Great Lakes Dredge & Dock Corporation

Good day and thank you for standing by. Welcome to the Q3 2023 Great Lakes Dredge and DocCorp 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 that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Martina Bakinkas, Director of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to our third quarter 2023 conference call. Joining me on the call this morning is our President and Chief Executive Officer, Lassa Pettersson, and our Chief Financial Officer, Scott Kornblau. LASA will provide an update on the events of the quarter, then Scott will continue with an update on our financial results for the quarter. LASA will conclude with an update on the outlook for the business and the 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. The third quarter, as expected, was a challenging quarter due to vessel dry docks and idle equipment due to the market delays from 2022 and the first half of 2023. Despite the challenges, we were successful in building a solid backlog for the fourth quarter and for 2024 and onwards. We continue to see positive developments with both a larger number of capital projects and a better mix of projects coming to the market, which provides us with confidence that we are on a path to a return to normal operations going into 2024. Great Lakes ended the quarter with a record dredging backlog of $1.03 billion, which does not include approximately $50 million in performance obligations related to offshore wind contracts and $225 million in low bids and options pending awards. At the end of the third quarter, 71% of Great Lakes backlog consisted of capital projects. In the third quarter, we added $519 million in capital projects, which includes two LNG projects, the Brownsville Ship Channel Project for Next Decade Corporations Rio Grande LNG Project and the Port Arthur LNG Phase I Project. The Rio Grande Brownsville LNG Project is the largest project undertaken in Great Lakes history. Subcontract work on this project is anticipated to start later this year with a major dredging effort starting in Q2 of 2024 and lasting for approximately two and a half years. A proven performance and safety culture allows us to win and execute these projects and support the growth of LNG exports in the U.S. In addition to these two capital projects, Great Lakes added $235 million in maintenance and coastal protection projects to our dredging backlog in the third quarter. As we have navigated the challenges from 2022 and have seen the ramp-up in bidding in 2023, we continue to be proactive on cost reductions and fleet adjustments, and we have reduced our general and administrative and overhead headcount by more than 50 percent during the year. As we have stated previously, with temporarily cold-stacked vessels to reduce costs, and these vessels can easily be reactivated as the market improves, as we did for one of our recent new projects. Our newest hopper dredge, the Galveston Island, is expected to be operational later in the fourth quarter, and our sister ship, the Amelia Island, is expected to be delivered in 2025. In the quarter, we took delivery of our two multi-cats, the Cape Hatteras and the Cape Canaveral, which support pipeline operations with a stable work platform for making pipeline connections safely and quickly in most weather conditions in line with a strong safety culture. We are executing on a strategy to enter the U.S. offshore wind market. In July 2023, We were honored to have President Biden attend the steel-cutting ceremony for Great Lakes Offshore Wind Rock Installation Vessel, the Arcadia, which marks another step forward as construction begins with expected delivery in 2025. In addition, we signed the first-ever subcontract for procurement of U.S. rock with carbon, sand, and gravel, a U.S. quarry in the state of New York. Both milestones solidify our entry into the offshore wind market and we support Great Lakes awarded rock installation contracts for the Empire Wind 1 and 2 projects with estimated installation windows in 2025 and 2026. We continue to monitor developments on related offshore wind power purchase agreements after the refusal by the New York State Energy Research and Development Authority to renegotiate the agreements for Equinor and BP's Empire Wind projects and Ørsted's Sunrise projects. We expect updates from Equinor in the first quarter on potential impacts to the development plans for the Empire Wind projects. The U.S. offshore wind market has seen other projects delayed or canceled due to higher interest rates and inflation. However, on October the 24th this year, the third round of PPAs for the state of New York saw four gigawatts of new PPAs awarded to three operators, and we continue to bid on projects with scheduled offshore installation windows in 2026 and onwards. I will now turn the call over to Scott to further discuss the results for the quarter, and then I'll provide further commentary around the market and our business.