on the Company’s foreign projects. As of December 31, 2023 and 2022, long-lived assets located outside of
the U.S had no net book value. Currently our assets outside of the U.S. do not include dredges. Revenue from foreign projects has
been concentrated in the Middle East which comprised less than 1% of total contract revenues in 2024, 2023 and 2022. At December
31, 2024, there were no accounts receivable due on contracts in the Middle East. At December 31, 2022, approximately 9% of total
accounts receivable, including retainage and contract revenues in excess of billings, were due on contracts in the Middle East.
11. RETIREMENT PLANS
The Company sponsors two 401(k) savings plans, one covering substantially all non-union salaried employees (“Salaried
Plan”), a second covering its hourly employees (“Hourly Plan”). Under the Salaried Plan and the Hourly Plan, individual employees
may contribute a percentage of compensation and the Company will match a portion of the employees’ contributions. The Salaried
Plan also includes a discretionary profit-sharing component, permitting the Company to make discretionary employer contributions to
all eligible employees of these plans. Additionally, the Company sponsors a Supplemental Savings Plan in which the Company makes
contributions for certain key executives. The Company’s expense for matching, discretionary and Supplemental Savings Plan
contributions for 2024, 2023 and 2022, was $6.1 million, $4.8 million and $3.0 million, respectively.
The Company also contributes to various multiemployer pension plans pursuant to collective bargaining agreements. In 2024,
2023 and 2022, the Company contributed $5.3 million, $5.2 million and $4.9 million respectively to all of the multiemployer plans
that provide pension benefits. The information available to the Company about the multiemployer plans in which it participates,
whether via request to the plan or publicly available, is generally dated due to the nature of the reporting cycle of multiemployer plans
and legal requirements under the Employee Retirement Income Security Act (“ERISA”) as amended by the Multiemployer Pension
Plan Amendments Act (“MPPAA”). Based upon these plans’ most recently available annual reports, the Company’s contributions to
these plans were less than 5% of each plan’s total contributions.
The Company does not expect any future increased contributions to have a material negative impact on its financial position,
results of operations or cash flows for future years. The risks of participating in multiemployer plans are different from single
employer plans as assets contributed are available to provide benefits to employees of other employers and unfunded obligations from
an employer that discontinues contributions are the responsibility of all remaining employers. In addition, in the event of a plan’s
termination or the Company’s withdrawal from a plan, the Company may be liable for a portion of the plan’s unfunded vested
benefits. However, information from the plans’ administrators is not available to permit the Company to determine its share, if any, of
unfunded vested benefits.
12. COMMITMENTS AND CONTINGENCIES
Commercial commitments
Performance and bid bonds are customarily required for dredging and marine construction projects. The Company has bonding
agreements with Argonaut Insurance Company, Liberty Mutual Insurance Company and Philadelphia Indemnity Insurance Company,
(collectively, the “Sureties”) under which the Company can obtain performance, bid and payment bonds. The Company also currently
has outstanding bonds with ACE Holdings, Travelers Casualty and Surety Company of America, Berkley Insurance Company and
Zurich American Insurance Company. Bid bonds are generally obtained for a percentage of bid value and amounts outstanding
typically range from $1.0 million to $10.0 million. At December 31, 2024, the Company had outstanding performance bonds with a
notional amount of approximately $1.32 billion. The revenue value remaining in backlog related to the projects totaled approximately
$904.1 million.
Certain foreign projects performed by the Company have warranty periods, typically spanning no more than one to three years
beyond project completion, whereby the Company retains responsibility to maintain the project site to certain specifications during the
warranty period. Generally, any potential liability of the Company is mitigated by insurance, shared responsibilities with consortium
partners, and/or recourse to owner-provided specifications.
