Great Lakes Dredge & Dock Corporation (GLDD) announced that it has been awarded a $122 million contract for deepening of the Miami Harbor by the U.S. Army Corps of Engineers. With further options of contract expected to be awarded by January 31, 2014, the project value will go up to $206 million.
Dredging on this project is slated to begin in the fourth quarter. The project will deepen the Port of Miami channel to minus 50 feet and will equip the port to accommodate the next generation post-Panamax vessels that will transport cargo through the expanded Panama Canal starting in early 2015.
The base work of the project includes excavation of the offshore entrance channel to the Port. Further option work which is expected to be awarded by January 31, 2014 involves the deepening of the inner channels. This will provide access to the Port’s berthing areas.
Great Lakes will employ over 300 crew and staff for the execution of this project. The project will take place in the environmentally sensitive waters of one of the busiest ports in the United States. Thus, important aspects of the project include seagrass and coral resource health monitoring and water quality and sedimentation measurement activities. Great Lakes and other environmental partners will be liable for safety of the public, crews employed on the project, vessel traffic as well as the marine environment. In order to excavate the hard limestone found in Miami and other East Coast ports, Great Lakes will employ the best-in-class heavy-duty rock cutter suction dredge.
Great Lakes reported earnings per share of 1 cent in the first quarter of 2013, which stood at half the year-ago quarter’s earnings and fell short of the Zacks Consensus Estimate of 5 cents. Weak results at the demolition segment offset improved performance in the dredging segment. Total backlog as of the first quarter end stood at $417 million, down from $449 million as of 2012 end.
After a record fourth quarter of 2012, the Dredging segment delivered another strong quarter. This momentum is expected to continue, going forward. Great Lakes’ Australia and Brazil projects will begin dredging in the second quarter. The domestic dredging bid market continues to be active. Great Lakes has won 52% of the market in the first quarter and added a $30 million coastal protection project in April. Numerous Superstorm Sandy related projects are expected to continue. The State of Louisiana recently announced $340 million of potential projects funded by the initial BP settlement.
The demolition segment will, however, require some time to deliver a turnaround. Great Lakes foresees numerous demolition and environmental remediation opportunities on the horizon, and plans to selectively target those projects that it can execute well.
Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States. Great Lakes is also one of the largest U.S. providers of commercial and industrial demolition and remediation services, mainly in the Northeast. Great Lakes currently holds a Zacks Rank #5 (Strong Sell).
Other stocks to consider in the same industry with a favorable Zacks Rank are Primoris Services Corporation (PRIM) with a Zacks Rank #1 (Strong Buy) while Orion Marine Group Inc. (ORN) and Chicago Bridge & Iron (CBI) retain a Zacks Rank #2 (Buy).
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