Great Lakes Dredge & Dock Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 Great Lakes Dredgen DocCorp Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Tina Paganskis, Director of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to our quarterly conference call. Joining me on the call this morning is our President and Chief Executive Officer, Lassa Pettersson, and our Chief Financial Officer, Mark Marinko. Lassa will provide an update on the events of the quarter, then Mark will continue with an update on our financial results of the quarter. Lassa will conclude with an update on the outlook for the business and the markets. Following their comments, there will be an opportunity for questions. During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties, and other factors that can cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2020 Form 10-K and subsequent filings. During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA from continuing operations, which are explained in the net income to adjusted EBITDA from continuing operations reconciliation attached to our earnings release and posted on our investor relations website, along with certain other operating data. With that, I will turn the call over to Laksa.

Thank you, Tina. During 2020, as the COVID-19 pandemic hit our nation, Great Lakes, Dredge and Dock was able to adjust and navigate the difficulties and challenges the pandemic posed to our operations. However, as the third wave of the pandemic spread through our population, we started to see significant additional direct cost and operational interruptions in the first quarter of 2021. several of our vessel crews are infected despite our extensive testing and isolation protocols. Vessels were required to go to shore for crew changes, and the vessels had to be disinfected before returning to work. The direct COVID cost of at-home and on-site testing, disinfecting our vessels, and quarantining of crew were $4.3 million in the quarter. More importantly, The crew changes and taking the vessels offline for disinfection impacted the vessel scheduling and availability. In addition, it severely impacted the productivity on several projects and led to delays, and it also pushed revenue from the first quarter into remaining quarters of 2021. Today, the projects and vessels that were impacted are back in operation, and with a solid backlog, vaccinations increasing, and stronger performance expectations in the third and fourth quarter. We do not see adjusting our full year expectation at this time. As vaccinations now have become available to all age groups, we have initiated an extensive effort of communication and education of our crews and staff. We encourage them to get vaccinated as early as possible to keep themselves, their fellow workers, family, and friends safe and be part of the effort to stop the pandemic and hinder new strains of the virus developing and spreading. On our Boston project, which is starting up soon, 100% of the project team has been vaccinated, and company-wide we have approximately 20% of all staff and crew either fully vaccinated or partially vaccinated. Our ambition is to have the majority of all staff and crew vaccinated in the second quarter of 2021, which will greatly reduce or potentially eliminate further impacts on our operations. The company ended the quarter with net income of $8.8 million and adjusted EBITDA of $26.8 million, or 15%, compared to the first quarter of 2020 that ended with $34 million of net income and $61.4 million, or 28%, in adjusted EBITDA. The first quarter of 2020 was a record-breaking quarter for Great Lakes, driven by robust performance on several projects, no vessels in dry dock, and no COVID. Therefore, comparison to this quarter was expected to be difficult. In addition to the COVID-related impacts in the first quarter of 2021, we experienced an extended dry dock period on 2R dredges and some equipment repairs which impacted project schedules. We expect the domestic bid market to be just as strong this year as 2020. In the first quarter, Great Lakes announced awards of the Boston III Deepening Project and the Panama City Beach Renourishment, totaling $90.3 million. We were also the low bidder on the Mobile Deepening Project Phase III that was pending award for $53.9 million at the end of the first quarter. but has since been awarded. In addition, in April of this year, we were awarded the Golden Triangle Marsh Creation Project in Louisiana for $32.4 million, and we were the low bidder on the Captiva Island Project for $15.6 million. To support the strong domestic market demand, in 2020, Great Lakes announced the execution of a contract with Conrad's Shipyard in Louisiana, to build a new mid-size hopper dredge with expected delivery in the first quarter of 2023. The key laying ceremony has been held in April, and the new hopper dredge build remains on budget and on schedule. In addition to the new build, we continue to upgrade our existing U.S. domestic fleet with new equipment and technology to increase productivity. Investing in our fleet is paramount to maintaining strong product performance and our ability to effectively complete our projects. And with this strategic build and ongoing productivity upgrades to existing dredges, we believe our fleet is well equipped to meet current demands and future growth in the market. I now turn the call over to Mark to further discuss the results of the quarter and for an update on backlog developments.