10q10k10q10k.net

What changed in Great Lakes Dredge & Dock CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Great Lakes Dredge & Dock CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+277 added−275 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in Great Lakes Dredge & Dock CORP's 2023 10-K

277 paragraphs added · 275 removed · 217 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

63 edited+9 added−13 removed95 unchanged
Biggest changeThe Company’s master and ancillary contracts with IUOE Local 25 expire in September 2024. Our agreements with the Seafarers International Union expire in February 2023, however, negotiations began in January for a renewal agreement to be effective on March 1, 2023 and the Company expects that the membership will have a tentative agreement before expiration of the current agreement.
Biggest changeHowever, two unions represent a large majority of our dredging employees - the International Union of Operating Engineers (“IUOE”) Local 25 and the Seafarers International Union. The Company’s master and ancillary contracts with IUOE Local 25 will expire on September 30, 2024 and negotiations will begin in the second quarter of 2024 for a renewal agreement.
Compliance with these statutes and regulations can delay appropriation and/or performance of particular projects and increase related project costs. Non-compliance can also result in fines, penalties and claims by third parties seeking damages for alleged personal injury, as well as damages to property and natural resources. Certain environmental laws such as the U.S.
Compliance with these statutes and regulations can delay appropriation and/or performance of particular projects and increase related project costs. 8 Non-compliance can also result in fines, penalties and claims by third parties seeking damages for alleged personal injury, as well as damages to property and natural resources. Certain environmental laws such as the U.S.
“Management's Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Customers The dredging industry’s customers include federal, state and local governments, foreign governments and both domestic and foreign private concerns, such as utilities and oil and other energy companies.
“Management's Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Customers The dredging industry’s customers include federal, state and local governments, foreign governments and both domestic and foreign private concerns, such as utilities and oil and gas and other energy companies.
Item 1. B usiness. The terms “we,” “our,” “ours,” “us,” “Great Lakes” and “Company” refer to Great Lakes Dredge & Dock Corporation and its subsidiaries. Organization Great Lakes is the largest provider of dredging services in the United States which is complemented with a long history of performing significant international projects.
Item 1. B usiness. The terms “we,” “our,” “ours,” “us,” “Great Lakes”, “GLDD” and “Company” refer to Great Lakes Dredge & Dock Corporation and its subsidiaries. Organization Great Lakes is the largest provider of dredging services in the United States which is complemented with a long history of performing significant international projects.
Additionally, a large Chinese dredging company controls most of its home market and is a key player in the international market. There are also several governmentally supported dredging companies that operate on a local or regional basis. The Company targets opportunities that are well suited to its equipment and where it can be most competitive.
Additionally, a large Chinese dredging company controls most of its local market and is a key player in the international market. There are also several governmentally supported dredging companies that operate on a local or regional basis. The Company targets opportunities that are well suited to its equipment and where it can be most competitive.
In addition, a significant amount of the Company’s backlog relates to federal government contracts, which can be canceled at any time without penalty, subject to the Company’s right, in some cases, to recover the Company’s actual committed costs and profit on work performed up to the date of cancellation.
In addition, a significant amount of the Company’s backlog relates to federal government contracts, which can be canceled at any time without penalty, subject to the Company’s right, in some cases, to recover the Company’s actual committed costs 7 and profit on work performed up to the date of cancellation.
By law, the Louisiana Coastal Protection and Restoration Authority (“CPRA”) must update its coastal master plan every six years and let the latest science guide each iteration. The 2023 draft plan marks the fourth released by the agency since it formed in 2005 following Hurricane Katrina.
By law, the Louisiana Coastal Protection and Restoration Authority (“CPRA”) must update its coastal master plan every six years and let the latest science guide each iteration. The 2023 plan marks the fourth released by the agency since it formed in 2005 following Hurricane Katrina.
Contracts for state and local governments are generally awarded to the lowest qualified bidder. Contracts for private customers are awarded based, among other things, the contractor’s experience, equipment and schedule, contractual terms, as well as price.
Contracts for state and local governments are generally awarded to the lowest qualified bidder. Contracts for private customers are awarded based on, among other things, the contractor’s experience, equipment and schedule, contractual terms, as well as price.
The U.S. citizen ownership 8 and control standards require the vessel-owning entity to be at least 75% U.S. citizen owned and prohibit the chartering of the vessel to any entity that does not meet the 75% U.S. citizen ownership test.
The U.S. citizen ownership and control standards require the vessel-owning entity to be at least 75% U.S. citizen owned and prohibit the chartering of the vessel to any entity that does not meet the 75% U.S. citizen ownership test.
The 2023 draft plan contains 73 proposed projects aimed to lower the threat of storm surge and maintain as much of a natural buffer between communities and the Gulf of Mexico as possible.
The 2023 plan contains 73 proposed projects aimed to lower the threat of storm surge and maintain as much of a natural buffer between communities and the Gulf of Mexico as possible.
Over its 132 year history, the Company has grown to be a leader in capital, coastal protection and maintenance dredging in the United States and is one of the oldest and most experienced dredging companies in the country. The Company’s foreign projects are typically categorized in the capital work type, but are not included in the aforementioned bid market.
Over its 133 year history, the Company has grown to be a leader in capital, coastal protection and maintenance dredging in the United States and is one of the oldest and most experienced dredging companies in the country. The Company’s foreign projects are typically categorized in the capital work type, but are not included in the aforementioned bid market.
The delivery of the new Galveston Island and Amelia Island hopper dredges will provide the Company with added capacity and the opportunity to potentially retire older dredges. Hydraulic Dredges. Hydraulic dredges remove material using a revolving cutterhead which cuts and churns the sediment on the channel or ocean floor and hydraulically pumps the material by pipe to the disposal location.
The addition of the new Galveston Island and Amelia Island hopper dredges will provide the Company with added capacity and the opportunity to potentially retire older dredges. Hydraulic Dredges. Hydraulic dredges remove material using a revolving cutterhead which cuts and churns the sediment on the channel or ocean floor and hydraulically pumps the material by pipe to the disposal location.
Performance and advance payment guarantees are each typically 5% to 10% of the contract value. 5 Competition The U.S. dredging industry is highly fragmented composed of many small operators, primarily in maintenance dredging.
Performance and advance payment guarantees are each typically 5% to 20% of the contract value. 5 Competition The U.S. dredging industry is highly fragmented, composed of many small operators, primarily in maintenance dredging.
Generally, coastal protection projects take place during the fall and winter months to minimize interference with bird and marine life migration and breeding patterns as well as coastal recreation activities. Maintenance (15% of 2022 revenues). Maintenance dredging consists of the re-dredging of previously deepened waterways and harbors to remove silt, sand and other accumulated sediments.
Generally, coastal protection projects take place during the fall and winter months to minimize interference with bird and marine life migration and breeding patterns as well as coastal recreation activities. Maintenance (32% of 2023 revenues). Maintenance dredging consists of the re-dredging of previously deepened waterways and harbors to remove silt, sand and other accumulated sediments.
Although capital work can be impacted by budgetary constraints and economic conditions, these projects typically generate an immediate economic benefit to the ports and surrounding communities. Coastal protection (30% of 2022 revenues). Coastal protection projects generally involve moving sand from the ocean floor to shoreline locations where erosion threatens shoreline assets.
Although capital work can be impacted by budgetary constraints and economic conditions, these projects typically generate an immediate economic benefit to the ports and surrounding communities. Coastal protection (33% of 2023 revenues). Coastal protection projects generally involve moving sand from the ocean floor to shoreline locations where erosion threatens shoreline assets.
These statutes require vessels engaged in dredging in the navigable waters of the United States to be documented with a coastwise endorsement, to be owned and controlled by U.S. citizens, to be manned by U.S. crews, and to be built in the United States.
These statutes require vessels engaged in dredging in the navigable waters of the United States to be documented with a coastwise endorsement, and, among other things, to be owned and controlled by U.S. citizens, to be manned by U.S. crews, and to be built in the United States.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Bidding Activity and Backlog.” 7 Human Capital Management At December 31, 2022, the Company employed 426 full-time salaried and non-exempt personnel in the U.S., including those in a corporate function. In addition, the Company employs U.S. hourly personnel, most of whom are unionized, on a project-by-project basis.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Bidding Activity and Backlog.” Human Capital Management At December 31, 2023, the Company employed 364 full-time salaried and non-exempt personnel in the U.S., including those in a corporate function. In addition, the Company employs U.S. hourly personnel, most of whom are unionized, on a project-by-project basis.
Based on self-reporting, employee demographics are composed of approximately 65% White, 16% Hispanic or Latino, 13% African American or Black, 3% Asian, less than 1% American Indian or Alaska Native and less than 1% Native Hawaiian or Other Pacific Islander.
Based on self-reporting, employee demographics are composed of approximately 65% White, 18% Hispanic or Latino, 12% African American or Black, 3% Asian, less than 1% American Indian or Alaska Native and less than 1% Native Hawaiian or Other Pacific Islander.
The growth in demand for transportation of energy worldwide has driven the need for dredging to support new terminals, harbors, channels and pipelines. Europe is currently re-evaluating their sourcing of energy after the Russian invasion of Ukraine which will require imports of large quantities of Liquefied Natural Gas (“LNG”).
The growth in demand for transportation of energy worldwide has driven the need for dredging to support new terminals, harbors, channels and pipelines. Europe is currently re-evaluating their sourcing of energy after the Russian invasion of Ukraine which will require imports of large quantities of LNG.
In addition, the Disaster Relief Supplemental Appropriations Act for fiscal year 2023 was approved which included $1.48 billion for the Corps to make necessary repairs to infrastructure impacted by hurricanes and other natural disasters and to initiate coastal protection projects that will increase coastal resiliency. This increased budget and additional funding support our expectation for a stronger market in 2023.
In addition, the Disaster Relief Supplemental Appropriations Act for fiscal year 2023 was approved which included $1.48 billion for the Corps to make necessary repairs to infrastructure impacted by hurricanes and other natural disasters and to initiate coastal protection projects that will increase coastal resiliency. This increased budget and additional funding resulted in a strong bid market in 2023.
Schiffer was named Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary in December 2020 when she joined the Company. Ms. Schiffer leads the Company's legal and compliance organization, providing legal counsel. Ms.
Schiffer was named Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary in December 2020 when she joined the Company. Ms. Schiffer leads the Company's legal, compliance and human resource organizations, providing legal counsel. Ms.
Capital (domestic is 53% of 2022 revenues). Capital dredging consists primarily of port expansion projects, which involve the deepening of channels and berthing basins to allow access by larger, deeper draft ships and the provision of land fill used to expand port facilities.
Domestic Capital (32% of 2023 revenues). Capital dredging consists primarily of port expansion projects, which involve the deepening of channels and berthing basins to allow access by larger, deeper draft ships and the provision of land fill used to expand port facilities.
Crews are generally available for hire on relatively short notice. During 2022, the Company employed an average of approximately 750 hourly personnel to meet domestic project requirements. The U.S. salary and non-exempt full-time employees are comprised of approximately 90% men and 10% women.
Crews are generally available for hire on relatively short notice. During 2023, the Company employed an average of approximately 596 hourly personnel to meet domestic project requirements. The U.S. salary and non-exempt full-time employees are composed of approximately 90% men and 10% women.
Domestic rivers and lakes dredging and related operations typically consist of lake and river dredging, inland levee and construction dredging, environmental restoration and habitat improvement and other marine construction projects.
Rivers & lakes (3% of 2023 revenues). Domestic rivers and lakes dredging and related operations typically consist of lake and river dredging, inland levee and construction dredging, environmental restoration and habitat improvement and other marine 2 construction projects.
Navy are responsible for awarding federal contracts with respect to their own facilities. In 2022, approximately 67% of the Company’s dredging revenues were generated from 34 different contracts with federal agencies or third parties operating under contracts with federal agencies.
Navy are responsible for awarding federal contracts with respect to their own facilities. In 2023, approximately 75% of the Company’s dredging revenues were generated from 39 different contracts with federal agencies or third parties operating under contracts with federal agencies.
Great Lakes’ domestic dredging fleet is typically positioned on the East and Gulf Coasts, with a smaller number of vessels occasionally positioned on the West Coast, and with many of the rivers & lakes dredges on inland rivers and lakes. The mobility of the fleet enables the Company to move equipment in response to changes in demand.
Great Lakes’ domestic dredging fleet is typically positioned on the East and Gulf Coasts, with many of the rivers & lakes dredges on inland rivers and lakes. The mobility of the fleet enables the Company to move equipment in response to changes in demand.
Through the increased appropriation of HMTF monies, the Company anticipates increased funding for harbor maintenance projects to be let for bid throughout 2023 and beyond. Corps projects involving deepening, maintenance and coastal dredging are in line for robust funding continuing the trend of recent years.
Through the increased appropriation of HMTF monies, the Company has seen increased funding for harbor maintenance projects to be let for bid throughout 2023 and expects this trend to continue in 2024. Corps projects involving deepening, maintenance and coastal dredging are in line for robust funding continuing the trend of recent years.