Legal proceedings and other contingencies
As is customary with negotiated contracts and modifications or claims to competitively bid contracts with the federal
government, the government has the right to audit the books and records of the Company to ensure compliance with such contracts,
modifications, or claims, and the applicable federal laws. The government has the ability to seek a price adjustment based on the
results of such audit. Any such audits have not had, and are not expected to have, a material impact on the financial position,
operations or cash flows of the Company.
77
Various legal actions, claims, assessments and other contingencies arising in the ordinary course of business are pending against
the Company and certain of its subsidiaries. The Company will defend itself vigorously on all matters. These matters are subject to
many uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely to the
Company. Although the Company is subject to various claims and legal actions that arise in the ordinary course of business, the
Company is not currently a party to any material legal proceedings or environmental claims. The Company records an accrual when it
is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe any of
these proceedings, individually or in the aggregate, would be expected to have a material effect on results of operations, cash flows or
financial condition.
Lease obligations
The Company leases certain operating equipment and office facilities under long-term operating leases expiring at various dates
through 2030. The equipment leases contain renewal or purchase options that specify prices at the then fair value upon the expiration
of the lease terms. The leases also contain default provisions that are triggered by an acceleration of debt maturity under the terms of
the Company’s ABL Credit Agreement, or, in certain instances, cross default to other equipment leases and certain lease arrangements
require that the Company maintain certain financial ratios comparable to those required by its ABL Credit Agreement. Additionally,
the leases typically contain provisions whereby the Company indemnifies the lessors for the tax treatment attributable to such leases
based on the tax rules in place at lease inception. The tax indemnifications do not have a contractual dollar limit. To date, no lessors
have asserted any claims against the Company under these tax indemnification provisions.
13. SEGMENT INFORMATION
The Company reports segment information based on the management approach which designates the internal reporting used by
the Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer, for making decisions and
assessing performance as the source of the Company’s reportable segments. The Company has determined it has one reportable
segment: dredging.
As the Company operates in one reportable segment, the CODM is provided financial reports which include (i) a consolidated
statement of operations, (ii) plant expenses (as defined below), (iii) a summary of contract revenues by work type and backlog by
customer type, (iv) a consolidated balance sheet and (v) a contract analysis of revenues and margins by project. These financial reports
assist the CODM in assessing the Company’s financial performance and in allocating resources appropriately.
The dredging segment provides dredging services, which generally involves the enhancement or preservation of the navigability
of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The Company derives its
revenue primarily in the United States and manages its business activities on a consolidated basis. The accounting policies of the
dredging segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is
reported on the consolidated balance sheet as total consolidated assets. The CODM uses net income and Adjusted EBITDA to evaluate
income generated from segment assets in deciding whether to reinvest profits into the operating segment or into other parts of the
entity. Net income and Adjusted EBITDA are used to monitor budgeted versus actual results and to assess performance of the
segment.
Net income from the Company’s reportable segment is as follows:
2024
2023
2022
Contract revenues
$
762,693
$
589,625
$
648,781
Less:
Direct contract cost
449,748
379,062
418,274
Plant expenses excluding depreciation expense *
109,670
90,306
153,061
Depreciation expense
42,699
42,525
46,273
General and administrative expenses
70,769
57,056
51,117
Other (gains) losses
(2,998)
(7,543)
7,792
Interest expense
18,556
12,577
14,507
Interest income
(676)
(437)
(399)
Other (income) expense
(460)
(2,233)
1,571
Income tax provision (benefit)
18,120
4,406
(9,360)
Net income (loss)
$
57,265
$
13,906
$
(34,055)
* Consists of indirect expenses that are allocated to contracts, including, but not limited to: maintenance, supplies, wear and insurance.
