SEC Form 10-Q filed by Great Lakes Dredge & Dock Corporation

8/6/24 4:01:24 PM ET

$GLDD

Military/Government/Technical

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐	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

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2024, 67,188,921 shares of the Registrant’s Common Stock, par value $.0001 per share, were outstanding.

Great Lakes Dredge & Dock Corporation and Subsidiaries

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly Period ended June 30, 2024

INDEX


		Page

	Part I Financial Information (Unaudited)	3

Item 1	Financial Statements	3

	Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023	5

	Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2024 and 2023	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4	Controls and Procedures	26

	Part II Other Information	27

Item 1	Legal Proceedings	27

Item 1A	Risk Factors	27

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3	Defaults Upon Senior Securities	27

Item 4	Mine Safety Disclosures	27

Item 5	Other Information	27

Item 6	Exhibits	28

	Signature	29

PART I — Financial Information

Item 1. Financial Statements.

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)


	June 30,			December 31,
	2024			2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	23,134		$	22,841
Accounts receivable—net		56,279			54,810
Contract revenues in excess of billings		70,509			68,735
Inventories		31,952			33,912
Prepaid expenses		2,258			1,486
Other current assets		35,134			44,544
Total current assets		219,266			226,328

PROPERTY AND EQUIPMENT—Net		653,283			614,608
OPERATING LEASE ASSETS		74,670			88,398
GOODWILL		76,576			76,576
INVENTORIES—Noncurrent		86,905			86,325
OTHER		16,967			18,605
TOTAL	$	1,127,667		$	1,110,840

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	90,447		$	83,835
Accrued expenses		27,892			37,361
Operating lease liabilities		26,851			28,687
Billings in excess of contract revenues		20,574			29,560
Total current liabilities		165,764			179,443

LONG-TERM DEBT		411,475			412,070
OPERATING LEASE LIABILITIES—Noncurrent		49,169			61,444
DEFERRED INCOME TAXES		72,338			62,232
OTHER		10,898			10,103
Total liabilities		709,644			725,292

COMMITMENTS AND CONTINGENCIES (Note 8)
EQUITY:
Common stock—$.0001 par value; 90,000 authorized, 67,189 and 66,623 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.		7			6
Additional paid-in capital		319,776			317,337
Retained earnings		98,917			70,220
Accumulated other comprehensive loss		(677	)		(2,015	)
Total equity		418,023			385,548
TOTAL	$	1,127,667		$	1,110,840

See notes to unaudited condensed consolidated financial statements.

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023

Contract revenues	$	170,086		$	132,667		$	368,746		$	290,711
Costs of contract revenues		140,246			114,768			293,332			260,677
Gross profit		29,840			17,899			75,414			30,034
General and administrative expenses		16,161			14,462			32,272			27,479
Other gains		(906	)		(243	)		(2,922	)		(261	)
Operating income		14,585			3,680			46,064			2,816
Interest expense—net		(4,198	)		(3,175	)		(8,089	)		(6,560	)
Other income		128			2,024			553			2,251
Income (loss) before income taxes		10,515			2,529			38,528			(1,493	)
Income tax provision		(2,842	)		(796	)		(9,831	)		(5	)
Net income (loss)	$	7,673		$	1,733		$	28,697		$	(1,498	)

Basic earnings (loss) per share	$	0.11		$	0.03		$	0.43		$	(0.02	)
Basic weighted average shares		67,118			66,462			66,924			66,363

Diluted earnings (loss) per share	$	0.11		$	0.03		$	0.42		$	(0.02	)
Diluted weighted average shares		67,697			66,805			67,615			66,363

See notes to unaudited condensed consolidated financial statements.

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

Net income (loss)	$	7,673	$	1,733	$	28,697	$	(1,498	)
Net change in cash flow derivative hedges—net of tax (1)		50		978		1,338		(431	)
Comprehensive income (loss)	$	7,723	$	2,711	$	30,035	$	(1,929	)

(1)

Net of income tax provision of $(17) and $(331) for the three months ended June 30, 2024 and 2023, respectively. Net of income tax (provision) benefit of $(453) and $145 for the six months ended June 30, 2024 and 2023, respectively.

See notes to unaudited condensed consolidated financial statements.

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands)


											Accumulated
	Shares of				Additional						Other
	Common		Common		Paid-In			Retained			Comprehensive
	Stock		Stock		Capital			Earnings			Loss			Total

BALANCE—January 1, 2024		66,623	$	6	$	317,337		$	70,220		$	(2,015	)	$	385,548
Share-based compensation		21		1		2,396			—			—			2,397
Vesting of restricted stock units and impact of shares withheld for taxes		411		—		(970	)		—			—			(970	)
Exercise of options and purchases from employee stock plans		134		—		1,013			—			—			1,013
Net income		—		—		—			28,697			—			28,697
Other comprehensive income—net of tax		—		—		—			—			1,338			1,338
BALANCE—June 30, 2024		67,189	$	7	$	319,776		$	98,917		$	(677	)	$	418,023

BALANCE—January 1, 2023		66,188	$	6	$	312,091		$	56,314		$	(191	)	$	368,220
Share-based compensation		33		1		2,210		—			—				2,211
Vesting of restricted stock units and impact of shares withheld for taxes		156	—			(542	)	—			—				(542	)
Exercise of options and purchases from employee stock plans		115	—			562		—			—				562
Net loss	—		—		—				(1,498	)	—				(1,498	)
Other comprehensive loss —net of tax	—		—		—			—				(431	)		(431	)
BALANCE—June 30, 2023		66,492	$	7	$	314,321		$	54,816		$	(622	)	$	368,522


										Accumulated
	Shares of				Additional					Other
	Common		Common		Paid-In			Retained		Comprehensive
	Stock		Stock		Capital			Earnings		Loss			Total