The annual bid market for maintenance dredging over the prior three years averaged $776 million. • Gulf coast restoration. There has been continued focus on restoring the barrier islands and wetlands that provide natural protection from storms in the Gulf Coast area. Many restoration projects have commenced to repair coastal areas.
The annual bid market for maintenance dredging over the three year period ended December 31, 2023 averaged $797 million. • Gulf coast restoration. There has been continued focus on restoring the barrier islands and wetlands that provide natural protection from storms in the Gulf Coast area. Many restoration projects have commenced to repair coastal areas.
Petterson 66 President, Chief Executive Officer and Director Scott Kornblau 51 Senior Vice President, Chief Financial Officer & Treasurer David Johanson 51 Senior Vice President, Project Acquisition & Operations Christopher G. Gunsten 53 Senior Vice President, Project Services & Fleet Engineering Eleni Beyko 57 Senior Vice President, Offshore Wind Vivienne R.
Petterson 67 President, Chief Executive Officer and Director Scott Kornblau 52 Senior Vice President, Chief Financial Officer & Treasurer David Johanson 52 Senior Vice President, Project Acquisition & Operations Christopher G. Gunsten 54 Senior Vice President, Project Services & Fleet Engineering Eleni Beyko 58 Senior Vice President, Offshore Wind Vivienne R.
Competition on rivers & lakes projects is determined primarily based on geographic reach, project execution capability and price. Great Lakes and three other companies comprised approximately 80% of the Company’s defined bid market related to domestic capital, coastal protection, maintenance and rivers & lakes over the prior three years.
Competition on rivers & lakes projects is determined primarily based on geographic reach, project execution capability and price. Great Lakes and three other companies comprised approximately 66% of the Company’s defined bid market related to domestic capital, coastal protection, maintenance and rivers & lakes over the three year period ended December 31, 2023.
We are building the first Jones Act compliant rock installation vessel in the U.S. and winning the first rock installation contract for the Empire Wind I and II wind farms.
We are building the first Jones Act compliant rock installation vessel in the U.S. and, in 2022, won the first rock installation contract for the Empire Wind I wind farm.
The Company has bonding agreements with Argonaut Insurance Company ("Argo"), Berkley Insurance Company, Chubb Surety ("Chubb"), Travelers Casualty and Surety Company of America ("Travelers"), Zurich American Insurance Company, and Liberty Mutual Insurance Company ("Liberty"), (collectively, the “Sureties”) under which the Company can obtain performance, bid and payment bonds.
The Company has bonding agreements with Argonaut Insurance Company, ACE Holdings, Liberty Mutual Insurance Company and Philadelphia Indemnity Insurance Company, (collectively, the “Sureties”) under which the Company can obtain performance, bid and payment bonds. The Company also currently has outstanding bonds with Travelers Casualty and Surety Company of America, Berkley Insurance Company and Zurich American Insurance Company.
The annual bid market for coastal protection over the prior three years averaged $365 million. • Required maintenance of U.S. ports. The channels and waterways leading to U.S. ports have stated depths on which shippers rely when entering those ports.
The annual bid market for coastal protection over the three year period ended December 31, 2023 averaged $367 million. • Required maintenance of U.S. ports. The channels and waterways leading to U.S. ports have stated depths on which shippers rely when entering those ports.
Clamshell dredges with specialized buckets are ideally suited to handle softer silts and maintenance material requiring environmentally controlled excavation and disposal. Additionally, the Company owns an electric clamshell dredge which provides an advantage in those markets with stringent emissions standards. Scows.
Clamshell dredges with specialized buckets are ideally suited to handle softer silts and maintenance material requiring environmentally controlled excavation and disposal. Additionally, the Company owns an electric clamshell dredge which provides an advantage in those markets with stringent emissions standards. During 2023, the Company retired one mechanical dredge as part of its ongoing fleet modernization program. Scows.
Generally, inland river and lake projects in the northern U.S. take place in non-winter months because frozen waterways significantly reduce contractors’ ability to operate and transport its equipment in the relevant geographies.
Generally, inland river and lake projects in the northern U.S. take place in non-winter months because frozen waterways significantly reduce contractors’ ability to operate and transport its equipment in the relevant geographies. Foreign. Foreign capital projects typically involve land reclamations, channel deepening and port infrastructure development.
Hanson, Senior Vice President, Market Development Mr. Hanson was named the Senior Vice President, Market Development in January 2023 after serving as Senior Vice President - Government Relations & Business Development, a position he had held since March 2020. He was named Vice President of the Company in 2004. Mr.
Hanson was named the Senior Vice President, Market Development in January 2023 after serving as Senior Vice President - Government Relations & Business Development, a position he had held since March 2020. He was named Vice President of the Company in 2004. Mr. Hanson worked for Connolly Pacific of Long Beach, California before joining GLDD in 1988.
At December 31, 2022, the Company employed 2 foreign nationals and 1 local staff to manage and administer its Middle East operations. During 2022, the Company also employed an average of 2 hourly personnel to meet project requirements in the Middle East. The Company seeks to attract, select, hire, retain, incentivize, and integrate our existing and future employees.
At December 31, 2023, the Company employed 2 foreign nationals and 1 local staff to manage and administer its Middle East operations. The Company seeks to attract, select, hire, retain, incentivize, and integrate our existing and future employees.
Growing populations in coastal communities and vital beach tourism are drawing attention to the importance of protecting beachfront assets. Over the past few years, both the federal government and state and local entities have funded beach work recognizing the essential role these natural barriers play in absorbing storm energy and protecting public and private property.
Over the past few years, both the federal government and state and local entities have funded beach work recognizing the essential role these natural barriers play in absorbing storm energy and protecting public and private property.
She was of counsel in the firm’s corporate and securities section from 2011 until 2020. She has over 39 years of experience and has held significant legal, business and operational leadership roles in the industrials sector. Ms.
She was of counsel in the firm’s corporate and securities section from 2011 until 2020. She has over 40 years of experience and has held significant legal, business and operational leadership roles in the industrials sector. Ms. Schiffer earned a Bachelor of Science degree from the University of Central Arkansas and a Juris Doctor degree from Tulane University.
The Company is currently building a 6,500 cubic yard trailing suction hopper dredge, the Galveston Island , which is expected to be operational mid-year 2023, additionally, in June 2022 the Company exercised the contract option with the same builder to build a second 6,500 cubic yard trailing suction hopper dredge, the Amelia Island , with expected delivery in the first half of 2025.
The Company has recently taken delivery of a 6,500 cubic yard trailing suction hopper dredge, the Galveston Island , which began operations in February 2024. Additionally, in June 2022 the Company exercised the contract option with the same builder to build a second 6,500 cubic yard trailing suction hopper dredge, the Amelia Island , with expected delivery in 2025.
Port deepening projects are essential to maintaining safe and efficient navigation channels in ports and harbors along our coastlines. The Company believes that port deepening and expansion work authorized under current and anticipated future legislation will continue to provide significant opportunities for the domestic dredging industry.
The Company believes that port deepening and expansion work authorized under current and anticipated future legislation will continue to provide significant opportunities for the domestic dredging industry.
The Company also currently has outstanding bonds with Argo, Chubb, Travelers, and Liberty. Great Lakes has never experienced difficulty in obtaining bonding for any of its projects and Great Lakes has never failed to complete a marine project in its 132 year history.
Great Lakes has never experienced difficulty in obtaining bonding for any of its projects and Great Lakes has never failed to complete a marine project in its 133 year history.
In turn, several LNG, petrochemical and crude oil projects are creating the need for port development in support of energy exports.
In turn, several LNG, petrochemical and crude oil projects are creating the need for port development in support of energy exports. Several North American LNG export projects have been delayed over the past couple of years since the pandemic.
In December 2022, the Omnibus Appropriations Bill for fiscal year 2023 was passed which included another record budget of $8.66 billion for the Corps civil works program of which $2.32 billion is provided for the Harbor Maintenance Trust Fund to maintain and modernize our nation’s waterways, an increase of $269 million above the FY22 level.
The Omnibus Appropriations Bill for fiscal year 2023 includes a budget of $2.32 billion for the Harbor Maintenance Trust Fund to maintain and modernize our nation’s waterways, an increase of $269 million above the fiscal year 2022 level.
Reporting directly to the CEO, he was responsible for all of CB&I’s engineering, procurement and construction project operations and sales. Prior to CB&I, Mr. Petterson was CEO of Gearbulk, Ltd., a privately held company that owns and operates one of the largest fleets of gantry craned open hatch bulk vessels in the world.
Prior to CB&I, Mr. Petterson was CEO of Gearbulk, Ltd., a privately held company that owns and operates one of the largest fleets of gantry craned open hatch bulk vessels in the world. He was also President and COO of AMEC Inc. Americas, a subsidiary of AMEC plc, a British multinational consulting, engineering and project management company.
Additionally, as the offshore wind market develops in the U.S., port facilities will need to meet specific requirements to be able to service this industry. We anticipate these ports will require investments for port improvements that will include some dredging in order to serve as marshaling ports for various offshore wind projects.
We anticipate these ports will require investments for port improvements that will include some dredging in order to serve as marshaling ports for various offshore wind projects.
The Company has twelve scows in its fleet with a capacity ranging from 5,000 to 8,800 cubic yards. The Company placed into service three new scows during 2022, each 7,100 cubic yards in size. 6 In addition, the Company has numerous pieces of smaller equipment that support its dredging operations.
The Company has thirteen scows in its fleet with a capacity ranging from 5,000 to 8,800 cubic yards. The Company placed into service three new scows during 2022, each 8,800 cubic yards in size. During 2023, the Company entered into a sale 6 leaseback transaction for the three scows placed into service in 2022.
Petterson has served as Chief Executive Officer (“CEO”) since May 2017 and was also named President in 2020. Mr. Petterson most recently had served as a private consultant to clients in the Oil & Gas sector and served as Chief Operating Officer (“COO”) and Executive Vice President at Chicago Bridge and Iron (“CB&I”) from 2009 to 2013.
Petterson most recently had served as a private consultant to clients in the Oil & Gas sector and served as Chief Operating Officer (“COO”) and Executive Vice President at Chicago Bridge and Iron (“CB&I”) from 2009 to 2013. Reporting directly to the CEO, he was responsible for all of CB&I’s engineering, procurement and construction project operations and sales.
In December 2022, the Omnibus Appropriations Bill for the fiscal year 2023 was passed which included a record budget of $8.66 billion for the U.S. Army Corps of Engineers (the "Corps").
In December 2022, the Omnibus Appropriations Bill for the fiscal year 2023 was passed which included a record budget of $8.66 billion for the U.S. Army Corps of Engineers (the “Corps”). These appropriations funded the continuation of port deepening bids in 2023 for the ports of Sabine, Freeport, Mobile, San Juan, Houston, Corpus Christi and additional phases of Norfolk.
Kornblau was named Senior Vice President and Chief Financial Officer (“CFO”) when he joined the Company in October 2021 and was additionally named Treasurer in January 2022. In his over 25 years of professional experience prior, Mr. Kornblau has held various finance and leadership positions at Diamond Offshore Drilling, Inc.
In his over 25 years of professional experience prior, Mr. Kornblau has held various finance and leadership positions at Diamond Offshore Drilling, Inc. (“Diamond”), most recently as Senior Vice President and Chief Financial Officer since July 2018. Prior to Mr.
Kornblau earned a Bachelor of Arts degree in Accounting from the University of Texas at Austin. Mr. Kornblau is a certified public accountant. David Johanson, Senior Vice President, Project Acquisition and Operations Mr. Johanson was named Senior Vice President, Project Acquisition & Operation in July 2022 after serving as Senior Vice President, Gulf Region. Before that, Mr.
David Johanson, Senior Vice President, Project Acquisition and Operations Mr. Johanson was named Senior Vice President, Project Acquisition & Operation in July 2022 after serving as Senior Vice President, Gulf Region. Before that, Mr.
The Company experienced an average combined bid market share in the U.S. of 35% over the prior three years, including 49%, 54%, 17% and 23% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively.
The Company experienced an average combined bid market share in the U.S. of 33% over the three year period ended December 31, 2023, including 36%, 56%, 23% and 22% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively, exclusive of liquefied natural gas (“LNG”) projects.
Hanson serves on several Federal Advisory Committees as well as on boards of groups with national and regional interest to the Company and several academic advisory boards related to ocean and coastal engineering. Mr. Hanson is an Ocean Engineering graduate of Texas A&M University where he was named a distinguished alumnus in 2013.
Prior to his work at Connolly Pacific, Mr. Hanson was with the U.S. Army Corps of Engineers. Mr. Hanson serves on several Federal Advisory 10 Committees as well as on boards of groups with national and regional interest to the Company and several academic advisory boards related to ocean and coastal engineering. Mr.
(“Diamond”), most recently as Senior Vice President and Chief Financial Officer since July 2018. Prior to Mr. Kornblau’s appointment as CFO, he held the roles of acting CFO since December 2017 in addition to his Vice President and Treasurer position at Diamond since January 2017. Mr.
Kornblau’s appointment as CFO, he held the roles of acting CFO since 9 December 2017 in addition to his Vice President and Treasurer position at Diamond since January 2017. Mr. Kornblau earned a Bachelor of Arts degree in Accounting from the University of Texas at Austin. Mr. Kornblau is a certified public accountant.