78
Great Lakes Dredge & Dock Corporation
Schedule II—Valuation and Qualifying Accounts
For the Years Ended December 31, 2024, 2023 and 2022
(In thousands)
Beginning
Balance
Additions
Deductions
Ending
balance
Description
Year ended December 31, 2022
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts
$
564
$
—
$
—
$
564
Valuation allowance for deferred tax assets
2,487
3,525
—
6,012
Total
$
3,051
$
3,525
$
—
$
6,576
Year ended December 31, 2023
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts
$
564
$
—
$
200
$
364
Valuation allowance for deferred tax assets
6,012
546
—
6,558
Total
$
6,576
$
546
$
200
$
6,922
Year ended December 31, 2024
Allowances deducted from assets to which they apply:
Allowances for doubtful accounts
$
364
$
—
$
—
$
364
Valuation allowance for deferred tax assets
6,558
757
—
7,315
Total
$
6,922
$
757
$
—
$
7,679
79
I. EXHIBIT INDEX
Number
Document Description
2.1
Amended and Restated Agreement and Plan of Merger dated as of December 22, 2003, among Great Lakes Dredge
& Dock Corporation, GLDD Acquisitions Corp., GLDD Merger Sub, Inc. and Vectura Holding Company LLC.
(Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K filed with the
Commission on January 6, 2004).
2.2
Agreement and Plan of Merger by and among GLDD Acquisitions Corp., Aldabra Acquisition Corporation, and
certain shareholders of Aldabra Acquisition Corporation and GLDD Acquisitions Corp., dated as of June 20, 2006.
(Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K filed with the
Commission on June 22, 2006).
3.1
Second Amended and Restated Certificate of Incorporation of Great Lakes Dredge & Dock Corporation, effective
May 9, 2024. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on Form
10-Q filed with the Commission on August 6, 2024).
3.2
Second Amended and Restated Bylaws of Great Lakes Dredge & Dock Corporation, dated as of January 12, 2023.
(Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K filed with the
Commission on January 19, 2023).
3.3
Certificate of Ownership and Merger of Great Lakes Dredge & Dock Corporation with and into Great Lakes Dredge
& Dock Holdings Corp. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on
Form 8-K filed with the Commission on December 29, 2006).
4.1
Description of Great Lakes Dredge & Dock Corporation Securities Registered Pursuant to Section 12 of the
Exchange Act. *
4.2
Specimen Common Stock Certificate for Great Lakes Dredge & Dock Corporation. (Incorporated by reference to
Great Lakes Dredge & Dock Corporation’s Annual Report on Form 10-K filed with the Commission on March 22,
2007).
4.3
Indenture, dated May 25, 2021, among Great Lakes Dredge & Dock Corporation, as Issuer, the guarantors party
thereto, and Wells Fargo Bank, National Association, as Trustee, relating to the 2029 Notes (incorporated by
reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on Form 10-Q filed with the Commission
on August 3, 2021).
4.4
Form of 2029 Notes (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on
Form 10-Q filed with the Commission on August 3, 2021).
10.1
Employment Agreement between Great Lakes Dredge & Dock Corporation and Lasse Petterson, dated as of April
28, 2017. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K
filed with the Commission on May 1, 2017). †
10.2
Employment Agreement between Great Lakes Dredge & Dock Corporation and Scott Kornblau, dated as of
September 29, 2021. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on
Form 8-K filed with the Commission on October 4 , 2021). †
10.3
Employment Agreement between Great Lakes Dredge & Dock Corporation and Vivienne Schiffer, dated as of
December 7, 2020. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual Report on Form
10-K filed with the Commission on February 23, 2022). †
10.4
Employment Agreement between Great Lakes Dredge & Dock Corporation and Eleni Beyko, dated as of January 8,
2021 (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual Report on Form 10-K filed
with the Commission on February 16, 2024). †
10.5
Second Amended and Restated Great Lakes Dredge & Dock Company, LLC Annual Bonus Plan effective as of
January 1, 2012 (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-
K filed with the Commission on January 17, 2012). †
10.6
401 (k) Savings Plan. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual Report on
Form 10-K filed with the Commission on March 30, 2005). †
80
Number
Document Description
10.7
Amended and Restated Great Lakes Dredge & Dock Corporation Supplemental Savings Plan effective January 1,
2014. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual Report on Form 10-K filed
with the Commission on March 11, 2014). †
10.8
Great Lakes Dredge & Dock Corporation Director Deferral Plan, adopted on November 8, 2017 (Incorporated by
reference to Great Lakes Dredge & Dock Corporation’s Annual Report on Form 10-K filed with the Commission on
February 28, 2018). †
10.9
Form of Investor Rights Agreement among Aldabra Acquisition Corporation, Great Lakes Dredge & Dock Holdings
Corp., Madison Dearborn Capital Partners IV, L.P., certain stockholders of Aldabra Acquisition Corporation and
certain stockholders of GLDD Acquisitions Corp. (Incorporated by reference to Great Lakes Dredge & Dock
Holding Corp.’s Registration Statement on Form S-4 filed with the Commission on August 24, 2006).