BALANCE—March 31, 2024		66,941	$	6	$	318,517		$	91,244	$	(727	)	$	409,040
Share-based compensation		11		1		1,397			—		—			1,398
Vesting of restricted stock units and impact of shares withheld for taxes		224		—		(289	)		—		—			(289	)
Exercise of options and purchases from employee stock plans		13		—		151			—		—			151
Net income		—		—		—			7,673		—			7,673
Other comprehensive income—net of tax		—		—		—			—		50			50
BALANCE—June 30, 2024		67,189	$	7	$	319,776		$	98,917	$	(677	)	$	418,023

BALANCE—March 31, 2023		66,416	$	6	$	312,533		$	53,083	$	(1,600	)	$	364,022
Share-based compensation		13		1		1,995			—		—			1,996
Vesting of restricted stock units and impact of shares withheld for taxes		63		—		(207	)		—		—			(207	)
Net income		-		—		—			1,733		—			1,733
Other comprehensive income—net of tax		-		—		—			—		978			978
BALANCE—June 30, 2023		66,492	$	7	$	314,321		$	54,816	$	(622	)	$	368,522

See notes to unaudited condensed consolidated financial statements.

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2024			2023
OPERATING ACTIVITIES:
Net income (loss)	$	28,697		$	(1,498	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization		22,128			21,787
Deferred income taxes		9,654			5
Gain on sale of assets		(2,821	)		(261	)
Amortization of capitalized contract costs		8,394			4,989
Amortization of deferred financing fees		874			483
Share-based compensation expense		2,563			2,435
Changes in assets and liabilities:
Accounts receivable		(1,469	)		2,960
Contract revenues in excess of billings		(1,774	)		22,717
Inventories		1,380			(5,378	)
Prepaid expenses and other current assets		(767	)		1,172
Accounts payable and accrued expenses		(1,581	)		(26,268	)
Billings in excess of contract revenues		(8,986	)		14,052
Other noncurrent assets and liabilities		517			(3,098	)
Cash provided by operating activities		56,809			34,097
INVESTING ACTIVITIES:
Purchases of property and equipment		(64,263	)		(54,777	)
Proceeds from dispositions of property and equipment		9,033			1,180
Cash used in investing activities		(55,230	)		(53,597	)
FINANCING ACTIVITIES:
Deferred financing fees		(11,261	)		—
Taxes paid on settlement of vested share awards		(970	)		(542	)
Exercise of options and purchases from employee stock plans		1,013			562
Borrowing under revolving loans		16,000			80,000
Borrowing under Second Lien Credit Agreement		100,000			—
Repayments of revolving loans		(106,000	)		(25,000	)
Payments on finance lease obligations		(988	)		—
Cash (used in) provided by financing activities		(2,206	)		55,020
Net (decrease) increase in cash, cash equivalents and restricted cash		(627	)		35,520
Cash, cash equivalents and restricted cash at beginning of period		23,761			6,546
Cash, cash equivalents and restricted cash at end of period	$	23,134		$	42,066

Supplemental Cash Flow Information
Cash paid for interest	$	13,803		$	9,957
Cash paid for income taxes	$	1,471		$	258

Non-cash Investing and Financing Activities
Property and equipment purchased but not yet paid	$	3,212		$	1,965

See notes to unaudited condensed consolidated financial statements.

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollar amounts in thousands, except per share amounts or as otherwise noted)

Basis of presentation

The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Great Lakes Dredge & Dock Corporation and Subsidiaries (the “Company” or “Great Lakes”) and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of June 30, 2024 and December 31, 2023, and its results of operations for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023 have been included.

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 is generally hired on a project-by-project basis. Costs of contract revenues vary significantly depending on the type and location of work performed and assets utilized.

The Company has one operating segment which is also the Company’s reportable segment and reporting unit of which the Company tests goodwill for impairment. The Company performed its most recent test of impairment as of July 1, 2023 with no indication of impairment as of the test date. When performing the quantitative test, the Company assessed the fair values of its reporting unit using both a market-based approach and an income-based approach. The assessment used estimates based on assumptions that the Company believes to be reasonable, but such assumptions are subject to unpredictability and uncertainty. Likewise, changes in terminal value and discount rate assumptions, unfavorable economic environment or market conditions and other factors in the future may cause a different assessment. Changes in these estimates and assumptions could materially affect the determination of fair value, and may result in the impairment of goodwill in the event that actual results differ from those estimates. As of the test date, the fair value of the reporting unit was in excess of its carrying value by at least 10%. 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 impairment test of goodwill in the third quarter of 2024 should no triggering events occur which would require a test prior to the next annual test.

The condensed consolidated statements of operations and comprehensive income (loss) for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.

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.

On January 1, 2024, we adopted FASB 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. ASU 2023-07 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. ASU 2023-07 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 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 adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements or disclosures.

Reclassifications—Certain reclassifications have been made to prior period condensed consolidated statements of cash flows to conform to current period presentation. These reclassifications have no effect on net cash flows.

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 are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

Net income (loss)	$	7,673	$	1,733	$	28,697	$	(1,498	)

Weighted-average common shares outstanding — basic		67,118		66,462		66,924		66,363
Effect of stock options and restricted stock units		579		343		691		—

Weighted-average common shares outstanding — diluted		67,697		66,805		67,615		66,363

Earnings (loss) per share — basic	$	0.11	$	0.03	$	0.43	$	(0.02	)
Earnings (loss) per share — diluted	$	0.11	$	0.03	$	0.42	$	(0.02	)

For the six months ended June 30, 2023, 319 stock options and restricted stock units were excluded from the diluted weighted average common shares outstanding because the Company incurred a loss during this period.

For the three and six months ended June 30, 2024, respectively, there were 60 and 59 stock options (“NQSOs”) and restricted stock units (“RSUs”) 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. For the three and six months ended June 30, 2023, respectively, there were 918 and 554 NQSOs and RSUs 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.