He was also President and COO of AMEC Inc. Americas, a subsidiary of AMEC plc, a British multinational consulting, engineering and project management company. Prior to joining AMEC, Mr. Petterson served in various executive and operational positions for Aker Maritime, Inc., the deepwater division of Aker Maritime ASA of Norway over the course of 20 years.
Prior to joining AMEC, Mr. Petterson served in various executive and operational positions for Aker Maritime, Inc., the deepwater division of Aker Maritime ASA of Norway over the course of 20 years. He spent the first nine years of his career in various positions at Norwegian Contractors, an offshore oil & gas platform contractor. Mr.
The Company views this legislation as a positive catalyst for the domestic dredging industry as it authorizes funding for critical infrastructure improvements that are needed throughout the U.S. Further, the WRDA 2022 bill authorizes studies for future water resources improvements and make modifications to previous authorizations.
WRDA 2022 featured among many other things authorization for New York and New Jersey shipping channels to be deepened to 55 feet, projects which are estimated to be approximately $6 billion. The Company views this legislation as a positive catalyst for the domestic dredging industry as it authorizes funding for critical infrastructure improvements that are needed throughout the U.S.
Schiffer 63 Senior Vice President, Chief Legal Officer & Chief Compliance Officer James J. Tastard 58 Senior Vice President, Chief Human Resources & Administrative Officer William H. Hanson 66 Senior Vice President, Market Development Lasse J. Petterson, President, Chief Executive Officer and Director Mr.
Schiffer 64 Senior Vice President, Chief Legal Officer & Chief Compliance Officer William H. Hanson 67 Senior Vice President, Market Development Lasse J. Petterson, President, Chief Executive Officer and Director Mr. Petterson has served as Chief Executive Officer (“CEO”) since May 2017 and was also named President in 2020. Mr.
Incident prevention in all areas has top priority in the Company’s business planning, in the overall conduct of its business, and in the operation and maintenance of our equipment (marine and land) and facilities. During the recent COVID-19 pandemic, the health and safety of our employees is our primary goal.
Incident prevention in all areas has top priority in the Company’s business planning, in the overall conduct of its business, and in the operation and maintenance of our equipment (marine and land) and facilities. Unions The Company is a party to numerous collective bargaining agreements in the U.S. that govern its relationships with its unionized hourly workforce.
He spent the first nine years of his career in various positions at Norwegian Contractors, an offshore oil & gas platform contractor. Mr. Petterson holds both master’s and bachelor’s degrees from the Norwegian University of Technology. 9 Scott Kornblau, Senior Vice President, Chief Financial Officer and Treasurer Mr.
Petterson holds both master’s and bachelor’s degrees from the Norwegian University of Technology. Scott Kornblau, Senior Vice President, Chief Financial Officer and Treasurer Mr. Kornblau was named Senior Vice President and Chief Financial Officer (“CFO”) when he joined the Company in October 2021 and was additionally named Treasurer in January 2022.
The annual bid market for domestic capital dredging, which includes deep port capital dredging and Gulf Coast restoration, averaged $561 million over the prior three years. 3 • Substantial need for coastal protection. Beach erosion is a recurring problem due to the normal ebb and flow of coastlines as well as the effects of severe storm activity.
The annual bid market for domestic capital dredging, which includes deep port capital dredging and Gulf Coast restoration, averaged $715 million over the three year period ended December 31, 2023. 3 • Substantial need for coastal protection.
WRDA 2022 is on a two-year renewal cycle and includes legislation that authorizes the financing of Corps’ projects for flood and hurricane protection, dredging, ecosystem restoration and other construction projects. WRDA 2022 featured among many other things authorization for New York and New Jersey shipping channels to be deepened to 55 feet, estimated at $6 billion.
Also, at the end of 2022, the Water Resources Development Act (“WRDA”) of 2022 (“WRDA 2022”), was approved by Congress and signed into law by the President. WRDA 2022 is on a two-year renewal cycle and includes legislation that authorizes the financing of Corps’ projects for flood and hurricane protection, dredging, ecosystem restoration and other construction projects.
Foreign (less than 1% of 2022 revenues). Foreign capital projects typically involve land reclamations, channel deepening and port infrastructure development. The Company targets foreign opportunities that are well suited to the Company’s equipment and where it faces reduced competition from its European competitors.
The Company targets foreign opportunities that are well suited to the Company’s equipment and where it faces reduced competition from its European competitors. Historically maintaining a presence in foreign markets has enabled the Company to diversify its customer base and take advantage of differences in global economic development.
Maintaining a presence in foreign markets has enabled the 2 Company to diversify its customer base and take advantage of differences in global economic development. Over the last two decades, the Company has performed dredging work in the Middle East, Africa, Australia, the Caribbean and Central and South America. Rivers & lakes (2% of 2022 revenues).
Over the last two decades, the Company has performed dredging work in the Middle East, Africa, Australia, the Caribbean and Central and South America. No foreign revenues were recognized during 2023. However, the Company expects to continue targeting foreign capital projects in the future.
Removed
These appropriations are expected to fund the continuation of port deepening bids in 2023 for the ports of Sabine, Freeport, Mobile, San Juan, Houston, Corpus Christi and additional phases of Norfolk. Also, at the end of the year, the Water Resources Development Act ("WRDA") of 2022 ("WRDA 2022"), was approved by Congress and signed into law by the President.
Added
In December 2023, Great Lakes was awarded another rock installation contract to perform subsea rock cable protection, a new utilization for this vessel, on an offshore wind project off the East Coast of the United States.
Removed
Several North American LNG export projects have been delayed in the past couple of years during the pandemic but with the increase in LNG prices, some of these LNG projects are currently gaining momentum and are targeting final investment decisions in 2023.
Added
Further, the WRDA 2022 bill authorizes studies for future water resources improvements and make modifications to previous authorizations. Port deepening projects are essential to maintaining safe and efficient navigation channels in ports and harbors along our coastlines.
Removed
Our commitment to health and safety reaches far beyond our employees and embraces their families, our customers, and our community. The unique nature of our business requires many of our employees to live and work in close proximity to one another.
Added
Beach erosion is a recurring problem due to the normal ebb and flow of coastlines as well as the effects of severe storm activity. Growing populations in coastal communities and vital beach tourism are drawing attention to the importance of protecting beachfront assets.
Removed
We instituted and strictly adhere to rigorous measures designed to provide our employees with a safe working environment and allow them to safely execute tasks. Relocation of our Corporate Headquarters The move of the Company’s headquarters from Oakbrook Terrace, Illinois, to Houston, Texas, was substantially completed in 2021, although some support staff members remain in Oakbrook Terrace.
Added
However, with the increase in LNG prices and sustained worldwide demand, LNG projects are expected to grow over the next several years. Additionally, as the offshore wind market develops in the U.S., port facilities will need to meet specific requirements to be able to service this industry.
Removed
While one of the objectives of the relocation was improving our ability to secure more public and private business opportunities in our core coastal areas, including the Gulf of Mexico, our relocation also provided us access to a unique talent pool that has roots in the maritime industries as well as world class engineering experience and innovation.
Added
The transaction generated gross cash proceeds of $29.5 million. Additionally in 2023, the Company retired three scows as part of its ongoing fleet modernization program. Multi Cats. In 2023, the Company took delivery of two Damen multifunctional all-purpose vessels (“Multi Cats”), the Cape Hatteras and the Cape Canaveral in 2023.
Removed
Access to research and development initiatives at Texas A&M University, boasting the only dredging-focused course of study in the United States, is only 90 miles away, and two other campuses with emphasis on coastal and offshore studies are also nearby.
Added
These vessels will greatly improve the safety and efficiency of pipe and anchor operations. The two vessels are the first Damen Multi Cats to be built in the U.S. and are fully compliant with the U.S. Coast Guard and U.S. Army Corps of Engineers stability criteria. The Company has numerous pieces of smaller equipment that support its dredging operations.
Removed
The region is known for its robust community college and technical school system that provides skilled labor and training to the maritime trades. Our new Houston location allows us to increase our engagement with other local maritime businesses, giving us the opportunity to learn and improve by sharing the best industry practices for safety, operations, and innovation.
Added
Our agreements with the Seafarers International Union expire in February 2026.
Removed
Unions The Company is a party to numerous collective bargaining agreements in the U.S. that govern its relationships with its unionized hourly workforce. However, two unions represent a large majority of our dredging employees - the International Union of Operating Engineers (“IUOE”) Local 25 and the Seafarers International Union.
Added
A member of the Asian American Journalists Association, Ms. Schiffer holds a certification in sustainability from Stanford University Graduate School of Business and a certification in Cybersecurity Governance for the Board of Directors from the Massachusetts Institute of Technology Sloan School of Management. William H. Hanson, Senior Vice President, Market Development Mr.
Removed
Schiffer earned a Bachelor of Science degree from the University of Central Arkansas and a Juris Doctor degree from Tulane University. 10 James J. Tastard, Senior Vice President, Chief Human Resources and Administrative Officer Mr. Tastard was named Senior Vice President and Chief Human Resources and Administrative Officer in October 2020.

… 5 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

58 edited+10 added−15 removed202 unchanged
Biggest changeRisk Factor Summary The following is a summary of the principal risks that could adversely affect, or have adversely affected, the Company’s business, operating results and financial condition: • Our ability to obtain and retain federal government dredging and other contracts, which is impacted by the amount of government funding for dredging and other projects and the degree to which government funding is directed to the Corps and certain other customers, which in turn could be impacted by extended federal government shutdowns or declarations of additional national emergencies; • The inability of our largest customer, the Corps, to bring projects to market, which significantly impacted our results of operations in 2022; • Our ability to qualify as an eligible bidder under government contract criteria and to compete successfully against other qualified bidders in order to obtain government dredging and other contracts; • Significant liabilities that could be imposed were we to fail to comply with government contracting regulations, including proposed regulations which may be promulgated; 11 • Cost over-runs, operating cost inflation and potential claims for liquidated damages, particularly with respect to our fixed cost contracts; • The timing of our performance on contracts and new contracts being awarded to us, which adversely impacted our results of operations in 2022; • Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather patterns, which has impacted our ability to perform projects on time and on budget in 2022; • Unforeseen delays and cost overruns related to maintenance of our existing vessels and the construction of new vessels, including potential mechanical and engineering issues, supply chain issues and unforeseen changes in environmental regulations; • Equipment or mechanical failures, which adversely impacted our results of operations in 2022; • Impacts to our supply chain for procurement of new vessel build materials or maintenance on our existing vessels, which had an adverse impact on our results of operations in 2022; • Rising costs related to inflation, particularly with the cost of materials needed for maintenance of our dredges, and increasing costs to operate and maintain aging vessels and comply with applicable regulations or standards, which significantly impacted our results of operations in 2022; • Capital and operational costs due to environmental regulations; • Market and regulatory responses to climate change, including proposed regulations concerning emissions reporting and future emissions reduction goals; • Contract penalties for any projects that are completed late; • Force majeure events, including natural disasters, pandemics and terrorists’ actions; • Changes in the amount of our estimated backlog; • Significant negative changes attributable to large, single customer contracts; • Our ability to obtain financing for the construction of new vessels, including our new offshore wind vessel; • Our inability to secure contracts to utilize our new offshore wind vessel; • Any failure to comply with Section 27 of the Jones Act provisions on coastwise trade, or if those provisions were modified or repealed; • Adverse rulings by Customs and Border Protection concerning the Jones Act or other matters impacting our business; • Fluctuations in fuel prices, particularly given our dependence on petroleum-based products; • Impacts of nationwide inflation on procurement of new build materials; • Our ability to obtain bonding or letters of credit and risks associated with draws by the surety on outstanding bonds or calls by the beneficiary on outstanding letters of credit; • The impact of COVID-19 or new worldwide infections and related responsive measures, including negative supply chain impacts; • Acquisition integration and consolidation, including transaction expenses, unexpected liabilities and operational challenges and risks; • Divestitures and discontinued operations, including retained liabilities from businesses that we sell or discontinue; • Potential penalties and reputational damage as a result of legal and regulatory proceedings; • Any liabilities imposed on us for the obligations of joint ventures, partners and subcontractors; • Increased costs of certain material used in our operations due to newly imposed tariffs; • Unionized labor force work stoppages; • Any liabilities for job-related claims under federal law, which does not provide for the liability limitations typically present under state law; • Operational hazards, including any liabilities or losses relating to personal or property damage resulting from our operations; 12 • Our ability to identify and contract with qualified MBE or DBE contractors to perform as subcontractors; • Our substantial amount of indebtedness, which makes us more vulnerable to adverse economic and competitive conditions; • Restrictions on the operation of our business imposed by financing terms and covenants; • Impacts of adverse capital and credit market conditions on our ability to meet liquidity needs and access capital; • Limitations on our hedging strategy imposed by statutory and regulatory requirements for derivative transactions; • Foreign exchange risks, in particular, as it relates to the new offshore wind vessel build; • Losses attributable to our investments in privately financed projects; • Restrictions on foreign ownership of our common stock; • Restrictions imposed by Delaware law and our charter on takeover transactions that stockholders may consider to be favorable; • Restrictions on our ability to declare dividends imposed by our financing agreements and Delaware law; • Significant fluctuations in the market price of our common stock, which may make it difficult for holders to resell our common stock when they want or at prices that they find attractive; • Changes in previously recorded net revenue and profit as a result of the significant estimates made in connection with our methods of accounting for recognized revenue; • Maintaining an adequate level of insurance coverage; • Our ability to find, attract and retain key personnel and skilled labor; • Disruptions, failures, data corruptions, cyber-based attacks or security breaches of the information technology systems on which we rely to conduct our business; and • Impairments of our goodwill or other intangible assets.
