Great Lakes Dredge & Dock Corporation

and thank you for standing by. Welcome to the Q1 2023 Great Legs Dredge and Dock Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tina Baginskas, Director of Investor Relations, and please go ahead.

Thank you. Good morning and welcome to our first quarter 2023 conference call. Joining me on this call this morning is our President and Chief Executive Officer, Lassa Pedersen, and our Chief Financial Officer, Scott Kornblau. Lassa will provide an update on the events of the quarter, then Scott will continue with an update on our financial results for the quarter. Lassa will conclude with an update on the outlook for the business and market. 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 could 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 2022 Form 10-K and subsequent filings. During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the Net Income to Adjusted EBITDA 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 Lassa.

Thank you, Tina. As stated in our press release, we reported improved results in the first quarter of 2023. The company showed improvements in gross profit margins and adjusted EBITDA compared to each of the prior three quarters. In this winter quarter, We continue to face weather challenges on projects in the Northeast. And as in the previous quarter, we had a lower than normal amount of capital work due to the delay in the bid market for large port deepenings and coastal protection projects in 2022. We ended the quarter with revenues of 158 million and EBITDA of 10.2 million. Our fleet utilization in the first quarter was strong, But project revenues came primarily from maintenance projects, which typically provide lower margin work. Fortunately, we have started to see positive developments in 2023, with both a larger number of projects coming out to bid and a better mix of projects coming to the market. In the first quarter of 2023, We had a total bid market that reached over $300 million, which is approximately $125 million greater than the first quarter of 2022. And we were low bidder on 41% of this market. We ended the quarter with $327.1 million of dredging backlog. which does not include approximately $50 million of performance obligation related to offshore wind contracts. And in addition, we ended the quarter with $516.9 million in low bids and options pending award. Not included in the first quarter backlog numbers are two major projects on which we were the low bidder in early April. namely the Freeport deepening projects at around $160 million and a coastal protection project in the northeast at approximately $90 million. Assuming these two projects move forward to award in second quarter, we could see work commence in the second half of the year. It is positive that we have seen overall improvements in results in the first quarter and that bidding for last project has started to pick up in first and second quarter. and we expect that additional projects come to bid for the remainder of the year. However, as new projects typically take six to eight weeks from bidding to contract award, and additionally a minimum of four weeks to mobilize to site, we do expect in the short term to see some continuous slowness in project revenues, as we will have some dredge in dry dock and some lower fleet utilization in Q2 and Q3 than in Q1. That's due to the slow bid market that we saw in 2022. In the last six months, we took swift and proactive action on cost reductions and fleet utilization adjustments. Last year, we retired the 42-year-old hopper dredge for Terrapin Island, and we currently have cold-stacked two major dredges and various support equipment in anticipation of an improved dredging market in the second part of 2023 and onwards. Correspondingly, we have adjusted our G&A and administrative cost structure to reflect the changed market conditions. And earlier this year, we had a 10% reduction in SG&A and overhead staff, and we target a further 5% reduction in 2023 through natural attrition. As we adjust to the current market condition, we remain optimistic in the long-term outlook for the trading market. and our ongoing pre-renewal program is part of our strategy to continue to be the U.S. industry leader in our selected market segments. After decommissioning several of our oldest dredges in 2017, we have invested in productivity upgrades on our best-performing vessels, and our new hopper dredge, the Galveston Island, is on budget and is expected to be operational in the third quarter. and her sister ship, the Amelia Island, is expected to be delivered in 2025. We are also executing our strategy to enter the fast-growing U.S. offshore wind market. Construction of our U.S.-flagged Johnstown-compliant inclined four-pipe vessel for subsea rock installation, which will be named Arcadia, is on budget and expected to be delivered and operational in the first half of 2025. Last year, Great Lakes was awarded its first rock installation contract for the Empire Wind 1 and 2 by Equinor and BP with installation windows in 2025 and 2026. And we are currently bidding rock installation on several other offshore wind farm projects with a work plan for 2025 and beyond. I will now turn the call over to Scott to further discuss the results for the quarter and then I'll provide a further commentary around the market and our business.