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Industrials

Construction

Great Lakes Dredge & Dock Corporation

New Awards of $132.3 million announced.
Six projects were awarded,&nbsp;ranging in size from $11.5 million to $37.2 million. Four of the awards totaling $94.9 million relate to Coastal&nbsp;Protection, one award of $25.9 million&nbsp;relates to Maintenance and one award of $11.5 million relates to Capital. Two awards of $37.3 million is related to 4Q2021 activity and the other four awards of $95.0 million relate to 1Q2022 activity. All of the work is shorter term in nature and will enhance 2022 equipment utilization.
Combined with 4Q2021 backlog of $552 million, but a large amount of 4Q2021 low bids pending award, the outlook looks solid this year. Also, it appears that the prospects for one of the LNG projects in low bids pending award has improved with FID on the horizon, which would push $100-$150 million of the low bid pending award number into backlog.
The Coastal Protection awards include:
Coastal Storm Risk Management Rockaway Inlet Beach Fill Subcontract in New York (Coastal Protection for $37.2 million)
This subcontract includes dredging and beach fill work associated with a larger land and marine construction project awarded to a Wisconsin company. This project should start in 3Q2022.
Avon Village Beach Nourishment and Buxton Renourishment Project in North Carolina (Coastal Protection for $25.9 million) 
The project includes beach renourishment to help protect the towns of Avon Village and Buxton from severe weather, while expanding beach access. Part of the project will protect Highway 12 from erosion within the Cape Hatteras National Seashores. Work should start in 2Q2022 and run into 3Q2022.
Coastal Storm Risk Management (CSRM) Carolina and Kure Beaches Project in North Carolina (Coastal Protection for $20.3 million) 
The project involves dredging, moving and shaping beach fill to protect towns from storm erosion. In addition, the fill and plantings should enhance beach areas. Work started this month and should run into 2Q2022.
Town of Nags Head Post-Dorian Beach Renourishment Project in North Carolina (Coastal Protection for $11.6 million)
The project involves replacing sand lost from beaches during Hurricane Dorian in 2019. Work is designed to enhance erosion protection and &nbsp;expand the beach area. Work should begin in early 3Q2022 and possibly run into 4Q2022.
Maintenance award.
South Atlantic Division Regional Harbor Dredging Project in Georgia, North Carolina and South Carolina (Maintenance for $25.8 million)
The project, which was awarded in 4Q2021, includes maintenance dredging from the entrance channels of five ports in three states; Brunswick and Savannah in Georgia, Wilmington and Morehead City in North Carolina and Charleston in South Carolina. Work began in 4Q2021 and should be completed in 3Q2022.
Capital award.
Jacksonville Harbor Contract C Dredging Modification Project in Florida (Capital for $11.5 million) 
The project, which was awarded in 4Q2021, involves additional Option A work to the ongoing Jackonville C base contract to deepen and widen the channel, expand the turning basin and deepen berths at Jacksonville Port Authority Blount Island Marine Terminal to the authorized depth of 47 feet to improve navigation safety and efficiency. Work is ongoing with completion slated for 3Q2022.
 

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Recovery expected this year and no change to 2022 EBITDA estimate.&nbsp;
With moderating COVID- 19 costs, we estimate that 2022 EBITDA will recover to $144.2 million. More than 80% of current backlog should be converted to revenue this year and the announced 4Q2021/1Q2022 awards are shorter term. The awards help temper three factors that represent headwinds this year, including dry docking activity, higher offshore wind support infrastructure and a tighter labor market.
Maintain Outperform rating and price target of $17.05/share due to new awards, recovering backlog and fleet renewal program.&nbsp;
We are encouraged that 4Q2021 execution was solid after a couple of challenging quarters, and last year ended on a high note. Still, the stock is off to a relatively weak start this year following a loss of 13% in January partially offset by a gain of 7% in February, but we believe that the risk/reward profile is very favorable. Trading at an EV multiple of 8.3x 2022 EBITDA, the stock remains attractive due to recent awards, strong execution and solid backlog.
Figure 1: Stock Price Performance (January 2016-Present)
<img decoding="async" src="https://www.noblelinx.com/x/research/images/reports/GLDDpriceperform.jpg" style="width: 464px;height: 291px" />
Source: Yahoo Finance.
While full year 2021 EBITDA was a challenging year due to weaker 2Q/3Q2021 operating results, we believe that GLDD &nbsp;remains well positioned to benefit from positive dredging market fundamentals. More importantly, the focus remains on winning projects with the right margin and maintaining margin discipline, while the win rate and fleet utilization are secondary considerations.
The 2022 outlook is robust with the bid market elevated in the $1.8-$2.0 billion range and we forecast a robust rebound in EBITDA to $144 million. The port deepening projects should be complemented by active beach control/nourishment/restoration and maintenance work. Additional energy export related work (both LNG and crude oil) might be pushed out, possibly into next year, even though energy market fundamentals are turned more constructive, and the potential work for the offshore wind industry represents a large long-term market opportunity in the 2025-6 time frame. With the FID decision on the Jones Act compliant rock dumping barge, GLDD is well positioned given the current expected strong growth profile of the US offshore wind market.
As shown below, the current EV multiple of 8.3x 2022 EBITDA have moved up into the middle of the historic trading range, as LTM EBITDA has moderated over the past year. We expect EBITDA to rebound this year, and the current 2022 EV multiple has ranged from a low of 7.2x to a high of 9.0x.
Figure 2: LTM EBITDA and Enterprise Value/EBITDA Multiples (Quarterly since 1Q2016)
<img decoding="async" src="https://www.noblelinx.com/x/research/images/reports/GLDDvaluationMar172022.jpg" style="width: 469px;height: 275px" />
Source: Company Reports and Noble Capital Markets estimates.

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Great Lakes Dredge & Dock Corporation (GLDD)

New 1Q2022 Awards Announced

Fundamental Analysis:

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Investor Conference Highlights (GLDD)

Another Difficult Quarter (GLDD)

Some More Contracts (GLDD)

Fleet Renewal Program Moving Forward (GLDD)

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