10.10
Great Lakes Dredge & Dock Corporation 2017 Long-Term Incentive Plan (Incorporated by reference to Great Lakes
Dredge & Dock Corporation’s Current Report on Form 8-K filed with the Commission on May 17, 2017). †
10.11
Great Lakes Dredge & Dock Corporation 2021 Long-Term Incentive Plan (Incorporated by reference to Great Lakes
Dredge & Dock Corporation’s Current Report on Form 8-K filed with the Commission on May 7, 2021). †
10.12
Form of Great Lakes Dredge & Dock Corporation Restricted Stock Unit Award Agreement pursuant to the Great
Lakes Dredge & Dock Corporation 2017 Long-Term Incentive Plan. (Incorporated by reference to Great Lakes
Dredge & Dock Corporation’s Quarterly Report on Form 10-Q filed with the Commission on May 4, 2018). †
10.13
Form of Great Lakes Dredge & Dock Corporation Performance-Based Restricted Stock Unit Award Agreement
(Three Year Form) pursuant to the Great Lakes Dredge & Dock Corporation 2017 Long-Term Incentive Plan.
(Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on Form 10-Q filed with
the Commission on May 4, 2018). †
10.14
Restricted Stock Unit Award Notice pursuant to the Great Lakes Dredge & Dock Corporation 2017 Long-Term
Incentive Plan. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on Form
10-Q filed with the Commission on May 3, 2019). †
10.15
Performance-Based Restricted Stock Unit Award Notice pursuant to the Great Lakes Dredge & Dock Corporation
2017 Long-Term Incentive Plan. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly
Report on Form 10-Q filed with the Commission on May 3, 2019). †
10.16
Purchase Agreement, dated May 12, 2021, by and among the Company, certain subsidiary guarantors named therein
and BofA Securities, Inc., as representative of the initial purchasers named therein. (Incorporated by reference to
Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K filed with the Commission on May 18,
2021).
10.17
Second Amended and Restated Revolving Credit and Security Agreement dated as of July 29, 2022 by and among
Great Lakes Dredge & Dock Corporation, as Borrower, each other Credit Party party hereto from time to time, the
financial institutions which are now or which hereafter become a party hereto as lenders, PNC Bank, National
Association, as Agent (the “Agent”), PNC Capital Markets, CIBC Bank USA, Bank of America, N.A. and Truist
Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, CIBC Bank USA and Truist Bank as Co-
Syndication Agents, Bank of America, N.A., as Documentation Agent and PNC Bank National Association, as
Green Loan Coordinator (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on
Form 8-K filed with the Commission on August 1, 2022).
10.18
Vessel Construction Agreement, dated June 5, 2020 by and between Conrad Shipyard, L.L.C., and Great Lakes
Dredge & Dock Company, LLC. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly
Report on Form 10-Q filed with the Commission on August 4, 2020). (1)
10.19
Vessel Construction Agreement, dated November 15, 2021 by and between Philly Shipyard Inc., and Great Lakes
Dredge & Dock Company, LLC. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual
Report on Form 10-K filed with the Commission on February 23, 2022). (1)
10.20
Consulting Agreement, dated December 1, 2022, between Great Lakes Dredge & Dock Company, LLC and David E.