Biggest changeRisk Factor Summary The following is a summary of the principal risks that could adversely affect, or have adversely affected, the Company’s business, operating results and financial condition: • A reduction in government funding for dredging and other contracts, or government cancellation of such contracts, or the inability of the Corps to let bids to market; • Our ability to qualify as an eligible bidder under government contract criteria and to compete successfully against other qualified bidders in order to obtain government dredging and other contracts; • Cost over-runs, operating cost inflation and potential claims for liquidated damages, particularly with respect to our fixed cost contracts; • The timing of our performance on contracts and new contracts being awarded to us; • Significant liabilities that could be imposed were we to fail to comply with government contracting regulations; • Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather patterns; • Costs necessary to operate and maintain our existing vessels and the construction of new vessels; • Equipment or mechanical failures; • Pandemic, epidemic or outbreak of an infectious disease; • Disruptions to our supply chain for procurement of new vessel build materials or maintenance on our existing vessels; • Capital and operational costs due to environmental regulations; • Market and regulatory responses to climate change, including proposed regulations concerning emissions reporting and future emissions reduction goals; • Contract penalties for any projects that are completed late; • Force majeure events, including natural disasters, war and terrorists’ actions; • Changes in the amount of our estimated backlog; • Significant negative changes attributable to large, single customer contracts; • Our ability to obtain financing for the construction of new vessels, including our new offshore wind vessel; 11 • Our ability to secure contracts to utilize our new offshore wind vessel; • Unforeseen delays and cost overruns related to the construction of our new vessels; • Any failure to comply with the Jones Act provisions on coastwise trade, or if those provisions were modified or repealed; • Fluctuations in fuel prices, particularly given our dependence on petroleum-based products; • Impacts of nationwide inflation on procurement of new build and vessel maintenance materials; • Our ability to obtain bonding or letters of credit and risks associated with draws by the surety on outstanding bonds or calls by the beneficiary on outstanding letters of credit; • Acquisition integration and consolidation, including transaction expenses, unexpected liabilities and operational challenges and risks; • Divestitures and discontinued operations, including retained liabilities from businesses that we sell or discontinue; • Potential penalties and reputational damage as a result of legal and regulatory proceedings; • Any liabilities imposed on us for the obligations of joint ventures, partners and subcontractors; • Increased costs of certain material used in our operations due to newly imposed tariffs; • Unionized labor force work stoppages; • Any liabilities for job-related claims under federal law, which does not provide for the liability limitations typically present under state law; • Operational hazards, including any liabilities or losses relating to personal or property damage resulting from our operations; • Our ability to identify and contract with qualified MBE or DBE contractors to perform as subcontractors; • Our substantial amount of indebtedness, which makes us more vulnerable to adverse economic and competitive conditions; • Restrictions on the operation of our business imposed by financing terms and covenants; • Impacts of adverse capital and credit market conditions on our ability to meet liquidity needs and access capital; • Limitations on our hedging strategy imposed by statutory and regulatory requirements for derivative transactions; • Foreign exchange risks, in particular, as it relates to the new offshore wind vessel build; • Losses attributable to our investments in privately financed projects; • Restrictions on foreign ownership of our common stock; • Restrictions imposed by Delaware law and our charter on takeover transactions that stockholders may consider to be favorable; • Restrictions on our ability to declare dividends imposed by our financing agreements or Delaware law; • Significant fluctuations in the market price of our common stock, which may make it difficult for holders to resell our common stock when they want or at prices that they find attractive; • Changes in previously recorded net revenue and profit as a result of the significant estimates made in connection with our methods of accounting for recognized revenue; • Maintaining an adequate level of insurance coverage; • Our ability to find, attract and retain key personnel and skilled labor; • Disruptions, failures, data corruptions, cyber-based attacks or security breaches of the information technology systems on which we rely to conduct our business; and • Impairments of our goodwill or other intangible assets. 12 Risks Related to our Business A reduction in government funding for dredging or other contracts, or government cancellation of such contracts, or the inability of the Corps to let bids to market could materially adversely affect our business operations, revenues and profits.
In connection with the sale of our historical demolition business, we were obligated to keep in place the surety bonds on pending demolition projects for the period required under the respective contract for a project.
In connection with the sale of our historical demolition business, we were obligated to keep in place the surety bonds on pending demolition projects for the period required under the respective contract for a project.
We have remediated known releases and discharges as deemed necessary, but there can be no guarantee that additional costs will not be incurred if, for example, third party claims arise or new conditions are discovered. Our projects may involve excavation, remediation, demolition, transportation, management and disposal of hazardous waste and other regulated materials.
We have remediated known releases and discharges as deemed necessary, but there can be no guarantee that additional costs will not be incurred if, for example, third party claims arise or new conditions are discovered. 16 Our projects may involve excavation, remediation, demolition, transportation, management and disposal of hazardous waste and other regulated materials.
If we were to conclude that a future write-down of goodwill or other intangible assets is necessary, then we would be required to record a non-cash charge against earnings, which, in turn, could have a material adverse effect on our business, results of operations or financial condition. Item 1B. Unresolv ed Staff Comments. None. 29
If we were to conclude that a future write-down of goodwill or other intangible assets is necessary, then we would be required to record a non-cash charge against earnings, which, in turn, could have a material adverse effect on our business, results of operations or financial condition. Item 1B. Unresolv ed Staff Comments. None.
In addition, our inability to qualify as an eligible bidder, or to compete successfully when bidding for certain government contracts and to win those contracts, could materially adversely affect our business, operations, revenues and profits. Our significant number of fixed-price contracts subjects us to risks associated with cost over-runs, operating cost inflation and potential claims for liquidated damages.
In addition, our inability to qualify as an eligible bidder, or to compete successfully when bidding for certain government contracts and to win those contracts, could materially adversely affect our business, operations, revenues and profits. 13 Our significant number of fixed-price contracts subjects us to risks associated with cost over-runs, operating cost inflation and potential claims for liquidated damages.
Additionally, the increased cost of steel and other materials may adversely impact the cost of general maintenance and/or repairs of our existing vessels. 20 An inability to obtain bonding or letters of credit would limit our ability to obtain future contracts, which could, along with any draws on existing arrangements, adversely affect our business, operating results, cash flows and financial condition.
Additionally, the increased cost of steel and other materials may adversely impact the cost of general maintenance and/or repairs of our existing vessels. An inability to obtain bonding or letters of credit would limit our ability to obtain future contracts, which could, along with any draws on existing arrangements, adversely affect our business, operating results, cash flows and financial condition.
To the extent we do not have adequate surplus or net profits, we will be prohibited from paying dividends. 27 Significant fluctuations in the market price of our common stock may affect the ability of holders to resell our common stock at prices that they find attractive. The price of our common stock on the NASDAQ Global Market constantly changes.
To the extent we do not have adequate surplus or net profits, we will be prohibited from paying dividends. Significant fluctuations in the market price of our common stock may affect the ability of holders to resell our common stock at prices that they find attractive. The price of our common stock on the NASDAQ Global Market constantly changes.
Project financing may also involve the use of real estate, 26 environmental, wetlands or similar credits. If a project is unable to obtain other financing on terms acceptable to it in amounts sufficient to repay or redeem our investments, we could incur losses on our investments and any related contractual receivables.
Project financing may also involve the use of real estate, environmental, wetlands or similar credits. If a project is unable to obtain other financing on terms acceptable to it in amounts sufficient to repay or redeem our investments, we could incur losses on our investments and any related contractual receivables.
If we were to significantly underestimate the costs on one or more significant contracts, the resulting losses could have a material adverse effect on our business, operating results, cash flows or financial condition. 14 Our quarterly and annual operating results may vary significantly based on the timing of contract awards and performance.
If we were to significantly underestimate the costs on one or more significant contracts, the resulting losses could have a material adverse effect on our business, operating results, cash flows or financial condition. Our quarterly and annual operating results may vary significantly based on the timing of contract awards and performance.
The inability to obtain favorable financing may also impact our ability to bring the new vessels into service within the timeline anticipated by the Company, which may have an adverse effect on our business, financial position and/or results of operations. Inability to secure contracts to utilize new offshore wind vessel.
The inability to obtain favorable financing may also impact our ability to bring the new vessels into service within the timeline anticipated by the Company, which may have an adverse effect on our business, financial position and/or results of operations. 18 Inability to secure contracts to utilize new offshore wind vessel.
An adverse ruling in this suit, as well as other adverse letter rulings by CBP, may adversely impact our competitive advantage in the United States offshore wind industry, which could have a material adverse effect on our business, results of operations, cash flows or financial condition.
An adverse ruling in this suit, as well as other 19 adverse letter rulings by CBP, may adversely impact our competitive advantage in the United States offshore wind industry, which could have a material adverse effect on our business, results of operations, cash flows or financial condition.
Delays may also occur as a result of a shipyard giving priority to other customers. A significant delay in the construction of new vessels or a shipyard’s 19 inability to perform under the construction contract could negatively impact the Company’s ability to fulfill contract commitments and to realize timely revenues with respect to vessels under construction.
Delays may also occur as a result of a shipyard giving priority to other customers. A significant delay in the construction of new vessels or a shipyard’s inability to perform under the construction contract could negatively impact the Company’s ability to fulfill contract commitments and to realize timely revenues with respect to vessels under construction.
If we subsequently fail to reach our goals for the minimum MBE and/or DBE participation, we may be held responsible for breach of contract, which may include restrictions on our ability to bid on future projects as well as monetary damages.
If we subsequently fail to reach our goals for the minimum MBE and/or DBE participation, we may be held responsible for breach of contract, which may include restrictions on our ability to bid on 23 future projects as well as monetary damages.
Given the risks associated with the variables in these types of estimates, it is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded net revenues and profits.
Given the risks associated with the variables in these types of estimates, it 27 is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded net revenues and profits.
A significant disruption or failure could have a material adverse effect on our business, operating results, cash flows or financial condition. Impairments to our goodwill or other intangible assets could negatively affect our financial condition and results of operations.
A significant disruption or failure could have a material adverse effect on our business, operating results, cash flows or financial condition. 28 Impairments to our goodwill or other intangible assets could negatively affect our financial condition and results of operations.
Thus, it is possible that we are subject to liability exposure arising out of qui tam actions. 15 Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather patterns has and may continue to impact our ability to perform projects on time and on budget and therefore could materially adversely affect our business operations, revenues and profits.
Thus, it is possible that we are subject to liability exposure arising out of qui tam actions. 14 Project delays related to the increasingly negative impacts of climate change or other unusual, non-historical weather patterns has and may continue to impact our ability to perform projects on time and on budget and therefore could materially adversely affect our business operations, revenues and profits.
As noted above, if there should be a default (or alleged default) triggered under any of the surety bonds for the historical demolition business, it could have a material adverse effect on our ability to obtain bonds and on our business, results of operations, cash flows or financial condition. 22 During the second quarter of 2019, the Company completed the sale of the historical environmental & infrastructure business.
As noted above, if there should be a default (or alleged default) triggered under any of the surety bonds for the historical demolition business, it could have a material adverse effect on our ability to obtain bonds and on our business, results of operations, cash flows or financial condition. 21 During the second quarter of 2019, the Company completed the sale of the historical environmental & infrastructure business.
Our business could suffer in the event of a work stoppage by our unionized labor force. We are a party to numerous collective bargaining agreements in the U.S. that govern our industry’s relationships with our unionized hourly workforce. Two unions represent approximately 74% of our hourly dredging employees—the IUOE Local 25 and the Seafarers International Union.
Our business could suffer in the event of a work stoppage by our unionized labor force. We are a party to numerous collective bargaining agreements in the U.S. that govern our industry’s relationships with our unionized hourly workforce. Two unions represent approximately 69% of our hourly dredging employees—the IUOE Local 25 and the Seafarers International Union.
If we choose, or are required, to pay our subcontractors for work performed for customers who fail to pay, or delay paying us for the related work, we could experience a material decrease in profitability and liquidity. 23 New tariffs have increased our costs and could adversely affect our business operations, revenues and profits.
If we choose, or are required, to pay our subcontractors for work performed for customers who fail to pay, or delay paying us for the related work, we could experience a material decrease in profitability and liquidity. 22 New tariffs have increased our costs and could adversely affect our business operations, revenues and profits.
Equipment or mechanical failures could result in increased costs, project delays and reduced revenues. The successful performance of contracts requires a high degree of reliability of our vessels, barges and other equipment. The average age of our marine fleet as of December 31, 2022 was 26 years.
