Great Lakes (GLDD) Q2 Revenue Up 14%

Great Lakes Dredge & Dock (GLDD 7.62%), the country’s largest provider of dredging services, reported financial results for the second quarter on August 5, 2025. Headline results showed GAAP earnings per share of $0.14 for Q2 2025, above analyst estimates of $0.09. Revenue (GAAP) was $193.8 million, surpassing the $177.7 million estimate and up from $170.1 million in the prior-year period. Operational progress continued despite four vessels being offline for regulatory drydock. Taken together, the period reflected solid execution and sustained demand for dredging, especially in capital projects, although cash flow and backlog mix are areas to watch as newbuild investments ramp up and project composition evolves.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Company Overview and Recent Focus

Great Lakes Dredge & Dock specializes in large-scale dredging projects across the United States, serving both public and private sectors. It operates the largest and most varied fleet in its industry, including hopper, hydraulic, and mechanical dredges. With major roles in port deepening, coastal defense, and maintenance, the company’s services are essential to maritime trade, beach restoration, and infrastructure protection.

In recent years, the company’s strategy has centered on increasing its share of capital projects -- these are large, often one-off jobs like new port construction or expansion that typically supply higher margins. It has also aggressively focused on expanding into the offshore energy market, notably with purpose-built vessels for wind farm and subsea infrastructure work. Key factors for continued success include keeping a strong project backlog, maintaining high utilization of its fleet, and tightly managing project and vessel costs, especially during periods when required regulatory maintenance limits available operating assets.

Review of the Quarter: Achievements and Shifts

During Q2 2025, the company exceeded revenue and profit forecasts on a GAAP basis, despite having four vessels in regulatory drydock—a standard but costly requirement that removes vessels from service for mandated inspections and repairs. Despite this downtime, high asset utilization among the remaining fleet and substantial revenue from capital projects compensated for any potential shortfall. Capital project revenue climbed to $105.7 million from $70.7 million in the prior-year period, a 49.5% increase for Q2 2025. In contrast, coastal protection revenue (GAAP) fell to $65.2 million from $70.2 million (down 7.1%), while maintenance dredging (GAAP) declined to $22.9 million from $29.1 million (down 21.6%) for Q2 2025.

The shift in project mix toward larger capital jobs helped lift gross profit and margin. Gross profit was $36.6 million (GAAP) for Q2 2025, with gross margin rising to 18.9% from 17.5%, driven by project selection and strong execution, though partially offset by drydock costs. The company’s backlog, a pipeline of committed future projects, stood at $1.0 billion as of Q2 2025, up 18.8% from $0.85 billion in Q2 2024, supporting management’s statement about “expected revenue visibility for the remainder of 2025 and well into 2026.” Notably, about 93% of this backlog as of Q2 2025 now consists of higher-margin capital and coastal work, with significant upcoming projects in liquefied natural gas (LNG) and offshore wind. Among these are large-scale jobs for the Woodside Louisiana LNG, Port Arthur LNG, and the Rio Grande LNG projects, which underpin current and future results.

Operational costs reflected both external and internal factors. General and administrative expense rose by $3.3 million, or 20%, in Q2 2025, mainly due to higher incentive compensation—a result of strong financial performance in the first half of the year. Net income (GAAP) for Q2 2025 reached $9.7 million, $2.0 million higher than the prior-year period, balancing improved results against a rise in income tax provision. The company also invested heavily in its future fleet, with substantial capital expenditures on two major vessels: the subsea rock installation vessel Acadia, aimed at offshore wind, and the new hopper dredge Amelia Island, set for immediate deployment upon delivery.

Instead, capital was returned to shareholders through the repurchase of 1.3 million shares, totaling $11.6 million under an authorized $50 million buyback program as of Q2 2025. Liquidity stood at $272 million as of June 30, 2025, benefiting from a recent increase in the revolving credit facility.

Product and Service Developments

Capital projects form the core of Great Lakes Dredge & Dock’s business, involving deepening and expanding ports and harbors to support larger vessels. Coastal protection, another key product line, focuses on beach restoration and shoreline stabilization, protecting communities and infrastructure from storm damage. Maintenance dredging ensures that harbors and navigation channels remain at required depth, supporting both commercial and Navy activities.

Recent quarters, including Q1 2025, have seen increased capital project activity, which contributed most to revenue growth and lifted margins due to higher profit potential. The company remains the largest U.S.-flagged operator in its space and has maintained a combined bid market share of 31% across capital, coastal protection, maintenance, and inland projects over the three-year period ended December 31, 2024. Management reports that industry competition and bidding conditions have stayed similar to past norms. The entry into offshore energy marks a new direction, particularly with the upcoming Acadia vessel. This ship will begin service in 2026 with contracted projects for Empire Wind and Sunrise Wind, large-scale offshore wind farms, before potentially branching into other subsea infrastructure markets like oil and gas pipeline and cable protection. The expansion is backed by a global shortage of similar vessels and a strategic aim to reduce reliance on any single segment or region.

In Q2 2025, more than $64 million was spent on capital additions, with $28.7 million allocated to Acadia and $19.8 million to Amelia Island. The latter is scheduled for immediate operation after delivery and is tailored for deployment on coastal protection assignments. These ongoing investments temporarily reduced cash on hand to $2.9 million as of June 30, 2025.

The company's results remained mostly unaffected by tariff risk, as major purchases for newbuilds are already onshore. Operating in a heavily regulated industry, the company manages additional complexity -- the U.S. Army Corps of Engineers, the principal customer for public projects, is continuing at robust funding levels through September 2025, while recent legislation such as the Water Resources Development Act authorizes new work. This supports ongoing demand, but the mixed pace of project awards highlights the importance of monitoring backlog replenishment each quarter.

Looking Ahead

Management kept its outlook unchanged, stating it expects “The Company had an exceptional first half of 2025, which we expect to continue for the remainder of this year and into 2026 driven by a modernized fleet, superior project execution, and a robust backlog.”” The period just reported (Q2 2025) was expected to be the low point for revenue and margins due to regulatory drydocking, with results in the second half of 2025 forecast to normalize as vessels re-enter service. Full-year 2025 financial results are expected to exceed those of 2024.

As of June 30, 2025, the company’s share repurchase program remained active.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.