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Great Lakes Dredge & Docks hit by decline in international dredging contracts

News // February 23, 2017

The Interim Chief Executive Officer and Chief Financial Officer at Great Lakes Dredge & Dock, Mark Marinko, says that although the company executed well on its domestic dredging contracts, performance was offset by a major decline in international work due to a smaller market in 2016 that impacted the entire international dredging industry as well as the absence of the Suez Canal project, which contributed robust revenue and contract margin in 2015. "We were pleased to have our internationally-based vessels utilized during the second half of the year, however the contracts were not at the margin of recent international projects," said Mr Marinko.

Chairman of the Board Robert Uhler said: "Last year was transformative for the company. Operationally, we made significant progress repositioning the E&I segment by divesting the non-core assets that were not a strategic fit for the business. We expect the risk controls and other processes that were implemented in 2016 to make this segment well positioned as we move forward in 2017. We also expect the changes in leadership, including the recent additions to the board, to enhance our ability to maximize shareholder value."

Mr Marinko concluded: "The domestic dredging bid market in which we compete continued to remain at a healthy level in 2016 at US$972 million. The total value of the market declined compared to the prior year, largely the result of fewer projects valued at over US$50 million being tendered. Our dredging segment won 29 per cent of our addressable bid market, which is below the average combined dredging bid market share over the prior three years during which we were awarded several large projects. Coastal protection projects account for US$164 million of our awards, maintenance projects account for US$68 million, capital work accounts for US$27 million, and rivers and lakes awards account for US$22 million. Subsequent to year-end, we received an US$88 million award for coastal restoration work in the Gulf of Mexico that has been added to backlog. 

"With a project already in backlog for it to execute, we look forward to the delivery of our new ATB hopper dredge, Ellis Island, late in the second quarter of this year. We are tracking several potential opportunities and believe this addition to our fleet positions us well to capture work in 2017 and beyond.

"Internationally, although the dredging market continues to experience softness, we are pursuing several opportunities, primarily in the Middle East. Due to market conditions, in 2016 the company sold Reem Island, an underutilized dredge which was based in the Middle East. Subsequent to year-end, we intend to sell its underutilized sister ship, Noon Island, which is also based in the Middle East. We remain optimistic and believe that our presence internationally is strategically beneficial for the company.

"In Washington DC, although Congress was unable to pass a budget for fiscal year 2017, we are pleased that it passed and former President Obama signed into law Water Infrastructure Improvements for the Nation (WIIN) Act, which includes the Water Resources Development Act of 2016. 

"This comprehensive legislation authorizes many projects to address the needs of America's harbours, locks, dams, flood protection, and other water infrastructure while also helping the US Army Corps be more efficient in its oversight of these important projects. Finally, we are also encouraged by the new administration's emphasis on investing in the United States' infrastructure, including ports and waterways, and are hopeful that this focus will accelerate many of these much needed projects."

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