Accrued expenses

Accrued expenses at June 30, 2024 and December 31, 2023 were as follows:


	June 30,		December 31,
	2024		2023

Insurance	$	13,217	$	12,521
Payroll and employee benefits		8,510		11,986
Finance lease liabilities		1,673		1,047
Interest		1,641		2,388
Income and other taxes		846		1,900
Contract reserves		500		3,964
Fuel hedge contracts		324		2,918
Other		1,181		637
Total accrued expenses	$	27,892	$	37,361

Long-term debt

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 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.

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 and zero borrowings on the Second Lien Credit Agreement as of June 30, 2024 and December 31, 2023, respectively. The weighted average interest rate on the Second Lien Credit Agreement borrowings during the quarter ended June 30, 2024 is 13.07%.

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, 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.

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 zero and $90.0 million borrowings on the revolver as of June 30, 2024 and December 31, 2023, respectively. There were $45.5 million and $49.8 million letters of credit outstanding as of June 30, 2024 and December 31, 2023, respectively. The Company had $254.5 million and $122.3 million of availability under the ABL Amendment as of June 30, 2024 and December 31, 2023, respectively. Availability was not suppressed as of June 30, 2024. Availability was suppressed by $37.9 million as of December 31, 2023, 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.

Capitalized terms used but not defined herein in Note 4, Long-term debt, shall have the meanings ascribed to such terms in the Second Lien Credit Agreement and the ABL Amendment, as applicable.

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 Amendment. 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 rates on the Company’s outstanding borrowings were 7.10% and 5.57% as of June 30, 2024 and December 31, 2023, respectively.

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 commodity price risk or foreign currency 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 Levels
		June 30, 2024				December 31, 2023
		Assets		Liabilities		Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Fuel hedge contracts	2	$	—	$	324	$	—	$	2,918
Foreign currency exchange hedge contracts	2		—		138		358		—
Total derivatives		$	—	$	462	$	358	$	2,918

Fuel hedge contracts

The Company is exposed to certain market risks, primarily commodity price risk as it relates to 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 could 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 dredging backlog.

As of June 30, 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 December 2025. As of June 30, 2024, there were 11.5 million gallons remaining on these contracts representing forecasted domestic fuel purchases through December 2025. Under these swap agreements, the Company will pay fixed prices ranging from $2.35 to $2.90 per gallon.

At June 30, 2024 and December 31, 2023, the fair value liabilities of the fuel hedge contracts were estimated to be $324 and $2,918, respectively, and are recorded in accrued expenses in the condensed consolidated balance sheets. 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 six months ended June 30, 2024 were $238. The remaining gains and losses included in accumulated other comprehensive loss at June 30, 2024 will be reclassified into earnings over the next eighteen 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 cost of contract revenues in the statement of operations. The fair values of fuel hedges are corroborated using inputs that are readily observable in public markets; therefore, the Company determines fair value 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 sometimes enters into foreign currency exchange forward contracts to hedge the risk that fluctuations in the Euro in relation to the US Dollar could have an adverse impact on cash flows associated with its equipment builds.

As of June 30, 2024, the Company was party to various foreign exchange forward contract arrangements to hedge the purchase of materials through November 2024. As of June 30, 2024, there were 3.9 million Euro of payments remaining on these hedge contracts. Under these hedge contracts, the Company will pay fixed prices ranging from $1.09 to $1.13 per Euro.

As of June 30, 2024 . the fair value liability of foreign currency exchange hedge contracts was $138 and is recorded in accrued expenses in the condensed consolidated balance sheets. As of December 31, 2023, the fair value asset of foreign currency exchange hedge contracts was $358 and is recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets. For foreign currency exchange 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 six months ended June 30, 2024 were $42. The remaining gains and losses included in accumulated other comprehensive loss at June 30, 2024 will be reclassified into earnings over the next five months, corresponding to the period during which the hedged currency is expected to be utilized. Changes in the fair value of foreign currency exchange hedge contracts not considered highly effective are recorded as other expenses in the statement of operations. 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.

Accumulated other comprehensive income (loss)

Changes in the components of the accumulated balances of other comprehensive income (loss) are as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Derivatives:
Fuel Hedge Contracts
Reclassification of derivative losses to earnings—net of tax	$	359		$	1,434		$	238		$	1,804
Change in fair value of derivatives—net of tax		(310	)		(252	)		1,700			(2,158	)
Net change in cash flow derivative fuel hedges—net of tax	$	49		$	1,182		$	1,938		$	(354	)

Foreign Currency Exchange Hedge Contracts
Reclassification of derivative losses (gains) to earnings—net of tax	$	6		$	(279	)	$	42		$	(321	)
Change in fair value of derivatives—net of tax		(5	)		75			(642	)		244
Net change in cash flow derivative foreign currency hedges—net of tax	$	1		$	(204	)	$	(600	)	$	(77	)
Total net change in cash flow derivative hedges - net of tax	$	50		$	978		$	1,338		$	(431	)

Adjustments reclassified from accumulated balances of other comprehensive income (loss) to earnings are as follows:


		Three Months Ended					Six Months Ended
		June 30,					June 30,
	Statement of Operations Location	2024		2023			2024		2023
Derivatives:
Fuel hedge contracts	Costs of contract revenues	$	482	$	1,918		$	319	$	2,413
Foreign currency exchange hedge contracts	Other expense (income)		7		(372	)		56		(424	)
	Income tax benefit		124		390			95		502
		$	365	$	1,156		$	280	$	1,487

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 June 30, 2024. In May 2021, the Company sold $325,000 of the 2029 Notes, which were outstanding at June 30, 2024 (see Note 4, Long-term debt). The fair value of the 2029 Notes was $290,001 at June 30, 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.

