Great Lakes Dredge & Dock CORP Q4 FY2023 earnings call

• 2023 was a year of positive transition with a record backlog of $1.04 billion, including major capital project awards like Freeport Deepening and LNG-related port deepening. - Implemented cost reduction initiatives, modernized the fleet with new dredges (e.g., Galveston Island delivered in Dec 2023) and retired older equipment. - Offshore wind market had cancellations but long-term outlook remains strong with global and US targets; secured a new rock installation contract for offshore wind in Dec 2023.

In the fourth quarter of 2023, revenues were $181.7 million, with coastal protection, maintenance, and offshore wind revenues contributing to an increase, offset by a decrease in rivers and lakes project revenue. Full-year 2023 revenue was $589.6 million. The fourth quarter 2023 gross profit was $38.7 million with a margin of 21.3%, improving from the prior year's negative figures. The backlog ended 2023 at $1.04 billion, with 71% in capital projects.

• Expect approximately 60% of the $1 billion backlog to convert to revenue in 2024. - Full-year 2024 capital expenditures expected between $170 million and $195 million, with heaviest spend in the middle of the year. - Three regulatory dry dockings planned for 2024, with two starting in Q1 and one in the second half.

• Offshore wind market cancellations and developer PPA resets. - Regulatory delays in budget approval affecting the bid market. - Maritime Administration financing timing challenges for new vessels.

Q: Why did MARAD timing shift?

A: MARAD's diligence was affected by negative headlines, but there's a path to secure financing though not at favorable terms currently.

Q: Weather or project delays affecting Q4 revenue?

A: Subcontractor work on LNG project started later than expected in Q4, driving revenue differences.

Q: Rock contract revenue?

A: Roughly $10 million related to Empire II, including $7.4 million from termination and $2.5 million from engineering services before termination.

Q: Asset sales in 2024?

A: Not foreseen as a major lever going forward, as it's a lever that can't be pulled frequently.

Q: Backlog utilization in 2024?

A: Roughly 60% of the backlog is expected to convert to revenue in 2024, but it can fluctuate as schedules adjust.

Q: EBITDA margins and mix?

A: Q4 was normalized with no dry docks, and the company is setting up to return to normal margins aiming for high teens operating and mid-teens EBITDA.

Q: Offshore wind performance obligations?

A: The $44 million includes a signed executed contract for offshore wind, not pending FID.

Q: CapEx inflection point?

A: CapEx will wind down in 2025, leading to normalized operating cash flow as the large cash outflow from newbuilds subsides