Simonelli. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Quarterly Report on Form 10-Q
filed with the Commission on May 2, 2023).
10.21
Second Lien Credit Agreement, dated April 24, 2024. (Incorporated by reference to Great Lakes Dredge & Dock
Corporation’s Current Report on Form 8-K filed with the Commission on April 25, 2024).
81
Number
Document Description
10.22
Amendment No. 1 to Second Amended and Restated Revolving Credit and Security Agreement, dated April 24,
2024. (Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Current Report on Form 8-K filed
with the Commission on April 25, 2024).
19
Great Lakes Dredge & Dock Corporation Insider Trading Policy. *
21
Subsidiaries of Great Lakes Dredge & Dock Corporation. *
23.1
Consent of Deloitte & Touche LLP. *
31.1
Certification Pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
Certification Pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. *
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. *
97
Great Lakes Dredge & Dock Corporation Statement of Policy Regarding Incentive Compensation Recoupment.
(Incorporated by reference to Great Lakes Dredge & Dock Corporation’s Annual Report on Form 10-K filed with the
Commission on February 16, 2024)
101.INS
Inline XBRL Instance Document. *
101.SCH
Inline XBRL Taxonomy Extension Schema with embedded Linkbase documents. *
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) *
(1)
Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material
and is the type of information that the Company treats as private and confidential.
* Filed herewith
† Compensatory plan or arrangement
82
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Great Lakes Dredge & Dock Corporation
(registrant)
By:
/s/ Scott Kornblau
Scott Kornblau
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Date: February 20, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capabilities and on the dates indicated.
Signature
Date
Title
/s/ Lasse J. Petterson
February 20, 2025
President, Chief Executive Officer and Director
Lasse J. Petterson
(Principal Executive Officer)
/s/ Scott Kornblau
February 20, 2025
Senior Vice President and Chief Financial Officer
Scott Kornblau
(Principal Financial Officer)
/s/ Ryan M. Bayer
February 20, 2025
Vice President and Chief Accounting Officer
Ryan M. Bayer
(Principal Accounting Officer)
/s/ Lawrence R. Dickerson
February 20, 2025
Chairman of the Board and Director
Lawrence R. Dickerson
/s/ Dana Armstrong
February 20, 2025
Director
Dana Armstrong
/s/ Kathleen M. Shanahan
February 20, 2025
Director
Kathleen M. Shanahan
/s/ Earl Shipp
February 20, 2025
Director
Earl Shipp
/s/ Ronald R. Steger
February 20, 2025
Director
Ronald R. Steger
/s/ D. Michael Steuert
February 20, 2025
Director
D. Michael Steuert
BOARD OF DIRECTORS
Chairman of the Board
Lawrence Dickerson
Directors
Dana Armstrong
Lasse Petterson
Kathleen M. Shanahan
Earl Shipp
Ronald Steger
D. Michael Steuert
ANNUAL MEETING
Thursday, May 8, 2025 - 1pm (CT)
Virtually via live audio webcast at
www.virtualshareholdermeeting.com/GLDD2025
INVESTOR INQUIRIES
For additional financial documents and information:
• gldd.com
• investorrelations@gldd.com
STOCK LISTING
Great Lakes Dredge & Dock Corporation
NASDAQ Symbol GLDD
TRANSFER AGENT
Broadridge Corporate Issuer Solutions, Inc.