Equipment or mechanical failures could result in increased costs, project delays and reduced revenues. The successful performance of contracts requires a high degree of reliability of our vessels, barges and other equipment. The average age of our marine fleet as of December 31, 2023 was 25 years.
Delays, such which we experienced in 2022, may affect our ability to perform on our projects or increase the cost of our performing certain projects, and may result in our inability to perform certain projects on time and on budget.
Delays, such as those we experienced in 2022, may affect our ability to perform on our projects or increase the cost of our performing certain projects, and may result in our inability to perform certain projects on time and on budget.
Year Ended December 31, 2022 2021 2020 Federal government backlog (in US $1,000) $ 290,694 $ 341,768 $ 390,345 Percentage of backlog from federal government 77 % 62 % 70 % Although we do not currently have any international projects, if we were to engage in a new foreign project, we may have backlog with foreign governments that use local laws and regulations to change terms of a contract in backlog or to limit our ability to receive payment on a timely basis.
Year Ended December 31, 2023 2022 2021 Federal government backlog (in US $1,000) $ 350,242 $ 290,694 $ 341,768 Percentage of backlog from federal government 34 % 77 % 62 % Although we do not currently have any international projects, if we were to engage in a new foreign project, we may have backlog with foreign governments that use local laws and regulations to change terms of a contract in backlog or to limit our ability to receive payment on a timely basis.
Revenues related to dredging contracts with federal agencies or companies operating under contracts with federal agencies and the percentage as a total of dredging revenue for the years ended December 31, 2022, 2021 and 2020 were as follows: Year Ended December 31, 2022 2021 2020 Federal government revenue (in US $1,000) $ 431,705 $ 568,980 $ 582,949 Percent of revenue from federal government 67 % 78 % 79 % Amounts spent by the federal government on dredging are subject to the budgetary and legislative processes.
Revenues related to dredging contracts with federal agencies or companies operating under contracts with federal agencies and the percentage as a total of dredging revenue for the years ended December 31, 2023, 2022 and 2021 were as follows: Year Ended December 31, 2023 2022 2021 Federal government revenue (in US $1,000) $ 438,790 $ 431,705 $ 568,980 Percent of revenue from federal government 74 % 67 % 78 % Amounts spent by the federal government on dredging are subject to the budgetary and legislative processes.
Depending on the specific circumstances of any particular force majeure event, or if we are unable to react quickly to such an event, our operations may be affected significantly, our productivity may be affected, our ability to complete projects in accordance with our contractual obligations may be affected, our payments from customers may be delayed and we may incur increased labor and materials costs, which could have a negative impact on our financial condition, relationships with customers or suppliers, and our reputation.
Depending on the specific circumstances of any particular force majeure event, or if we are unable to react quickly to such an event, our operations may be affected significantly, our productivity may be affected, our ability to complete projects in accordance with our contractual obligations may be affected, our payments from customers may be delayed and we may incur increased labor and materials costs, which could have a negative impact on our financial condition, relationships with customers or suppliers, and our reputation. 17 The amount of our estimated backlog may change and may not be indicative of future revenues.
Contract revenue is recorded over time based on estimates which we develop from information known to us at the time of recording, but which may change. The cumulative impact of revisions to estimates is reflected in the period in which these changes are experienced or become known.
The majority of our work is performed on a fixed-price basis. Contract revenue is recorded over time based on estimates which we develop from information known to us at the time of recording, but which may change. The cumulative impact of revisions to estimates is reflected in the period in which these changes are experienced or become known.
We have entered into bonding agreements with the sureties, or the “Sureties”, pursuant to which the Sureties issue bid bonds, performance bonds and payment bonds, and provide guarantees required by us in the day-to-day operations of our dredging business. The Company currently has outstanding bonds with Argo, Chubb, Travelers, and Liberty.
We have entered into bonding agreements with the sureties, or the “Sureties”, pursuant to which the Sureties issue bid bonds, performance bonds and payment bonds, and provide guarantees required by us in the day-to-day operations of our dredging business.
The prices of steel and other materials to build and develop new vessels, as well as to maintain and/or repair our existing vessels, fluctuate based on market events outside of our control, which had an adverse effect on our results of operations in 2022.
The prices of steel and other materials to build and develop new vessels, as well as to maintain and/or repair our existing vessels, fluctuate based on market events outside of our control. This had an adverse effect on our results of operations in 2022, however did not have a material adverse effect on our results of operations in 2023.
If the shipyards with which we contract are affected, regulatory drydocking and repairs and general maintenance of our vessels, as well as new construction, may be delayed and we may incur increased labor and materials costs.
Our ability to complete projects in accordance with our contractual obligations may be affected, and we may incur increased labor and materials costs. If the shipyards with which we contract are affected, regulatory drydocking and repairs and general maintenance of our vessels, as well as new construction, may be delayed and we may incur increased labor and materials costs.
These provisions could have the effect of delaying, deferring or preventing a change in control of our company, discourage others from making tender offers for our shares, lower the market price of our stock or impede the ability of our stockholders to change our management, even if such changes would be beneficial to our stockholders.
These provisions could have the effect of delaying, deferring or preventing a change in control of our company, discourage others from making tender offers for our shares, lower the market price of our stock or impede the ability of our stockholders to change our management, even if such changes would be beneficial to our stockholders. 26 Our stockholders may not receive dividends because of restrictions in our debt agreements or Delaware law.
We expect that the severity of unusual storms and weather patterns will continue to fluctuate and may continue to adversely impact our ability to complete projects on time and on budget and therefore could materially adversely affect our business operations, revenues and profits.
While we did not experience any significant delays in 2023, we expect that the severity of unusual storms and weather patterns will continue to fluctuate and may continue to adversely impact our ability to complete projects on time and on budget and therefore could materially adversely affect our business operations, revenues and profits.
At any given time, we are subject to Jones Act personal injury claims and claims from general contractors and other third parties for personal injuries. Our insurance policies may not be adequate to protect us from liabilities that we incur in our business.
At any given time, we are subject to Jones Act personal injury claims and claims from general contractors and other third parties for personal injuries. Our insurance policies may not be adequate to protect us from liabilities that we incur in our business. We may not be able to obtain similar levels of insurance on reasonable terms, or at all.
In addition, a significant amount of our backlog (77% as of December 31, 2022) relates to federal government contracts, which can be canceled at any time without penalty to the government, subject, in most cases, to our contractual right to recover our actual committed costs and profit on work performed up to the date of cancellation. 18 Below is our backlog from federal government contracts as of December 31, 2022, 2021, and 2020 and the percentage of those contracts to total backlog as of the same date.
In addition, a significant amount of our backlog (34% as of December 31, 2023) relates to federal government contracts, which can be canceled at any time without penalty to the government, subject, in most cases, to our contractual right to recover our actual committed costs and profit on work performed up to the date of cancellation.
Loss of a single customer contract could significantly decrease revenue. Prospective customers may be incentivized to use another dredging company other than the Company. The Company could lose future contracts for work to competitors or could be forced to accept lower margins on contracts.
As of December 31, 2023, approximately 50% of the Company’s backlog is from two private customers. Loss of a single customer contract could significantly decrease revenue. Prospective customers may be incentivized to use another dredging company other than the Company. The Company could lose future contracts for work to competitors or could be forced to accept lower margins on contracts.
The primary foreign currencies to which the Company has exposure are the Bahraini Dinar and the Euro. We have unhedged foreign currency exposure related to the new inclined fall-pipe vessel for subsea rock installation build, in particular, as it relates to the procurement of steel for this build.
The primary foreign currencies to which the Company has exposure are the Bahraini Dinar and the Euro. We have unhedged foreign currency exposure related to the 25 new inclined fall-pipe vessel for subsea rock installation build.
The average age of our more significant vessels as of December 31, 2022, by equipment type, is as follows: Type of Equipment Quantity Average Age in Years Hydraulic Dredges 8 44 Hopper Dredges 4 27 Mechanical Dredges 5 50 Unloaders 1 39 Drillboats 1 39 Material and Other Barges 83 22 Total 102 26 Remaining economic life has not been presented, because it is not reasonably quantifiable.
The average age of our more significant vessels as of December 31, 2023, by equipment type, is as follows: Type of Equipment Quantity Average Age in Years Hydraulic Dredges 8 45 Hopper Dredges 5 23 Mechanical Dredges 4 35 Unloaders 1 40 Drillboats 1 40 Material and Other Barges 86 22 Total 105 25 Remaining economic life has not been presented, because it is not reasonably quantifiable.
The covenants in the credit agreement governing our senior revolving credit facility and the indenture governing our senior notes, subject to specified exceptions and to varying degrees, restrict our ability to, among other things: • incur additional indebtedness; • create, incur, assume or permit to exist any liens; • enter into sale and leaseback transactions; • enter into operating leases; • make investments, loans and advancements; • merge, consolidate or reorganize with, or dispose of all or substantially all assets to, a third party; • sell assets; • make acquisitions; • pay dividends; • enter into transactions with affiliates; • prepay or redeem other indebtedness; and • issue certain types of capital stock. 25 These restrictions may interfere with our ability to obtain financings or to engage in other business activities, which could have a material adverse effect on our results of operations, cash flows or financial condition.
The covenants in the credit agreement governing our senior revolving credit facility and the indenture governing our senior notes, subject to specified exceptions and to varying degrees, restrict our ability to, among other things: • incur additional indebtedness; • create, incur, assume or permit to exist any liens; • enter into sale and leaseback transactions; • enter into operating and finance leases; • make investments, loans and advancements; • merge, consolidate or reorganize with, or dispose of all or substantially all assets to, a third party; • sell assets; • make acquisitions; 24 • pay dividends; • enter into transactions with affiliates; • prepay or redeem other indebtedness; and • issue certain types of capital stock.
We 28 may not be able to obtain similar levels of insurance on reasonable terms, or at all. Our inability to obtain such insurance coverage at acceptable rates or at all could have a material adverse effect on our business, results of operations, cash flows or financial condition.
Our inability to obtain such insurance coverage at acceptable rates or at all could have a material adverse effect on our business, results of operations, cash flows or financial condition.
We have experienced, and may continue to experience, project delays and supply chain issues as a result of COVID-19 and its variants. In addition, certain of our contractors, such as shipyards and subcontractors on projects, have experienced and may continue to experience personnel issues, which might delay our new build program and maintenance of our vessels.
In addition, certain of our contractors, such as shipyards and subcontractors on projects, have experienced and may continue to experience personnel issues, which might delay our new build program and maintenance of our vessels.
To the extent we are responsible for monetary damages, the total costs of the project could exceed our original estimates, we could experience reduced profits or a loss for that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity. 24 Risks Related to our Financing We have substantial indebtedness, which makes us more vulnerable to adverse economic and competitive conditions.
To the extent we are responsible for monetary damages, the total costs of the project could exceed our original estimates, we could experience reduced profits or a loss for that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity.
The amount of our estimated backlog may change and may not be indicative of future revenues. Our contract backlog represents our estimate of the revenues that we will realize under the portion of the contracts remaining to be performed.
Our contract backlog represents our estimate of the revenues that we will realize under the portion of the contracts remaining to be performed.
The failure of certain contractual protections to protect us from incurring such liability, such as staying out of the ownership chain for hazardous waste and other regulated materials and securing indemnification obligations from our customers or subcontractors, could have a material adverse effect on our business, results of operations, revenues or profits. 17 Environmental requirements have generally become more stringent over time, for example in the areas of air emissions controls for vessels and ballast treatment and handling.
The failure of certain contractual protections to protect us from incurring such liability, such as staying out of the ownership chain for hazardous waste and other regulated materials and securing indemnification obligations from our customers or subcontractors, could have a material adverse effect on our business, results of operations, revenues or profits.
In 2022, our business was adversely impacted by the inability of the Corps to let bids to market, and that inability may continue and may adversely impact our results of operations. Additionally, most of the projects the Corps did bring to market in 2022 were lower margin maintenance projects.
In 2022, our business was adversely impacted by the inability of the Corps to let bids to market, and that inability may continue and may adversely impact our results of operations. If the Corps does not bring higher margin capital projects to market, it may adversely impact our results of operations.
Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. The principal sources of our liquidity are cash flow from operations and borrowings under our senior revolving credit facility.
We need liquidity to pay our operating and capital expenses, interest on our debt and remaining obligations on our new build program. Without sufficient liquidity, we will be forced to curtail our operations, and our business will suffer. The principal sources of our liquidity are cash flow from operations and borrowings under our senior revolving credit facility.
Our stockholders may not receive dividends because of restrictions in our debt agreements or Delaware law. Our ability to pay dividends is restricted by the agreements governing our debt, including our Amended Credit Agreement, our bonding agreements and the indenture governing our senior unsecured notes.
Our ability to pay dividends is restricted by the agreements governing our debt, including our Amended Credit Agreement, our bonding agreements and the indenture governing our senior unsecured notes.
The Company’s master and ancillary contracts with IUOE Local 25 expire in September 2024. Our agreements with the Seafarers International Union will expire on February 28, 2023, however, negotiations began in January for a renewal agreement to be effective on March 1, 2023.
