Another $34.8 Million of Awards

Another LNG Award

More Work

A Top Line Miss, But Better than Expected Bottom Line

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Industrials

Construction

Great Lakes Dredge & Dock Corporation

This short note offers a preliminary summary of our major impressions following the investor meetings, and we plan to publish a more extensive note in the very near future. 
While it appears that new build(s) is likely to be announced in 1Q2020, we have yet to incorporate the incremental capex into our 2020 estimates. 2020 capex could potentially increase by $15-25 million, including the upfront deposit of 10% and progress payments required before the final payment of 20% upon delivery in 1Q2022. Once additional details, including the cost of the first new build and option on the second new build, we will adjust our estimates to reflect the project timeline details.
Independent of the investor meetings, we secured information on the DoD web site about two pending projects where GLDD is low bidder but no award has yet to be announced. Since the 3Q2019 earnings call, GLDD was low bidder for $13.8 million of shore protection work on Tybee Island, near Savannah, Georgia and $13.7 million of rock removal work in the Delaware River in Chester, Pennsylvania. Both projects are short-term in nature and help fill in the near-term project pipeline, with completion dates in 1Q2020. The Tybee Island work has an estimated completion date of February 16, 2020 and the Chester work has an estimated completion date of March 15, 2020.
On the energy export front, higher US production of crude oil and natural gas is creating a competitive advantage for exporters of crude oil and natural gas, as well as refined products, petrochemicals and LNG. While LNG development appears to have been impacted by trade tensions which have pushed out the negotiations of off-take agreements, management was positive of the potential for LNG projects to have an impact over the next several years. Increased environmental activism has also pushed out LNG liquefaction projects. 
Rio Grange LNG is one potential project for GLDD that we are tracking. We have highlighted it over the past six months after Bechtel was appointed EPC, and GLDD submitted a dredging bid to Bechtel in 2Q2019. Next Decade (NEXT), the developer, has pushed out FID into 1Q2020 from 3Q2019, Offsetting that slight negative is the rating of $50 million of capital from an international entity. NEXT now expects the final FERC certificate to be issued in 4Q2019, per the November 2019 corporate presentation.
We will also add additional information on the outlook for the potential for offshore wind projects to develop into a market opportunity for GLDD in the 2023-4 timeframe.
Please see our November 6th report &#8220;Backlog rebounded and set up for strong finish to year&#8221; for additional details on 3Q2019 operating results and our current dredging market outlook. We adjusted our 2019-20 estimates in that report and no material estimate revisions are expected in our follow-up note.

Great Lakes Dredge & Dock Corporation (GLDD)

Investor Meetings Renew Confidence

Fundamental Analysis:

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Another $34.8 Million of Awards (GLDD)

Another LNG Award (GLDD)

More Work (GLDD)

A Top Line Miss, But Better than Expected Bottom Line (GLDD)

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