What happened

The largest U.S. dredging company fell short of expectations in terms of both revenue and earnings, and the stock is taking on water as a result. Shares of Great Lakes Dredge & Dock (GLDD 3.25%) traded down more than 20% on Wednesday morning following its fourth-quarter earnings release.

So what

Great Lakes plays a vital role in the U.S. transportation system, operating specialized equipment that makes sure waterways are navigable. But the work did not translate into profits in the last three months of 2022.

On Wednesday morning, the company reported a fourth-quarter loss of $0.47 per share on revenue of $146.66 million, falling short of analyst expectations for a $0.14 per-share loss on sales of $161 million. The loss included an $8 million charge related to the retirement of Terrapin Island, one of the company's older dredge boats, but CEO Lasse Petterson said Great Lakes is facing a lot of headwinds right now.

"The fourth quarter continued to be impacted by a significantly delayed bid market combined with high inflation, significant weather delays on projects in the Northeast, fewer high margin capital projects, dredging project production issues, higher than anticipated drydock costs, and the retirement of the Terrapin Island," Petterson said.

For the full year, revenue declined by 10% to $648.8 million, and the company swung from a $49.4 million profit in 2021 to a $34 million net loss.

Now what

The issues Petterson described are not going to disappear with the new year, though the CEO did say he expects to see the dredging bid market pick up in the first half of 2023. The company is also trying to build its business working with the U.S. offshore wind market, including bidding for contracts for rock installations around major wind projects.

There's real potential here, as continued dredging is necessary to keep rivers and ports open and able to be served by larger and larger ships. Offshore energy projects involving fossil fuels and renewables offer the potential for growth as well. But after a miserable 2022, there isn't much momentum pushing Great Lakes forward right now.

Shares of Great Lakes are down nearly 60% over the past year, and investors are likely to wait on the dock to see if a rebound materializes before diving in.