The Company’s master and ancillary contracts with IUOE Local 25 expire in September 2024 and negotiations will begin in the second quarter of 2024 for a renewal agreement. Our agreements with the Seafarers International Union expire in February 2026.
An extended shutdown may result in us incurring substantial costs without reimbursement under our contracts and the delay or cancellation of key projects, which could have a material adverse effect on our revenue and operating results. 13 In addition, potential contract cancellations, modifications, protests, suspensions or terminations may arise from resolution of these issues and could cause our revenues, profits and cash flows to be lower.
An extended shutdown may result in us incurring substantial costs without reimbursement under our contracts and the delay or cancellation of key projects, which could have a material adverse effect on our revenue and operating results.
Overall, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business.
Overall, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business. We have experienced, and may continue to experience, project delays and supply chain issues as a result of COVID-19 and its variants.
If internal sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional financing on favorable terms, or at all. Regulatory requirements for derivative transactions could adversely impact our ability to hedge interest rate, currency or commodity risks.
If internal sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional financing on favorable terms, or at all.
However, in the future, other defaults (or alleged defaults) triggered under any of our surety bonds could have a material adverse effect on our business, results of operations, cash flows or financial condition. We may be adversely impacted by global health concerns.
However, in the future, other defaults (or alleged defaults) triggered under any of our surety bonds could have a material adverse effect on our business, results of operations, cash flows or financial condition. 20 Acquisitions involve integration, consolidation and strategic risks and may involve significant transaction expenses and unexpected liabilities, which could adversely affect our business and results of operations.
Breakdowns not only add to the costs of executing a project, but they can also delay the completion of subsequent contracts, which are scheduled to utilize the same assets. We operate a scheduled maintenance program in order to keep all assets in good working order, but despite this, breakdowns can and do occur, resulting in loss of revenue.
Breakdowns not only add to the costs of executing a project, but they can also delay the completion of subsequent contracts, which are scheduled to utilize the same assets.
The U.S. government and various state, local and foreign government agencies conduct rigorous competitive processes for awarding many contracts. Some contracts include multiple award task order contracts in which several contractors are selected as eligible bidders for future work.
Some contracts include multiple award task order contracts in which several contractors are selected as eligible bidders for future work.
We recognize revenue on our projects using generally accepted accounting principles in the United States (“GAAP”) including guidance from Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606) subsequent to year-end December 31, 2017. The majority of our work is performed on a fixed-price basis.
General Risk Factors Our methods of accounting for recognizing revenue involve significant estimates and could result in a change in previously recorded revenue and profit. We recognize revenue on our projects using generally accepted accounting principles in the United States (“GAAP”) including guidance from Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606).
If the Corps does not bring higher margin capital projects to market, it may adversely impact our results of operations. Our inability to qualify as an eligible bidder for government contracts or to compete successfully with other qualified bidders for certain contracts could materially adversely affect our business operations, revenues and profits.
Our inability to qualify as an eligible bidder for government contracts or to compete successfully with other qualified bidders for certain contracts could materially adversely affect our business operations, revenues and profits. The U.S. government and various state, local and foreign government agencies conduct rigorous competitive processes for awarding many contracts.
Should we need additional funds or to refinance our existing indebtedness, we may not be able to obtain such additional funds or refinancing on acceptable terms, or at all. We need liquidity to pay our operating and capital expenses, interest on our debt and remaining obligations on our new build program.
The domestic and worldwide capital and credit markets may experience significant volatility, disruptions and dislocations with respect to price and credit availability. Should we need additional funds or to refinance our existing indebtedness, we may not be able to obtain such additional funds or refinancing on acceptable terms, or at all.
We currently have a substantial amount of indebtedness. As of December 31, 2022, we had indebtedness of $325.0 million, consisting of our senior subordinated notes. As of December 31, 2022, we had no borrowings on our revolving credit facility and approximately $16.4 million of undrawn letters of credit, leaving $245.7 million of additional borrowing capacity under our revolving credit facility.
Risks Related to our Financing We have substantial indebtedness, which makes us more vulnerable to adverse economic and competitive conditions. We currently have a substantial amount of indebtedness. As of December 31, 2023, we had indebtedness of $415.0 million, consisting of our senior subordinated notes and borrowings on our revolving credit facility.
These figures exclude contingent obligations, including $0.7 billion of performance bonds outstanding under the Company’s agreements with the Sureties and other bonding agreements.
As of December 31, 2023, we had approximately $49.8 million of undrawn letters of credit, leaving $122.3 million of additional borrowing capacity under our revolving credit facility. These figures exclude contingent obligations, including $960.9 million of performance bonds outstanding under the Company’s agreements with the Sureties and other bonding agreements.
For example, we experienced an unexpected engine failure on our dredge Terrapin Island , which resulted in a negative impact to our results of operations in 2022. A pandemic, epidemic or outbreak of an infectious disease affecting our markets or impacting our facilities or suppliers could adversely impact our business.
We operate a scheduled maintenance program in order to keep all assets in good working order, but despite this, breakdowns can and do occur, resulting in loss of revenue. 15 A pandemic, epidemic or outbreak of an infectious disease affecting our markets or impacting our facilities or suppliers could adversely impact our business.
Risks Related to our Business A reduction in government funding for dredging or other contracts, or government cancellation of such contracts, or the inability of the Corps to let bids to market could materially adversely affect our business operations, revenues and profits. A substantial portion of our revenue is derived from federal government contracts, particularly dredging contracts.
A substantial portion of our revenue is derived from federal government contracts, particularly dredging contracts.
Removed
The only parties privy to the information in the complaint are the complainant, the U.S. government and the court. Therefore, it is possible that qui tam actions have been filed against us and that we are not aware of such actions or have been ordered by the court not to discuss them until the seal is lifted.
Added
The Company did not experience any material adverse effect on its operations in 2023 as a result of the U.S. federal government operating under a continuing resolution until December 2022. Currently, the government is operating under a continuing resolution until the 2024 budget is approved.
Removed
Thus, it is possible that we are subject to liability exposure arising out of qui tam actions. If we fail to comply with government contracting regulations, we could be subject to significant potential liabilities and loss of revenue. Our contracts with federal, state, local and foreign governmental customers are subject to various procurement regulations and contract provisions.
Added
In addition, potential contract cancellations, modifications, protests, suspensions or terminations may arise from resolution of these issues and could cause our revenues, profits and cash flows to be lower.
Removed
These regulations also subject us to examinations by government auditors and investigators, from time to time, to ensure compliance and to review costs. Violations of government contracting regulations could result in the imposition of civil and criminal penalties, which could include termination of contracts, forfeiture of profits, imposition of payments and fines and suspension or debarment from future government contracting.
Added
Environmental requirements have generally become more stringent over time, for example in the areas of air emissions controls for vessels and ballast treatment and handling.
Removed
If we fail to continue to qualify for or are suspended from work under a government contract for any reason, we could suffer a material adverse effect on our business, operating results, cash flows or financial condition.
Added
Below is our backlog from federal government contracts as of December 31, 2023, 2022, and 2021 and the percentage of those contracts to total backlog as of the same date.
Removed
In addition, we may be subject to litigation brought by private individuals on behalf of the government relating to our government contracts, referred to in this annual report as “qui tam” actions, which could include claims for up to treble damages. Qui tam actions are sealed by the court at the time of filing.
Added
Towards the end of 2023, the Company saw several cancellations of Power Purchase Agreements (“PPA’s”) that were entered into in 2018 and 2019, as inflation and interest rate hikes eroded the profitability of these PPA’s. This led our clients, Equinor and bp, to terminate our Empire Wind II contract and reset their plan for the related wind farm.
Removed
If an infectious disease were to have a widespread outbreak at one or more of our vessels or 16 facilities, our operations may be affected significantly, our productivity may be affected, key personnel necessary to conduct our operations or replacement crew may be unavailable, our ability to complete projects in accordance with our contractual obligations may be affected and we may incur increased labor and materials costs.
Added
Great Lakes may have the opportunity to re-tender this project, if Equinor re-bids their PPA for this development. If there are additional cancellations of PPA’s, the Company’s ability to utilize its new offshore wind vessel may be adversely impacted.
Removed
In 2022, we experienced supply chain disruptions which led to a delay in the delivery of our multifunctional all-purpose vessels (“multicats”). Our ability to complete projects in accordance with our contractual obligations may be affected, and we may incur increased labor and materials costs.
Added
This challenge was rejected at the District Court level and the Company has appealed to the 5th Circuit.
Removed
If another pandemic, epidemic or outbreak of an infectious disease or other public health crisis were to affect our markets or facilities or those of our suppliers, our business could be adversely affected.
Added
These restrictions may interfere with our ability to obtain financings or to engage in other business activities, which could have a material adverse effect on our results of operations, cash flows or financial condition. Adverse capital and credit market conditions may affect our ability to access capital and meet liquidity needs.
Removed
Another pandemic could cause disruptions in and restrictions on our ability to travel, and in the future these disruptions and restrictions could restrict our ability to perform work for future projects in different locations.
Added
In March 2023, S&P Global Ratings (“S&P”) downgraded our corporate credit rating to CCC+ with a negative outlook from B with a stable outlook, and Moody’s Investor Services (“Moody’s”) downgraded our corporate credit rating to B3 with a negative outlook from B2 with a stable outlook. These credit ratings are below investment grade and could raise our cost of financing.
Removed
If the shipyards with which we contract were affected by a new outbreak of infectious disease, repairs of our vessels as well as new construction may be delayed and we may incur increased labor and materials costs.
Added
As a consequence, we may not be able to issue additional debt in amounts and/or with terms that we consider to be reasonable. One or more of these occurrences could limit our ability to pursue other business opportunities. Regulatory requirements for derivative transactions could adversely impact our ability to hedge interest rate, currency or commodity risks.
Removed
In addition, we may experience difficulties with certain suppliers or with vendors in their supply chains, and our business could be affected if we become unable to procure essential supplies or services in adequate quantities and at acceptable prices.
Removed
Our clients, which are the Corps, private clients and other federal, state or local agencies, may be impacted by a pandemic or other health emergency, and if prolonged, these impacts may lead to cancelations or delays in projects.

… 3 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeAs of December 31, 2022, the Company owns or leases the following additional facilities: Location Type of Facility Size Leased or Owned Staten Island, NY Yard 4.4 Acres Owned Morgan City, LA Yard 6.4 Acres Owned Norfolk, VA Yard 15.3 Acres Owned Norfolk, VA Yard 16.2 Acres Leased Little Rock, AR Yard 11.8 Acres Leased Cape Girardeau, MO Office 726 Square feet Owned Cape Girardeau, MO Storage 7,200 Square feet Owned Cape Girardeau, MO Yard 18.4 Acres Owned Jacksonville, FL Office 4,171 Square feet Leased Oakbrook Terrace, IL Office 44,219 Square feet Leased
Biggest changeAs of December 31, 2023, the Company owns or leases the following additional facilities: Location Type of Facility Size Leased or Owned Staten Island, NY Yard 4.4 Acres Owned Morgan City, LA Yard 6.4 Acres Owned Norfolk, VA Yard 15.3 Acres Owned Norfolk, VA Yard 16.2 Acres Leased Little Rock, AR Yard 11.8 Acres Leased Cape Girardeau, MO Office 726 Square feet Owned Cape Girardeau, MO Storage 7,200 Square feet Owned Cape Girardeau, MO Yard 18.4 Acres Owned Jacksonville, FL Office 4,171 Square feet Leased Oakbrook Terrace, IL Office 44,219 Square feet Leased

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed4 unchanged
Biggest changeThe graph assumes initial investments of $100 each on December 31, 2017, in GLDD stock (assuming reinvestment of all dividends paid during the period), the NASDAQ Composite Index and the peer group companies, collectively. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Great Lakes Dredge & Dock Corp $ 100.00 $ 122.59 $ 209.81 $ 243.89 $ 291.11 $ 110.19 Peer Average (see below) 100.00 81.72 93.43 124.97 149.68 142.66 NASDAQ Composite Index 100.00 96.12 129.97 186.69 226.63 151.61 31 The peer group in the graph above is composed of the following member companies: Company Ticker Aegion Corporation (prior to acquisition by New Mountain Capital, LLC on May 17, 2021) AEGN Ameresco AMRC Argan, Inc.
Biggest changeThe graph assumes initial investments of $100 each on December 31, 2018, in GLDD stock (assuming reinvestment of all dividends paid during the period), the NASDAQ Composite Index and the peer group companies, collectively. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Great Lakes Dredge & Dock Corp $ 100.00 $ 171.15 $ 198.94 $ 237.46 $ 89.88 $ 116.01 Peer Average (see below) 100.00 113.90 143.93 159.34 168.41 301.90 NASDAQ Composite Index 100.00 135.23 194.24 235.78 157.74 226.24 31 The peer group in the graph above is composed of the following member companies: Company Ticker Ameresco AMRC Argan, Inc.
AGX Badger Daylighting Ltd BADFF Construction Partners Inc ROAD Helix Energy Solutions group, Inc. HLX Helmerich & Payne, Inc. HP Hill International HIL IES Holdings IESC Infrastructure & Energy Alternatives (prior to acquisition by MasTec Inc on October 7, 2022) IEA Limbach Holdings LMB Logistec Corporation LGT Matrix Service Company MTRX Mistras Group MG MYR Group Inc.