1155 Long Island Ave.
Edgewood, NY 11717
GREAT LAKES DREDGE & DOCK CORPORATION
u Established 1890
u Committed to creating an Incident & Injury-Free®
(IIF®) working environment
u Certified ISO 9001:2000 for International
Operations
u An equal-opportunity employer
CORPORATE HEADQUARTERS &
DREDGING OPERATIONS OFFICE
Great Lakes Dredge & Dock Corporation
9811 Katy Freeway, Suite 1200
Houston, TX 77024
346-359-1010 | info@gldd.com
OFFICES
Gulf
9811 Katy Freeway, Suite 1200
Houston, TX 77024
346-359-1010 | info@gldd.com
Northeast
2747 Richmond Terrace
Staten Island, NY 10303
713-981-2700 | NortheastRegion@gldd.com
Middle East
MJ Tower Office 32
1st Floor Building 870
Block 436, Road 3618
Al Seef, Bahrain
+973 17471929 | MEinfo@gldd.com
BUSINESS OPERATIONS AND SUPPORT
1 Parkview Plaza, Suite 800
Oakbrook Terrace, IL 60181
630-574-3000 | info@gldd.com
YARD LOCATIONS
Staten Island, NY
Norfolk, VA
Morgan City, LA
Cape Girardeau, MO
Little Rock, AR
CORPORATE
INFORMATION
TOP LEFT: We have invested in our
fleet to further reduce exposure to
potential incidents by taking delivery
in late 2023 of the Cape Hatteras and
the Cape Canaveral, two Damen 3013
Multi Cats built by Conrad Shipyard
in Morgan City, Louisiana. These
vessels allow our pipe handling and
connection work to take place securely
on deck, greatly reducing the risk of
man overboards.
TOP RIGHT: In early 2024, our
company was awarded the American
Waterways Operators American
Waterways HERO Award, Recognizing
Heroic Maritime Rescues, for the quick-
thinking actions of Katie Weston, our
East River Crew Boat Captain, and her
lifesaving rescue on January 16, 2024.
CENTER LEFT: Fritz Golding, Director
Learning and Development, Jason
Campbell, Vice President, Health,
Safety, Environment, and Robert
Worrell, Vice President, Human
Resources and Labor Relations visit
the Port Arthur LNG project site during
Construction Safety Week 2024.
CENTER RIGHT: Great Lake’s Multi
Cat dredge support vessels, Cape
Hatteras and Cape Canaveral,
were awarded the prestigious 2024
Significant Boat of the Year title at the
International WorkBoat Show. This
award underscores the Company’s
commitment to safety, innovation, and
operational excellence in the dredging
and maritime sectors. Pictured third
from left, Dave Johanson, Great
Lakes Senior Vice President, Project
Acquisition and Operations.
BOTTOM: The Cape Hatteras, one of
Great Lakes’ Damen 3013 Multi Cats
built by Conrad Shipyard in Morgan
City, Louisiana.
INVESTING IN
SAFETY
TOP: Trailing Suction Hopper Dredge Ellis Island is the largest hopper dredge
in the United States market, with a carrying capacity of 15,000 cubic yards.
LEFT: Pictured left to right: Lasse Petterson, Great Lakes President and Chief
Executive Officer, Chris Gunsten, Great Lakes Senior Vice President, Project
Services and Fleet Engineering, and Rodger E. Rees, Port Director and CEO,
Galveston Wharves at the Port of Galveston during the Galveston Island
Naming Ceremony at Pier 21 in Galveston, Texas on October 25, 2024.
BOTTOM LEFT: Cutter Suction Dredge Ohio performing deepening
improvements to the Brownsville Ship Channel in South Texas. The work is
being performed for NextDecade Corporation, in support of their Rio Grande
LNG project. (Photo: Dredge Ohio Relief Captain Zack Price)
BOTTOM RIGHT: Hopper Dredge Liberty Island pumping beneficial use
dredged material to Egmont Key, Florida during maintenance dredging of
the Tampa Harbor Entrance Channel for the U.S. Army Corps of Engineers,
Jacksonville District. (Photo: Ed O’Dowd)
DREDGE & DOCK CORPORATION
GREAT LAKES
9811 Katy Freeway, Suite 1200 | Houston, TX 77024
346-359-1010 | info@gldd.com | gldd.com
2 0 2 4 A N N U A L R E P O R T