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 Prior Plan permitted the granting of stock options, stock appreciation rights, restricted stock and restricted stock units to the Company’s employees and directors for up to 3.3 million shares of common stock, plus an additional 1.7 million shares underlying equity awards issued under the 2007 Long-Term 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.

During the six months ended June 30, 2024, the Company granted 686 restricted stock units to certain employees. In addition, all non-employee directors on the Company’s board of directors are paid a portion of their board-related compensation in stock grants or restricted stock units. Compensation cost charged to expense related to share-based compensation arrangements was $1.8 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively. Compensation cost charged to expense related to share-based compensation arrangements was $2.6 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively.

Revenue

At June 30, 2024, the Company had $807.9 million of remaining performance obligations, which the Company refers to as total dredging backlog. Total dredging backlog does not include $273.1 million of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog at June 30, 2024. Additionally, it does not include $44.6 million of performance obligations or $12.7 million of options pending award related to offshore wind contracts. Approximately 40% of the Company’s dredging backlog at June 30, 2024 is expected to be completed during the remainder of 2024, with the remaining balance expected to be completed between 2025 and 2026.

Revenue by category

The following series of tables presents the Company's revenue disaggregated by several categories.

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 Company’s contract revenues by type of work, for the periods indicated, are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Revenues	2024		2023		2024		2023
Dredging:
Capital—U.S.	$	70,747	$	38,157	$	140,647	$	70,632
Coastal protection		70,195		56,490		134,121		107,795
Maintenance		28,464		35,809		92,875		107,737
Rivers & lakes		680		2,211		1,103		4,547
Total revenues	$	170,086	$	132,667	$	368,746	$	290,711

The Company’s contract revenues by type of customer, for the periods indicated, are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Revenues	2024		2023		2024		2023
Dredging:
Federal government	$	118,687	$	107,368	$	253,476	$	249,530
State and local government		21,463		25,299		69,163		41,181
Private		29,936		-		46,107		—
Total revenues	$	170,086	$	132,667	$	368,746	$	290,711

Accounts receivable at June 30, 2024 and December 31, 2023 are as follows:


	June 30,			December 31,
	2024			2023
Completed contracts	$	6,810		$	2,920
Contracts in progress		42,027			40,743
Retainage		7,806			11,511
		56,643			55,174
Allowance for credit losses		(364	)		(364	)

Total accounts receivable—net	$	56,279		$	54,810

The components of contracts in progress at June 30, 2024 and December 31, 2023 are as follows:


	June 30,			December 31,
	2024			2023
Costs and earnings in excess of billings:
Costs and earnings for contracts in progress	$	300,495		$	206,330
Amounts billed		(246,366	)		(196,520	)
Costs and earnings in excess of billings for contracts in progress		54,129			9,810
Costs and earnings in excess of billings for completed contracts		16,380			58,925
Total contract revenues in excess of billings	$	70,509		$	68,735

Current portion of contract revenues in excess of billings	$	70,509		$	68,735
Long-term contract revenues in excess of billings		—			—
Total contract revenues in excess of billings	$	70,509		$	68,735

Billings in excess of costs and earnings:
Amounts billed	$	(155,330	)	$	(258,948	)
Costs and earnings for contracts in progress		134,756			229,388
Total billings in excess of contract revenues	$	(20,574	)	$	(29,560	)

At June 30, 2024 and December 31, 2023, costs to fulfill a contract with a customer recognized as an asset were $21.8 million and $22.2 million, respectively, and are recorded in other current assets and other noncurrent assets in the condensed consolidated balance sheets. These costs relate to pre-contract and pre-construction activities. During the three and six months ended June 30, 2024, the Company amortized $4.0 million and $8.4 million, respectively, of pre-construction costs. During the three and six months ended June 30, 2023, the Company amortized $1.3 million and $5.0 million, respectively, of pre-construction costs.

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, ACE Holdings, Liberty Mutual Insurance Company, Philadelphia Indemnity Insurance Company, Ascot Insurance Companies and AXIS Insurance Company under which the Company can obtain performance, bid and payment bonds. The Company also has outstanding bonds with 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 June 30, 2024, the Company had outstanding performance bonds with a notional amount of approximately $998.3 million. The revenue value remaining in dredging backlog related to the outstanding performance bonds totaled approximately $448.1 million.

Certain foreign projects performed by the Company have warranty periods, typically spanning between 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.

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, except as described below, 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 its 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 and financing 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 Amendment, 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 Amendment. 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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary note regarding forward-looking statements

Certain statements in this Quarterly Report on Form 10-Q 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 the “Company”), 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,” 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 Great Lakes’ Annual Report on Form 10-K for the year ended December 31, 2023 and in other securities filings by Great Lakes with the SEC.

Although Great Lakes believes that its 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 Quarterly Report on Form 10-Q are made only as of the date hereof and Great Lakes does 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.

General

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 rapidly developing offshore wind 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, 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.

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 (“bid market”). The Company experienced an average combined bid market share in the U.S. of 33% over the three-year period ended December 31, 2023, including 36%, 56%, 23% and 22% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively, exclusive of liquefied natural gas (“LNG”) projects.

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 the first six months of 2024, the Company’s dredging revenues earned from contracts with federal government agencies, including the Corps as well as other federal entities such as the U.S. Coast Guard and the U.S. Navy, were approximately 69% of dredging revenues, which is below 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 in the first half of 2024.

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 repairs. During the second quarter of 2024, the Company commenced and completed regulatory dry dock inspections on two dredges, and completed the regulatory dry dock inspection that commenced during the first quarter of 2024. Two of these dredges are expected to return to work in the third quarter of

2024. By comparison, the Company experienced regulatory dry dock inspections on two dredges in the second quarter of 2023. The Company does not have any regulatory dry dock inspections planned for the remainder of 2024.