AGX Badger Infrastructure Solutions Ltd. BADFF Construction Partners Inc ROAD Helix Energy Solutions Group, Inc. HLX Helmerich & Payne, Inc. HP Hill International, Inc. HIL IES Holdings Inc. IESC Infrastructure & Energy Alternatives (prior to acquisition by MasTec Inc on October 7, 2022) IEA Limbach Holdings, Inc. LMB Logistec Corporation LGT Matrix Service Company MTRX Mistras Group, Inc.
Accordingly, the Company cannot ensure the size of any such dividend or that the Company will pay any future dividend. Issuer Purchases of Equity Securities The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2022. Item 6. [ Reserved] 32
Accordingly, the Company cannot ensure the size of any such dividend or that the Company will pay any future dividend. Issuer Purchases of Equity Securities The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2023. Item 6. [ Reserved] Not applicable. 32
The graph below shows the cumulative total return to stockholders of the Company’s common stock during a five year period ended December 30, 2022, the last trading day of our 2022 fiscal year, compared with the return on the NASDAQ Composite Index and a group of our peers which we use internally as a benchmark for our performance.
The graph below shows the cumulative total return to stockholders of the Company’s common stock during a five year period ended December 29, 2023, the last trading day of our 2023 fiscal year, compared with the return on the NASDAQ Composite Index and a group of our peers which we use internally as a benchmark for our performance.
Holders of Record As of February 14, 2023, the Company had approximately 17 shareholders of record of the Company’s common stock. A substantial number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
Holders of Record As of February 13, 2024, the Company had approximately 17 shareholders of record of the Company’s common stock. A substantial number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
MYRG NV5 Global Inc NVEE Oceaneering International, Inc. OII Orion Marine Group, Inc. ORN Seacor Holdings (prior to merger with U.S. Shipping Corp on August 13, 2021) CKH Sterling Construction Company, Inc. STRL Team, Inc. TISI Tidewater Inc.
MG MYR Group Inc. MYRG NV5 Global Inc NVEE Oceaneering International, Inc. OII Orion Group Holdings, Inc. ORN Sterling Infrastructure, Inc. STRL Team, Inc. TISI Tidewater Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+39 added−30 removed54 unchanged
Biggest changeThe following is a reconciliation of Adjusted EBITDA to net income attributable to common stockholders of Great Lakes Dredge & Dock Corporation (in thousands): Year Ended December 31, 2022 2021 2020 Net income (loss) $ (34,055 ) $ 49,432 $ 66,103 Adjusted for: Interest expense—net 14,108 21,601 26,585 Income tax provision (benefit) (9,360 ) 13,391 20,187 Depreciation expense 46,273 43,016 38,183 Adjusted EBITDA $ 16,966 $ 127,440 $ 151,058 Components of Contract Revenues The following table sets forth, by type of work, the Company’s contract revenues for the years ended December 31, (in thousands): Revenues 2022 2021 2020 Dredging: Capital—U.S. $ 342,461 $ 397,034 $ 336,163 Capital—foreign 149 6,596 25,892 Coastal protection 192,567 169,678 201,361 Maintenance 98,077 132,551 148,767 Rivers & lakes 15,527 20,290 21,418 Total revenues $ 648,781 $ 726,149 $ 733,601 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Total revenue was $648.8 million in 2022, a decrease of $77.3 million, or 10.6%, from 2021 total revenue of $726.1 million.
Biggest changeThe following is a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations of Great Lakes Dredge & Dock Corporation (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 13,906 $ (34,055 ) $ 49,432 Adjusted for: Interest expense—net 12,140 14,108 21,601 Income tax provision (benefit) 4,406 (9,360 ) 13,391 Depreciation expense 42,525 46,273 43,016 Adjusted EBITDA $ 72,977 $ 16,966 $ 127,440 37 Components of Contract Revenues The following table sets forth, by type of work, the Company’s contract revenues for the years ended December 31, (in thousands): Revenues 2023 2022 2021 Dredging: Capital—U.S. $ 186,715 $ 342,461 $ 397,034 Capital—foreign — 149 6,596 Coastal protection 196,343 192,567 169,678 Maintenance 187,586 98,077 132,551 Rivers & lakes 16,318 15,527 20,290 Total dredging revenues $ 586,962 $ 648,781 $ 726,149 Offshore Wind 2,663 — — Total revenues $ 589,625 $ 648,781 $ 726,149 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Total revenue was $589.6 million in 2023, a decrease of $59.2 million, or 9.1%, from 2022 total revenue of $648.8 million.
The Company’s fleet, which includes 17 dredges, 17 material transportation barges, one drillboat, and numerous other support vessels, is the largest and most diverse fleet of any U.S. dredging company. Our fleet of dredging equipment can be utilized on one or many types of work and in various geographic locations.
The Company’s fleet, which includes 17 dredges, 13 material transportation barges, one drillboat, and numerous other support vessels, is the largest and most diverse fleet of any U.S. dredging company. Our fleet of dredging equipment can be utilized on one or many types of work and in various geographic locations.
Additionally, management believes that Adjusted EBITDA provides a 36 transparent measure of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For this reason, we use a measure based upon Adjusted EBITDA to assess performance for purposes of determining compensation under our incentive plan.
Additionally, management believes that Adjusted EBITDA provides a transparent measure of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For this reason, we use a measure based upon Adjusted EBITDA to assess performance for purposes of determining compensation under our incentive plan.
We recognize a contract modification when the parties to a contract approve a modification that either creates new, or changes existing, enforceable rights and obligations of the parties to the contract. Contract modifications are included in the transaction price only if it is probable that the modification estimate will not result in a significant reversal of revenue.
We recognize a contract modification when the parties to a contract approve a modification that either creates new, or changes 35 existing, enforceable rights and obligations of the parties to the contract. Contract modifications are included in the transaction price only if it is probable that the modification estimate will not result in a significant reversal of revenue.
If a qualitative assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test. 35 Otherwise, no further analysis is required. The Company also may elect to forego this step and just perform the quantitative impairment test.
If a qualitative assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test. Otherwise, no further analysis is required. The Company also may elect to forego this step and just perform the quantitative impairment test.
We expect substantially all of our coastal protection dredging backlog at December 31, 2022 to be performed in 2023. Coastal protection and storm impacts continue to provide the major impetus for coastal project investment at federal and state levels.
We expect substantially all of our coastal protection dredging backlog at December 31, 2023 to be performed in 2024. Coastal protection and storm impacts continue to provide the major impetus for coastal project investment at federal and state levels.
The Company plans to participate in the offshore wind market, and in November 2021, the Company entered into a $197 million contract with Philly Shipyard to build the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations which is expected to be delivered and operational in the first half of 2025.
The Company plans to participate in the offshore wind market, and in November 2021, the Company entered into a $197 million contract with Philly Shipyard to build the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations, the Acadia , which is expected to be delivered and operational in 2025.
In November 2021, the Company entered into a $197 million contract with Philly Shipyard to build the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations to support the new U.S. offshore wind industry which is expected to be delivered and operational in the first half of 2025.
In November 2021, the Company entered into a $197 million contract with Philly Shipyard to build the Acadia, the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations to support the new U.S. offshore wind industry which is expected to be delivered and operational in 2025.
The Company expects to perform on its offshore wind contracts using the inclined fall-pipe vessel for subsea rock installation which is expected to be delivered and operational in the first half of 2025. The Company’s contract backlog represents our estimate of the revenues that will be realized under the portion of the contracts remaining to be performed.
The Company expects to perform on its offshore wind contracts using the inclined fall-pipe vessel for subsea rock installation, which is expected to be delivered and operational in 2025. 39 The Company’s contract backlog represents our estimate of the revenues that will be realized under the portion of the contracts remaining to be performed.
At the end of the year, the Water Resources Development Act ("WRDA") of 2022 ("WRDA 2022"), was approved by Congress and signed into law by the President. WRDA 2022 is on a two-year renewal cycle and includes legislation that authorizes the financing of Corps' projects for flood and hurricane protection, dredging, ecosystem restoration and other construction projects.
At the end of 2022, the Water Resources Development Act (“WRDA”) of 2022 (“WRDA 2022”), was approved by Congress and signed into law by the President. WRDA 2022 is on a two-year renewal cycle and includes legislation that authorizes the financing of Corps' projects for flood and hurricane protection, dredging, ecosystem restoration and other construction projects.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 For a discussion comparing our consolidated operating results from the year ended December 31, 2021 with the year ended December 31, 2020, refer to Part II, Item 7.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 For a discussion comparing our consolidated operating results from the year ended December 31, 2022 with the year ended December 31, 2021, refer to Part II, Item 7.
Due to the fact that there are no public companies that are direct competitors, the Company weighs the results of this approach less than the income approach. In the current year, the Company performed both a qualitative and a quantitative goodwill impairment test.
Due to the fact that there are no public companies that are direct competitors, the Company weighs the results of this approach less than the income approach. In the current year, the Company performed a quantitative goodwill impairment test.
Also, 77% of our December 31, 2022 dredging backlog relates to federal government contracts, which can be canceled at any time without penalty to the government, subject to our contractual right to recover our actual committed costs and profit on work performed up to the date of cancellation.
Also, 34% of our December 31, 2023 dredging backlog relates to federal government contracts, which can be canceled at any time without penalty to the government, subject to our contractual right to recover our actual committed costs and profit on work performed up to the date of cancellation.
The Company considers it unlikely that it would have to perform under any of its contingent obligations. 42
The Company considers it unlikely that it would have to perform under any of its contingent obligations. 43
Cash provided by operating activities for the year ended December 31, 2021 was down compared to 2020 due to lower net income and higher working capital during 2021. The Company’s net cash flows used in investing activities for the years ended December 31, 2022, 2021 and 2020 totaled $140.9 million, $112.2 million and $43.2 million, respectively.
Cash provided by operating activities for the year ended December 31, 2022 was down compared to 2021 due to lower net income and higher working capital during 2021. The Company’s net cash flows used in investing activities for the years ended December 31, 2023, 2022 and 2021 totaled $120.1 million, $140.9 million and $112.2 million, respectively.
Other Off-Balance Sheet and Contingent Obligations The Company had outstanding letters of credit relating to contract guarantees and insurance payment liabilities totaling $16.4 million at December 31, 2022. We have granted liens on a substantial portion of the owned operating equipment as security for borrowings under the Amended Credit Agreement and other indebtedness.
Other Off-Balance Sheet and Contingent Obligations The Company had outstanding letters of credit relating to contract guarantees and insurance payment liabilities totaling $49.8 million at December 31, 2023. We have granted liens on a substantial portion of the owned operating equipment as security for borrowings under the Amended Credit Agreement and other indebtedness.
We have contracted dredging backlog related to coastal protection of $97.8 million at December 31, 2022 compared to $99.0 million at the end of 2021. During the year ended December 31, 2022, the Company continued to earn revenue on coastal protection projects in North Carolina, Florida, New York and New Jersey which were in dredging backlog at December 31, 2021.
We have contracted dredging backlog related to coastal protection of $138.4 million at December 31, 2023 compared to $97.8 million at the end of 2022. During the year ended December 31, 2023, the Company continued to earn revenue on coastal protection projects in North Carolina, Florida, New York and New Jersey which were in dredging backlog at December 31, 2022.
The decrease in domestic capital dredging revenue from the prior year was primarily driven by lower revenue earned from deepening projects in Alabama, Massachusetts, Florida and South Carolina. This decrease was partially offset by an increase in revenue earned on projects in Texas and Virginia.
The decrease in domestic capital dredging revenue from the prior year was primarily driven by lower revenue earned on projects in Massachusetts, Florida, South Carolina, Texas, New Hampshire, Alabama, New York and New Jersey. This decrease was partially offset by an increase in revenue earned in Virginia.
Coast Guard and the ABS. The Company’s vessels undergo regulatory dry-docks every two to three years or every five years, depending on the vessel type and may also go into dry dock on an as-needed basis for upgrades, maintenance and repairs. The Company experienced regulatory dry dock inspections on five dredges in 2022.
Coast Guard and the ABS. The Company’s vessels undergo regulatory dry-docks every two to three years or every five years, depending on the vessel type and may also go into dry dock on an as-needed basis for upgrades, maintenance and/or repairs.
The Company anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations and revolver availability. In 2022, 2021 and 2020, we received $2.1 million, $4.5 million and $4.5 million, respectively, in proceeds from dispositions of property and equipment.
The Company anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations, revolver availability, and possible future financing transactions. In 2023, 2022 and 2021, we received $30.7 million, $2.1 million and $4.5 million, respectively, in proceeds from dispositions of property and equipment.
“Management’s Discussion and Analysis of Financial Condition and Results of Operation – Year Ended December 31, 2021 Compared to Year Ended December 31, 2020” in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Commission on February 23, 2022.
“Management’s Discussion and Analysis of Financial Condition and Results of Operation – Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on February 17, 2023.
