GLDD Q1 Earnings Call: Outperformance Driven by Project Execution and Backlog Expansion

Dredging and coastal protection company Great Lakes Dredge & Dock (NASDAQ:GLDD) announced better-than-expected revenue in Q1 CY2025, with sales up 22.3% year on year to $242.9 million. Its non-GAAP profit of $0.49 per share was 86.7% above analysts’ consensus estimates.

Is now the time to buy GLDD? Find out in our full research report (it’s free).

StockStory’s Take

Great Lakes Dredge & Dock’s first quarter was shaped by high asset utilization and strong project execution, particularly in capital and coastal protection projects. Management attributed the quarter’s revenue and margin expansion to successful delivery on complex port deepening and coastal restoration contracts, while also noting that safe operations contributed to strong financial performance. CEO Lasse Petterson commented that the company’s backlog, combined with a robust pipeline of large project wins, is expected to support continued high utilization for the remainder of the year.

Looking ahead, management outlined confidence in the company’s revenue visibility, with the current backlog extending project execution capacity well into next year. The addition of the Woodside Louisiana LNG project and new vessel deliveries are expected to further enhance operational capabilities. CFO Scott Kornblau cautioned that the second quarter will see lower revenue and margins due to regulatory dry docks, but reiterated that full-year results are expected to surpass last year’s. Petterson emphasized ongoing efforts to diversify into offshore energy markets to mitigate project-specific risks.

Key Insights from Management’s Remarks

The latest quarter’s outperformance was largely attributed to the company’s ability to effectively deploy its fleet on high-margin projects and secure a strong future backlog. Management also addressed operational challenges and proactive strategic adjustments to evolving market conditions.

• Project Mix Favorability: The majority of revenue came from capital and coastal protection projects, which typically yield higher margins. Management highlighted that over 87% of first-quarter revenue came from these segments, enabling margin improvements.

• Fleet Utilization and Newbuilds: Nearly all active dredges were operating for most of the quarter, despite one in regulatory dry dock. The upcoming delivery of the Amelia Island hopper dredge and continued construction of the Acadia subsea rock installation vessel are intended to extend capabilities for coastal and offshore projects.

• Backlog and Bid Strategy: A quality backlog of $1.01 billion is supported by recent large project wins and a targeted bid approach. Management noted an additional $265 million in low bids and options pending award, providing revenue visibility into 2026.

• Offshore Wind Market Adjustments: The temporary pause on the Empire Wind 1 project prompted management to emphasize strategic diversification. The company is expanding the Acadia’s addressable market to include international offshore wind and subsea infrastructure projects, reducing reliance on domestic wind contracts.

• Share Repurchase and Liquidity: The board approved a $50 million share repurchase program, with $10.4 million spent through April. The company also upsized its revolving credit facility to $330 million, enhancing liquidity and supporting ongoing capital programs.

Drivers of Future Performance

Management’s outlook for the remainder of the year is shaped by a healthy backlog, continued demand for coastal protection and capital projects, and a focus on asset utilization. However, regulatory dry dock schedules and offshore wind market uncertainty introduce near-term variability.

• Regulatory Dry Docks Impact: The company expects the second quarter to be the low point for both revenue and margins in 2025 due to four vessels undergoing regulatory dry dock. Utilization of the remaining fleet is expected to remain high.

• Backlog Conversion and Pipeline: High-quality backlog and pending awards, particularly in coastal protection, are expected to support normalized operations and margin recovery in the latter half of the year. Management cited strong funding from the Harbor Maintenance Trust Fund as a key enabler.

• Offshore Energy Diversification: Strategic efforts to grow in international offshore wind and subsea infrastructure markets aim to offset potential delays or cancellations in U.S. offshore wind projects, broadening the company’s long-term revenue base.

Top Analyst Questions

• Joseph Gomes (NOBLE Capital): Asked about the potential impact if the Empire Wind 1 project is canceled. Management explained that cancellation provisions and fees would mitigate some cost impact, and noted efforts to find alternate projects for the Acadia vessel but acknowledged challenges in redeployment.

• Adam Thalhimer (Thompson Davis): Queried about the Woodside LNG project options and status of ongoing LNG jobs. Management clarified the timing of backlog recognition and reported strong performance and high margins on current LNG projects, with one finishing by year-end and another extending into next year.

• Adam Thalhimer (Thompson Davis): Sought details on international market progress for the Acadia vessel. Management described positive engagement in Europe and Asia, with active bids for projects in 2027 and 2028, though awards are expected later this year.

• Julio Romero (Sidoti & Company): Asked about the financial impact of regulatory dry docks and expectations for Q2 gross margins. Management indicated the second quarter will be the low point due to dry docks, with normalization expected in the second half of the year.

• Jonathan Tanwanteng (CJS): Requested a breakdown of outperformance drivers and timing of backlog liquidation. Management attributed the quarter’s success primarily to superior project execution on large jobs, and stated that approximately 60% of current backlog is expected to be executed during the remainder of the year.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the conversion of backlog into revenue, especially as four vessels undergo regulatory dry dock in the second quarter, (2) progress on the Woodside Louisiana LNG project and the impact of new vessel deliveries on operational capacity, and (3) developments in the offshore wind and international subsea infrastructure markets, with particular attention to the outcome of the Empire Wind 1 project and expansion into Europe and Asia. Ongoing funding from public infrastructure programs will also be important to watch.

Great Lakes Dredge & Dock currently trades at a forward P/E ratio of 16.1×. Should you double down or take your chips? Find out in our free research report.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.