As of the end of the second quarter of 2024, the Company had one dredge cold stacked. The cold stacked equipment can be easily reactivated when market conditions are favorable for the Company. During the second quarter of 2024, the Company began the reactivation of one of the previously cold stacked vessels in anticipation of commencing a contract in late 2024 or 2025.

The Company plans to participate in the offshore wind market, and in November 2021, the Company entered into a $197 million contract with Philly Shipyard to build the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations, the Acadia, which is expected to be delivered and operational in the second half of 2025. This vessel represents a significant critical advancement in building the U.S. logistics infrastructure to support the future of the new U.S. offshore wind industry. Offshore wind has been recognized around the world as a reliable source of renewable energy. The Company continues to pursue and tender bids, both domestically and internationally, for multiple offshore wind projects for the Acadia, to protect and stabilize offshore wind structures, cables and pipelines.

The offshore wind market reached historic milestones in the first quarter of 2024, with two commercial-scale offshore wind farms becoming operational and supplying power to the grid in New York and Massachusetts. New Jersey also awarded 3.7 gigawatts (“GW”) of Power Purchase Agreements in January 2024, and the results of the tri-state (Massachusetts, Rhode Island, and Connecticut) solicitation for 6 GW of offshore wind, are expected in the third quarter of 2024. In February 2024, the Vineyard Wind project, located about 14 miles off Martha’s Vineyard, completed installation of five turbines and is supplying power to the New England grid, while continuing to install additional turbines. In March 2024, the South Fork Wind project was completed, with all 12 offshore wind turbines constructed and the wind farm successfully delivering power to Long Island and the Rockaways. In June 2024, Equinor and Ørsted signed final power deals with New York State Energy Research & Development Authority for the Empire Wind and Sunrise Wind projects. Notably, the Company has been awarded rock installation contracts for both projects, and expects to be using the Acadia to protect and stabilize foundations and cables for these projects with combined capacity of 1.7 GW. On July 17, 2024, construction began on the Sunrise Wind project which is expected to provide power to approximately 600,000 New York homes. On July 2, 2024, the U.S. Department of the Interior (“DOI”) approved the Atlantic Shores South offshore wind energy project off the New Jersey Coast, which is expected to power close to one million homes with clean renewable energy. This brings total DOI approvals to more than 13 GW of clean energy from offshore wind energy projects. Also in July 2024, the Bureau of Ocean Energy Management approved the construction and operation of two offshore wind energy facilities, New England Wind 1 and New England Wind 2, that could power close to a million homes. In addition to the U.S. offshore wind market, there are several other market opportunities that the Acadia is well suited for, such as rock placement in the international offshore wind market, rock protection over pipelines in the oil and gas and carbon capture markets and telecommunications and power cable protection. As such, we continue to pursue and bid on a number of other offshore wind farm and cable and pipeline protection projects for the Acadia, both domestically and internationally, with work planned for 2026 and beyond.

Results of operations

The following tables set forth the components of net income (loss) and Adjusted EBITDA, as defined below, as a percentage of contract revenues for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024				2023
Contract revenues		100.0	%		100.0	%		100.0		%		100.0		%
Costs of contract revenues		(82.5	)		(86.5	)		(79.5	)			(89.7	)
Gross profit		17.5			13.5			20.5				10.3
General and administrative expenses		9.5			10.9			8.8				9.5
Other gains		(0.5	)		(0.2	)		(0.8	)			(0.1	)
Operating income		8.5			2.8			12.5				0.9
Interest expense—net		(2.5	)		(2.4	)		(2.2	)			(2.3	)
Other income		0.1			1.5			0.1				0.8
Income (loss) before income taxes		6.1			1.9			10.4				(0.6	)
Income tax provision		(1.7	)		(0.6	)		(2.7	)			-
Net income (loss)		4.4			1.3			7.7				(0.6	)

Adjusted EBITDA		15.2	%		12.5	%		18.6		%		9.2		%

Adjusted EBITDA, as provided herein, represents net income (loss) from continuing operations, 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 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 the Company’s operating trends. The Company believes that Adjusted EBITDA is a measure frequently used to evaluate performance of companies with substantial leverage and that the Company’s primary stakeholders (i.e., its stockholders, bondholders and banks) use Adjusted EBITDA to evaluate the Company’s period to period performance. Additionally, management believes that Adjusted EBITDA provides a transparent measure of the Company’s recurring operating performance and allows management and investors to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For this reason, the Company uses a measure based upon Adjusted EBITDA to assess performance for purposes of determining compensation under the Company’s 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, interest 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 the Company’s business. For these reasons, the Company uses operating income to measure the Company’s operating performance and uses Adjusted EBITDA only as a supplement.

The following is a reconciliation of Adjusted EBITDA to net income (loss):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
(in thousands)
Net income (loss)	$	7,673	$	1,733	$	28,697	$	(1,498	)
Adjusted for:
Interest expense—net		4,198		3,175		8,089		6,560
Income tax provision		2,842		796		9,831		5
Depreciation and amortization		11,108		10,937		22,128		21,787
Adjusted EBITDA	$	25,821	$	16,641	$	68,745	$	26,854

The Company’s contract revenues by type of work, for the periods indicated, were as follows:


	Three Months Ended							Six Months Ended
	June 30,							June 30,
Revenues (in thousands)	2024		2023		Change			2024		2023		Change
Dredging:
Capital—U.S.	$	70,747	$	38,157		85.4	%	$	140,647	$	70,632		99.1	%
Coastal protection		70,195		56,490		24.3	%		134,121		107,795		24.4	%
Maintenance		28,464		35,809		(20.5	)%		92,875		107,737		(13.8	)%
Rivers & lakes		680		2,211		(69.2	)%		1,103		4,547		(75.7	)%
Total revenues	$	170,086	$	132,667		28.2	%	$	368,746	$	290,711		26.8	%

Total revenue was $170.1 million for the three months ended June 30, 2024, up $37.4 million, or 28%, from $132.7 million for the same period in the prior year. For the six months ended June 30, 2024, total revenue was $368.7 million, up $78.0 million, or 27%, from $290.7 million for the same period in the prior year. For the three and six months ended June 30, 2024, the Company experienced a significant increase in domestic capital and coastal protection revenues, due in part to the delivery of the Galveston Island, the Company’s newest hopper dredge which began operations in February 2024, as compared to the same periods in the prior year. These increases were partially offset by decreases in maintenance and rivers & lakes revenues during the current year periods.

