Great Lakes Dredge & Dock (GLDD -0.69%) delivered a surprisingly strong quarter and is optimistic about what lies ahead. Investors are rallying into the shares, sending Great Lakes Dredge stock up 17% as of 3 p.m. ET.

A gusher of new business

Great Lakes is the largest provider of dredging services in the U.S., offering a range of services to U.S. government and private energy customers. The company sprang a leak in 2022, with a combination of high inflation, weather issues, and delayed bids causing results to suffer.

2023 was advertised as a year of transition, with Great Lakes focusing on improving operations and more reliable business. The effort paid off in the fourth quarter, with Great Lakes reporting earnings of $0.32 per share, well above the $0.10-per-share consensus, on revenue that was roughly in line with expectations at $181.7 million.

Great Lakes ended the year with a backlog of $1.04 billion in future business, compared to $377 million at the end of 2002.

"We continue to see strong support from the Biden Administration and Congress for the dredging industry," the company wrote in its earnings statement, including $2.32 billion in the fiscal 2023 budget to maintain and modernize U.S. waterways.

Is Great Lakes a buy after its strong earnings report?

With Wednesday's move, Great Lakes stock is now up 45% over the past 365 days but is nearly 40% below where it traded in the summer of 2022. The company has a solid business and provides a much-needed service, but investors need to be aware of the risks.

For one, while Great Lakes is trying to focus on more predictable business, a lot of its energy customers are cyclical in nature and could put off using the company's services if end markets turn south.

There is also the constant risk of gridlock in Washington or budget showdowns. And Great Lakes finished the year with just $22.8 million in cash on hand, compared to $412.1 million in total long-term debt.

There's the opportunity for further gains from here, but investors buying in need to keep a close eye on how the company's business evolves in the quarters to come.