Great Lakes Wins $141M Dredging Contracts, Boosts Revenues

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) received several major dredging contracts for a consolidated amount of $141 million. Notably, these awards are expected to be accretive to 2019 and 2020 earnings.

The first one is Jacksonville Deepening Contract B, which was initiated in 2018. The contract work, which is likely to begin in September and last till 2020-end, is a continuation of channel deepening an additional 2.5 miles upriver. Notably, the contract is valued at $96.6 million, which is the highest among the recently received contracts.

The second, which has a value of $38.4 million, is the Baltimore Harbor project. Per the project, Great Lakes will provide maintenance services for dredging of the sea-lanes in Baltimore. The contract work is anticipated to start in first-quarter 2020.

The last one is the Boston Harbor project, under which the company will perform maintenance dredging of the inner harbor channels in Boston. The contract is valued at $5.6 million and its associated work will start in late September.

U.S. Dredging Operation to Aid Top Line

Great Lakes is the largest provider of dredging services in the United States. The company’s revenues improved 40.4% in the past six-month period. The upside was driven by strong project performance throughout the domestic fleet.

Although its backlog at the end of the second quarter declined from the year-ago period, it expects bidding to increase significantly in the third and fourth quarters. The company sees additional phases of multiple large deepening and other capital projects to bid in the upcoming quarters. It also expects to bid on projects funded by $17.4 billion disaster supplemental appropriations.

In first-half 2019, the company registered adjusted EBITDA of $75.7 million compared with $37 million in the comparable year-ago period. Its continuous focus on large and technically challenging port deepening projects, major coastal restoration projects and shipping channel improvement projects — which are driven by new energy export facilities — is a major growth driver.

Shares of this Zacks Rank #2 (Buy) company have outperformed the industry so far this year. The stock has gained 48.6% in the said period compared with the 23.7% growth of industry. The price performance was mainly driven by solid project execution strategy and strong year-over-year performance. This trend is expected to continue in the current year as well. The Zacks Consensus Estimate for earnings is currently pegged at 74 cents, indicating 335.3% year-over-year improvement. Notably, the company’s earnings surpassed the consensus mark in each of the trailing seven quarters.

Other Stocks to Consider

Other top-ranked stocks in the same space include MasTec, Inc. (NYSE:MTZ) , North American Construction Group Ltd. (TSX:NOA) and EMCOR Group, Inc. (NYSE:EME) . While MasTec and North American Construction sport a Zacks Rank #1 (Strong Buy), EMCOR carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MasTec surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average being 21.7%.

North American Construction has an expected earnings growth rate of 228.6% for 2019.

EMCOR has a projected earnings growth rate of 16% for the current year.

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