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. For the three months ended June 30, 2024, domestic capital dredging revenue was $70.7 million, up $32.5 million, or 85%, compared to $38.2 million for the same period in 2023. The increase in capital dredging revenues for the three months ended June 30, 2024 was mostly due to a higher amount of revenue earned on projects in Texas in the second quarter of 2024 when compared to the same period in the prior year. This increase was partially offset by lower revenue earned on projects in Virginia in the current quarter. For the six months ended June 30, 2024, domestic capital dredging revenue was $140.6 million, up $70.0 million, or 99%, compared to $70.6 million for the same period in the prior year. The increase in capital dredging revenues for the six months ended June 30, 2024 was mostly due to a higher amount of revenue earned on projects in Texas in the current year when compared to the prior year period.

Coastal protection projects involve moving sand from the ocean floor to shoreline locations where erosion threatens shoreline assets. Coastal protection revenue for the quarter ended June 30, 2024 was $70.2 million, an increase of $13.7 million, or 24%, compared to $56.5 million in the prior year period. The increase in coastal protection revenue for the three months ended June 30, 2024 was attributable to an increase in the amount of revenue earned on projects in Florida and New Jersey in the current year when compared to the prior year period. This increase was partially offset by lower revenue earned on projects in New York in the current quarter. Coastal protection revenue for the six months ended June 30, 2024 was $134.1 million, an increase of $26.3 million, or 24%, compared to $107.8 million in the prior year period. The increase in coastal protection revenue for the six months ended June 30, 2024 was attributable to an increase in revenue earned on projects in Florida and Alabama in the current year when compared to the prior year period. This increase was partially offset by lower revenue earned on projects in New York in the current year to date period.

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 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. Maintenance revenue for the second quarter of 2024 was $28.5 million, down $7.3 million, or 21%, from $35.8 million in the same period of 2023. The decrease in maintenance revenues for the three months ended June 30, 2024 was mostly attributable to a decrease in revenue earned on projects in North Carolina, Alabama and Texas when compared with prior year quarter. This decrease was slightly offset by an increase in revenue earned on projects in Louisiana, Mississippi and Puerto Rico in the current year quarter. Maintenance revenue for the six months ended June 30, 2024 was $92.9 million, down $14.8 million, or 14%, from $107.7 million in the prior year period. The decrease in maintenance revenues for the six months ended June 30, 2024 was primarily attributable to a decrease in revenue earned on projects in North Carolina, South Carolina, Alabama and Texas when compared with prior year quarter. This decrease was slightly offset by an increase in revenue earned on projects in Louisiana, Mississippi and Puerto Rico in the same period in the prior year.

Rivers & 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. During the three months ended June 30, 2024, rivers & lakes revenue was $0.7 million, a decrease of $1.5 million, or 69%, from $2.2 million during the same period of 2023. During the six months ended June 30, 2024, rivers & lakes revenue was $1.1 million, a decrease of $3.4 million, or 76%, from $4.5

million in the prior year period. The decrease in river & lakes revenue for the three and six months ended June 30, 2024 was mostly attributable to a decrease in revenue earned on projects in Tennessee and Arkansas as compared to same periods of 2023.

Consolidated gross profit for the three months ended June 30, 2024 was $29.8 million, up $11.9 million, or 66%, compared to $17.9 million in same period of 2023. Gross profit margin for the three months ended June 30, 2024 increased to 17.5% from 13.5% in the same period in the prior year. Consolidated gross profit for the six months ended June 30, 2024 was $75.4 million, up $45.4 million, or 151%, compared to $30.0 million in the same period in the prior year. Gross profit margin for the six months ended June 30, 2024 increased to 20.5% from 10.3% in the same period in the prior year. The higher gross profit and profit margins experienced for the three and six months ended June 30, 2024 were driven by increased revenues as well as improved utilization and project performance in the current year quarter. Additionally, the project mix during the current year periods include a larger proportion of higher margin capital and coastal protection projects than the same periods in the prior year.

During the three and six months ended June 30, 2024, general and administrative expenses were $16.2 million and $32.3 million, respectively, compared to the same periods in the prior year in which the three and six month periods totaled $14.5 million and $27.5 million, respectively. For the three and six months ended June 30, 2024, general and administrative expenses include higher stock compensation and employee benefit expenses, partially offset by lower severance and office expenses.

Operating income for the second quarter of 2024 was $14.6 million, up $10.9 million from $3.7 million in the same period of the prior year. Operating income for the six months ended June 30, 2024 was $46.1 million, up $43.3 million from $2.8 million in the same period of the prior year. The increase in operating income for the three and six months ended June 30, 2024 was a result of higher gross profit, as well as gains on the sale of assets in the current year periods when compared to the same periods in the prior year, partially offset by higher general and administrative expenses in the current year periods when compared to the same periods in the prior year.

For the three months ended June 30, 2024, net interest expense was $4.2 million, $1.0 million higher compared to $3.2 million for the same period in the prior year. Net interest expense for the six months ended June 30, 2024 was $8.1 million, $1.5 million higher compared to $6.6 million for the same period in the prior year. The increase in net interest expense for the three and six months ended June 30, 2024 was primarily due to higher borrowings and the execution of the Second Lien Credit Agreement during the second quarter.

