Supply chain-fuelled dry docking delays were among a confluence of factors pushing Great Lakes Dredge & Dock into a quarterly loss.
The US dredging giant reported a net loss of $4.03m for the period, reversing a $2.11m profit a year earlier.
New York-listed Great Lakes reported $149m in contract revenue, down from $170m in the second quarter of 2021.
“Our second quarter results did not meet expectations as we continue to face and navigate a challenging environment driven by external factors including supply chain delays, inflationary pressures, [and] adverse weather conditions combined with some atypical dredging project challenges,” said chief executive Lasse Petterson.
Among the problems were dry dockings of the 4,900-gt Liberty Island (built 2001) and the 3,700-gt Carolina (built 1973).
Supply chain issues during the shipyard visits led the dredgers’ mobilisation to their projects to be delayed by several weeks, Petterson said.
“In addition, rapidly increasing inflation impacted the cost of labour, operating supplies and dry dockings in the quarter, which we are now accounting for in bids,” he said.
The quarter also saw three large projects encounter unanticipated site conditions, and weather on the US East Coast led several vessels to stop operating and seek shelter.
Project bidding pushed back
Bidding for new projects also came later than usual, leading two dredges to be idle during the quarter.
But Petterson struck a more optimistic tone for the months ahead.
| Q2 2022 | Q2 2021 | |
| Contract revenue | $149m | $170m |
| General and administrative expenses | $10.5m | $14.2m |
| Operating income | $342,000 | $8.84m |
| Net income | -$4.03m | $2.11m |
“We expect bidding to increase substantially for the remainder of the year and July is already off to a strong start, in which Great Lakes was low bidder on 74% of the $250 million of work that bid in the month,” the chief executive said.
He said third-quarter earnings should be stronger, though Petterson also warned that the company does not anticipate that it will meet its expectations for full-year results.
The delays that the company has experienced in dry docking do not appear to have extended to its newbuilding programme, which Petterson said is on schedule.
A new hopper dredge — the 5,000-gt Galveston Island — is scheduled for delivery from Conrad Shipyard in the first half of next year and its sibling is expected to be ready for operations in 2025.
Its 18,000-gt subsea rock installation vessel, which is under construction at Philly Shipyard to serve the offshore wind sector in US waters protected by the Jones Act, is expected to be delivered in 2024.
“In spite of the current short-term challenges, the outlook for Great Lakes remains strong. We continue to see increased market demand backed by strong government support and development of new LNG export facilities that we expect will benefit Great Lakes and our market position in the upcoming year,” Petterson said.
“Our goal is to contribute to building the US offshore wind industry, which we anticipate will provide an avenue for diversification and growth for our company.”
The second-quarter loss ate into Great Lakes’ profit for the first half, which fell to $7.02m from $10.9m in the first six months of 2021.
The company ended the quarter with $75.4m in cash and $321m in long-term debt.