Income tax provision for the three months ended June 30, 2024 was $2.8 million compared to $0.8 million for the same period in the prior year. For the six months ended June 30, 2024, the income tax provision was $9.8 million compared to a negligible income tax provision in the prior year period. The effective tax rate for the six months ended June 30, 2024 was 25.5%, while the effective tax rate for the same period of 2023 was nearly zero. The lower effective tax rate incurred in 2023 was primarily due to near break-even net loss offset by lower deductions for stock compensation in that period.

Net income for the three months ended June 30, 2024 was $7.7 million, up $6.0 million from $1.7 million in the same period in the prior year. Diluted earnings per share was $0.11 per share for the three months ended June 30, 2024, compared to $0.03 per share for the three months ended June 30, 2023. Net income for the six months ended June 30, 2024 was $28.7 million, an increase of $30.2 million, or 2,013%, from a net loss of $1.5 million for the same period in the prior year. Diluted earnings per share were $0.42 for the six months ended June 30, 2024, compared to a diluted loss per share of $0.02 for the six months ended June 30, 2023. The increase in net income for the three and six months ended June 30, 2024 was primarily driven by the substantial improvement to gross profit and the gain on sale of assets. This increase was slightly offset by an increases in general and administrative expenses and the income tax provision.

Adjusted EBITDA (as defined on page 20) for the three months ended June 30, 2024 was $25.8 million, up $9.2 million, from $16.6 million in the same quarter in the prior year. The increase in Adjusted EBITDA during the second quarter of 2024 was driven by the increase in gross profit, excluding depreciation partially offset by an increase in general and administrative expense. For the six months ended June 30, 2024 Adjusted EBITDA was $68.7 million, up $41.8 million, from $26.9 million during the same period in the prior year. The increase in Adjusted EBITDA during the first half of 2024 was driven by the increase in gross profit, excluding depreciation, as well as an increased income tax provision in the current period, partially offset by an increase in general and administrative expense.

Bidding activity and backlog

The following table sets forth, by type of work, the Company’s backlog as of the dates indicated:


	June 30,		December 31,		June 30,
Backlog (in thousands)	2024		2023		2023
Dredging:
Capital—U.S.	$	683,131	$	741,839	$	243,646
Coastal protection		38,205		138,394		34,835
Maintenance		82,070		152,104		147,143
Rivers & lakes		4,468		6,765		8,931
Total backlog	$	807,874	$	1,039,102	$	434,555

Total dredging backlog does not include $273.1 million of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog at June 30, 2024. Additionally, it does not include $44.6 million of performance obligations or $12.7 million of options pending award related to offshore wind contracts. The Company expects to perform on its offshore wind contracts using the Acadia, which is expected to be delivered and operational in the second half of 2025.

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. Additionally, 21% of our June 30, 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.

The 2024 Energy and Water Appropriations Bill, which passed in the first quarter, provided a record $8.7 billion in total funding to the Corps for fiscal year 2024. This funding included $5.6 billion for the Corps’ Operations and Maintenance work, $2.8 billion for the Harbor Maintenance Trust Fund to maintain and modernize our nation’s waterways, $2.2 billion for flood and storm damage reduction, and $18 million for Beneficial Use of Dredged Material. In 2023, the Disaster Relief Supplemental Appropriations Act was also approved which included $1.48 billion for the Corps to make necessary repairs to infrastructure impacted by hurricanes and other natural disasters, and to initiate beach renourishment projects that will increase coastal resiliency. We expect this increased budget and additional funding will continue to support a strong bid market so far in 2024, with a robust beach renourishment market and capital projects for additional phases of the Mobile and Sabine-Neches deepening 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 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. 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.

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 featured authorization for the New York and New Jersey shipping channels to be deepened to 55 feet, estimated at $6 billion, as well as the Coastal Texas Protection and Restoration Program, estimated at $34.4 billion. The Coastal Texas Protection and Restoration Program includes dune and marsh restoration to safeguard the Texas Gulf Coast from hurricane surges. WRDA 2024 appears to have strong bipartisan support and has already been approved by the U.S. Senate Environment and Public Works Committee and the House Transportation and Infrastructure Committee. The House and Senate approved their versions of WRDA 2024 on July 22, 2024 and August 1, 2024, respectively. The two bodies will now conference to resolve any differences. This moves WRDA 2024 one step closer to full Congressional approval.

The domestic dredging bid market for the quarter ended June 30, 2024 was $561.8 million, a $45.5 million decrease compared to the same period in the prior year. Total domestic dredging bid market for the current year period included awards for seven domestic capital projects, seven coastal protection projects, nine maintenance projects, and two river maintenance projects. The total domestic dredging bid market through June 30, 2024 was $873.7 million, of which the Company won 9.4%, which is below the Company’s average of 33% for the three-year period ended December 31, 2023. Variability in contract wins from quarter to quarter is not unusual and one quarter’s win rate is generally not indicative of the win rate the Company is likely to achieve for a full year.

The Company’s contracted dredging backlog was $807.9 million at June 30, 2024 compared to $1,039.1 million of dredging backlog at December 31, 2023. Total dredging backlog does not include $273.1 million of domestic low bids pending formal award and options pending on projects currently in dredging backlog at June 30, 2024. Additionally, it does not include $44.6 million of performance obligations or $12.7 million of options pending award related to offshore wind contracts. Subsequent to June 30, 2024, the Company was low bidder on additional projects totaling approximately $181.6 million. At December 31, 2023, the total dredging backlog does not include $44.6 million of performance obligations related to offshore wind contracts or $179.4 million of domestic low bids pending formal award and options pending on projects in dredging backlog as of that date. Included in the June 30, 2024 backlog are two LNG projects, including the 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. Subcontractor work has begun on both of these LNG projects and dredging work is anticipated to start in the third quarter of 2024.

Domestic capital dredging backlog at June 30, 2024 was $683.1 million, a decrease of $58.7 million from December 31, 2023. During the six months ended June 30, 2024, the Company was awarded one domestic capital dredging contract in Florida for $59.8 million. During the six months ended June 30, 2024, the Company continued to earn revenue on deepening projects in Virginia and Texas. Government funded projects coming into the pipeline include Sabine-Neches and Mobile. These deepenings continue the trend of ensuring all East Coast and Gulf of Mexico 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.

Coastal protection dredging backlog at June 30, 2024 was $38.2 million, a decrease of $100.2 million from December 31, 2023. During the six months ended June 30, 2024, the Company was awarded one coastal protection project in New Jersey for $13.2 million. During the six months ended June 30, 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. 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.

Maintenance dredging backlog at June 30, 2024 was $82.1 million, a decrease of $70.0 million from December 31, 2023. In the six months ended June 30, 2024, the Company was awarded one maintenance project for a total of $9.3 million in Florida. During the six months ended June 30, 2024, the Company continued to earn revenue on projects in Louisiana, Texas, Mississippi, Puerto Rico and Florida that were in dredging backlog at December 31, 2023.

Rivers & lakes backlog at June 30, 2024 was $4.5 million, a decrease of $2.3 million compared to rivers & lakes backlog at December 31, 2023. For the six months ended June 30, 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 continues to actively manage its liquidity. The Company’s principal sources of liquidity are net cash flows provided by operating activities, proceeds from previous issuances of long-term debt, and draws on our revolver. The Company’s principal uses of cash are to meet debt service requirements, finance capital expenditures, provide working capital and other general corporate purposes.

The Company’s cash provided by operating activities for the six months ended June 30, 2024 and 2023 was $56.8 million and $34.1 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 the six months ended June 30, 2024, relates primarily to significantly higher current period earnings in the current year, partially offset by the increases in contract revenues in excess of billings, decreases in billings in excess of contract revenues and changes in working capital compared to the same period in the prior year.

The Company’s cash flows used in investing activities for the six months ended June 30, 2024 and 2023 were $55.2 million and $53.6 million, respectively. Investing activities primarily relate to investments in our new build program, normal course upgrades and capital maintenance of the Company’s dredging fleet. During the six months ended June 30, 2024, the Company invested $4.0 million in the

Galveston Island, $15.5 million in the Amelia Island and $36.6 million in the Acadia, as well as maintenance capital expenditures. These investments were partially offset by the disposition of certain equipment for approximately $9.0 million during the current year.

The Company’s cash flows (used in) provided by financing activities for the six months ended June 30, 2024 and 2023 totaled a use of $2.2 million and proceeds of $55.0 million, respectively. The increase in net cash flows used in financing activities is primarily due to net repayments on the Company’s revolving debt facility during the six months ended June 30, 2024 of $90.0 million, compared to net borrowings of $55.0 million on the Company’s revolving debt facility during the six months ended June 30, 2023. On April 24, 2024, 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. 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 $11.3 million increased the net cash flows used in financing activities during the six months ended June 30, 2024.

The Company expects to spend between approximately $130 million and $150 million on capital expenditures in 2024 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, proceeds from the Second Lien Credit Agreement and potential new sources of financing.

Commitments, contingencies and liquidity matters

Refer to Note 4, Long-term debt, in the Notes to Condensed Consolidated Financial Statements for discussion of the Company’s ABL Amendment, Second Lien Credit Agreement and 2029 Notes. Additionally, refer to Note 8, Commitments and contingencies, in the Notes to Condensed Consolidated Financial Statements for discussion of the Company’s surety agreements.

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, and S&P Global Ratings changed our outlook from negative to stable and reaffirmed our corporate credit rating at CCC+. 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.

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 covenants 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.

Critical accounting policies and estimates

In preparing its consolidated financial statements, the Company follows GAAP, which is described in Note 1, Basis of presentation, to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The application of these principles requires significant judgments or an estimation process that can affect the results of operations, financial position and cash flows of the Company, as well as the related footnote disclosures. The Company continually reviews its accounting policies and financial information disclosures. Except as noted in Note 1, Basis of presentation, of the Company’s financial statements, there have been no material changes in the Company’s critical accounting policies or estimates since December 31, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The market risk of the Company’s financial instruments as of June 30, 2024 has not materially changed since December 31, 2023. The market risk profile of the Company on December 31, 2023 is disclosed in Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. 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) and 15d-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of June 30, 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 SEC’s rules and forms.

Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024 in providing such a reasonable assurance.

b) Changes in internal control over financial reporting.

There have been 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 June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — Other Information

Item 1. Legal Proceedings.

See Note 8, Commitments and contingencies, in the Notes to Condensed Consolidated Financial Statements.

Item 1A. Risk Factors.

There have been no material changes during the six months ended June 30, 2024 to the risk factors previously disclosed in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. 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 May 16, 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) providing for the sale of up to 500,000 shares of our common stock by May 31, 2025.

During the quarterly period ended June 30, 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 6. Exhibits


Number		Document Description

3.1		Second Amended and Restated Certificate of Incorporation of Great Lakes Dredge & Dock Corporation, effective May 9, 2024. *

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. **


101		Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL") *

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) *

* Filed herewith

** Furnished herewith

*** Previously filed

SIGNATURE

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: August 6, 2024

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SEC Form 10-Q filed by Great Lakes Dredge & Dock Corporation

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Director Dickerson Lawrence R sold $191,799 worth of shares (15,936 units at $12.04), decreasing direct ownership by 16% to 82,148 units (SEC Form 4)

Director Dickerson Lawrence R sold $67,118 worth of shares (5,323 units at $12.61), decreasing direct ownership by 5% to 98,084 units (SEC Form 4)

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