The selected financial data presented below have been derived from the Company’s consolidated financial statements; items may not sum due to rounding. 2022 2021 2020 Contract revenues 100.0 % 100.0 % 100.0 % Costs of contract revenues (95.2 ) (80.0 ) (76.7 ) Gross profit 4.8 20.0 23.3 General and administrative expenses (7.9 ) (8.6 ) (8.6 ) Proceeds from loss of use claim — — 0.2 Gain (loss) on sale of assets—net (1.2 ) — 0.2 Operating income (loss) (4.3 ) 11.4 15.1 Interest expense—net (2.2 ) (3.0 ) (3.6 ) Other income (expense) (0.2 ) 0.1 0.2 Income (loss) before income taxes (6.7 ) 8.5 11.7 Income tax (provision) benefit 1.4 (1.8 ) (2.8 ) Net income (loss) (5.3 ) 6.7 8.9 Adjusted EBITDA 2.6 % 17.6 % 20.6 % Adjusted EBITDA, as provided herein, represents net income (loss) attributable to common stockholders of Great Lakes Dredge & Dock Corporation, adjusted for net interest expense, income taxes, depreciation and amortization expense, debt extinguishment, accelerated maintenance expense for new international deployments, goodwill or asset impairments and gains on bargain purchase acquisitions.
The selected financial data presented below have been derived from the Company’s consolidated financial statements; items may not sum due to rounding. 2023 2022 2021 Contract revenues 100.0 % 100.0 % 100.0 % Costs of contract revenues (86.8 ) (95.2 ) (80.0 ) Gross profit 13.2 4.8 20.0 General and administrative expenses (9.7 ) (7.9 ) (8.6 ) Other (Gains) losses (1.3 ) 1.2 — Operating income (loss) 4.8 (4.3 ) 11.4 Interest expense—net (2.1 ) (2.2 ) (3.0 ) Other income (expense) 0.4 (0.2 ) 0.1 Income (loss) before income taxes 3.1 (6.7 ) 8.5 Income tax (provision) benefit (0.7 ) 1.4 (1.8 ) Net income (loss) 2.4 (5.3 ) 6.7 Adjusted EBITDA 12.4 % 2.6 % 17.6 % Adjusted EBITDA, as provided herein, represents net income (loss) from continuing operations of Great Lakes Dredge & Dock Corporation, adjusted for net interest expense, income taxes, depreciation and amortization expense, debt extinguishment, accelerated maintenance expense for new international deployments, goodwill or asset impairments and gains on bargain purchase acquisitions.
The decrease in revenues from the prior year was largely attributable to decreases in domestic capital, foreign capital, maintenance revenues and rivers & lakes. This decrease was partially offset by an increase in coastal protection revenues during the current year as compared to the prior year.
The decrease in revenues from the prior year was largely attributable to a decrease in domestic capital project revenues. This decrease was partially offset by an increase in domestic maintenance and coastal protection project revenues during the current year as compared to the prior year.
The Company categorizes revenue by service type to understand the market in which we operate and to assess how we are performing on bidding work or projects and are generating revenue from backlog. Domestic capital dredging revenues decreased $54.5 million, or 13.7%, to $342.5 million in 2022 when compared to 2021 revenues of $397.0 million.
The Company categorizes revenue by service type to understand the market in which we operate and to assess how we are performing on bidding work or projects and are generating revenue from backlog. Domestic capital dredging revenues decreased $155.8 million, or 45.5%, to $186.7 million in 2023 when compared to 2022 revenues of $342.5 million.
The period prior to the commencement of a major activity for dredging projects can range from 45 days to six months depending on the complexity of the project and environmental work windows.
We begin to recognize revenues when a dredging contract commences a major activity on the project. The period prior to the commencement of a major activity for dredging projects can range from 45 days to six months depending on the complexity of the project and environmental work windows.
Moreover, our dredges have different physical performance capabilities and typically work on certain types of dredging projects.
Moreover, our dredges have different physical performance capabilities and typically work on certain types of dredging projects. Accordingly, our dredges have different daily revenue generating capacities.
We have temporarily moved out of foreign operations to focus on domestic projects and do not anticipate any foreign capital project revenue in the immediate future. Coastal protection revenues were $192.6 million in 2022, an increase of $22.9 million, or 13.5%, from $169.7 million in 2021.
In 2022, we moved out of foreign operations to focus on domestic projects and do not anticipate any foreign capital project revenue in the immediate future. Coastal protection revenues were $196.3 million in 2023, an increase of $3.7 million, or 1.9%, from $192.6 million in 2022.
The Company’s net cash flows used in financing activities for the years ended December 31, 2022, 2021 and 2020 totaled $1.7 million, $5.9 million and $6.3 million, respectively.
The Company’s net cash flows provided by financing activities for the year ended December 31, 2023 totaled $89.9 million. The Company’s net cash flows used in financing activities for the years ended December 31, 2022 and 2021 totaled, $1.7 million and $5.9 million, respectively.
Although some of a project’s funding may ultimately be derived from multiple sources, the Corps maintains the authority over the project and is our customer. In 2022, our revenues earned from contracts with federal government agencies were approximately 67% of total revenue, down from our prior three-year average of 79%.
Although some of a project’s funding may ultimately be derived from multiple sources, the Corps maintains the authority over the project and is our customer. In 2023, our revenues earned from contracts with federal government agencies were approximately 75% of total revenue, consistent with the average of the three-year period ended December 31, 2023 of 74%.
Our backlog includes only those projects for which we have obtained a signed contract with the customer. Approximately 100% of the Company’s dredging backlog at December 31, 2022 is expected to be completed and converted to revenue in 2023.
Our backlog includes only those projects for which we have obtained a signed contract with the customer. Approximately 60% of the Company’s dredging backlog at December 31, 2023 is expected to be completed and converted to revenue in 2024. This amount may fluctuate as vessel schedules are adjusted in the future.
The decrease in maintenance revenue during the current year was mostly attributable to lower revenue earned on projects in Louisiana, Florida, and North Carolina in the current year compared to the prior year. This decrease was partially offset by greater revenue earned on projects in Mississippi and South Carolina in the current year.
The increase in maintenance revenue during the current year was mostly attributable to higher revenue earned on projects in Florida, North Carolina, Alabama, Texas, Mississippi and Puerto Rico in the current year compared to the prior year. This increase was partially offset by decreased revenue earned on projects in Louisiana in the current year.
MARAD announced in 2022 that they want to facilitate more offshore wind construction and have designated vessels like our subsea rock installation ship, “Vessels of National Interest” which will prioritize our application for review and funding through Title XI. The review and approval process is expected to be completed later in 2023.
MARAD announced in 2022 that they want to facilitate more offshore wind construction and have designated vessels like our subsea rock installation ship, “Vessels of National Interest” which will prioritize our application for review and funding through Title XI. The recent offshore wind developments, including the canceled PPAs discussed herein, have slowed down the progress of our Title XI application.
The increase in coastal protection revenue for the year ended December 31, 2022 was mostly attributable to a higher amount of revenue earned on projects in Virginia, North Carolina and New York in the current year as compared to the prior year.
The increase in coastal protection revenue for the year ended December 31, 2023 was mostly attributable to higher revenue earned on projects in New York and New Jersey, partially offset by less revenue earned on projects in North Carolina in the current year when compared to the prior year.
The Company is currently building a 6,500 cubic yard trailing suction hopper dredge, the Galveston Island , which is expected to be operational mid-year 2023, additionally, in June 2022 the Company exercised the contract option with the same builder to build a second 6,500 cubic yard trailing suction hopper dredge, the Amelia Island , with expected delivery in the first half of 2025.
Additionally, in June 2022 the Company exercised the 41 contract option with the same builder to build a second 6,500 cubic yard trailing suction hopper dredge, the Amelia Island , with expected delivery in 2025.
We experienced an average combined bid market share in the U.S. of 35% over the prior three years, including 49%, 54%, 17% and 23% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively. The Company’s largest domestic customer is the U.S.
We experienced an average combined bid market share in the U.S. of 33% over the three-year period ended December 31, 2023, including 36%, 56%, 23% and 22% of the domestic capital, coastal protection, maintenance and rivers & lakes sectors, respectively. The Company’s largest domestic customer is the U.S.
Beyond the next twelve months, our ability to fund our working capital needs, planned capital expenditures, scheduled debt payments and dividends, if any, and to comply with all the financial terms and covenants required under the Amended Credit Agreement, depends on our future operating performance and cash flows, which in turn are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. 41 Contractual Obligations Additional information related to contractual obligations can be found within this Item 7 in our “Liquidity and Capital Resources” section and also in Note 6, “Long-term debt,” and Note 12, “Commitments and contingencies,” to our consolidated financial statements.
Beyond the next twelve months, our ability to fund our working capital needs, planned capital expenditures, scheduled debt payments and dividends, if any, and to comply with all the financial terms and covenants required under the Amended 42 Credit Agreement, depends on our future operating performance and cash flows, which in turn are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.
Costs and Expenses The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor generally is hired on a project-by-project basis. The Company is a party to numerous collective bargaining agreements in the U.S. that govern our relationships with our unionized hourly workforce.
Costs and Expenses The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor generally is hired on a project-by-project basis.
If approved, we could borrow a portion of the acquisition cost of the subsea rock installation vessel with repayment terms of up to 25 years at rates tied to U.S. Treasury rates.
In January 2023, the Company applied with the Maritime Administration (“MARAD”), which is a unit of the U.S. Department of Transportation, for Title XI financing. If approved, we could borrow a portion of the acquisition cost of the subsea rock installation vessel with repayment terms of up to 25 years at rates tied to U.S. Treasury rates.
Accordingly, our dredges have different daily revenue generating capacities. 34 We generally expect to achieve different levels of gross profit margin (i.e., gross profit divided by revenues) for work performed on the different types of dredging projects and for work performed by different types of dredges.
We generally expect to achieve different levels of gross profit margin (i.e., gross profit divided by revenues) for work performed on the different types of dredging projects and for work performed by different types of dredges. Our expected gross margin for a project is based upon our estimates at the time of the bid.
During the year ended December 31, 2022, the Company continued to earn revenue on projects in Georgia, Florida, Louisiana, Mississippi and North and South Carolina which were in dredging backlog at December 31, 2021.
During the year ended December 31, 2023, the Company continued to earn revenue on projects in Florida, Louisiana, Mississippi and North and South Carolina which were in dredging backlog at December 31, 2022. Our contracted maintenance dredging backlog at December 31, 2023 of $152.1 million is $26.4 million higher than the backlog of $125.7 million at December 31, 2022 .
Past WRDA bills called for full use of the HMTF for its intended purpose of maintaining future access to the waterways and ports that support our nation’s economy. On March 27, 2020, the U.S. government enacted the CARES Act which includes a provision that lifts caps on the HMTF, thereby allowing full access to future annual revenues.
On March 27, 2020, the U.S. government enacted the CARES Act which includes a provision that lifts caps on the HMTF, thereby allowing full access to future annual revenues.
Bidding Activity and Backlog The following table sets forth, by type of work, the Company’s backlog as of the dates indicated (in thousands): 38 December 31, December 31, December 31, Dredging backlog 2022 2021 2020 Capital—U.S. $ 148,429 $ 398,748 $ 320,920 Capital—foreign — — 6,865 Coastal protection 97,819 99,048 97,986 Maintenance 125,671 50,966 125,090 Rivers & lakes 5,221 2,826 8,515 Total dredging backlog $ 377,140 $ 551,588 $ 559,376 Total dredging backlog does not include approximately $50,000 of performance obligations related to offshore wind contracts.
Bidding Activity and Backlog The following table sets forth, by type of work, the Company’s backlog as of the dates indicated (in thousands): December 31, December 31, December 31, Dredging backlog 2023 2022 2021 Capital—U.S. $ 741,839 $ 148,429 $ 398,748 Coastal protection 138,394 97,819 99,048 Maintenance 152,104 125,671 50,966 Rivers & lakes 6,765 5,221 2,826 Total dredging backlog $ 1,039,102 $ 377,140 $ 551,588 Total dredging backlog does not include $44.6 million of performance obligations related to offshore wind contracts or $179.4 million of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog at December 31, 2023.
The decrease in cash provided by operating activities during 40 2022 compared to the same period in the prior year was driven by a decrease in net income and an increase in working capital due to an increase in inventories during the current year when compared to the same period in the prior year.
The increase in cash provided by operating activities during 2023 compared to the same period in the prior year was driven by a increases in net income and billings in excess of contract revenues offset by an increase in accounts receivable during the current year when compared to the same period in the prior year.
For the year ended December 31, 2022, net loss was $34.1 million compared to net income of $49.4 million for the year ended December 31, 2021. The decrease in net income of $83.5 million, down 168.9% from 2021, was driven by a substantial decrease in gross profit, as described above.
For the year ended December 31, 2023, net income was $13.9 million compared to a net loss of $34.1 million for the year ended December 31, 2022. The increase in net income of $48.0 million, or 140.8% from 2022, was driven by a substantial increase in gross profit and an increase in other gains and losses, as described above.
The Company’s December 31, 2022 contracted dredging backlog was $377.1 million. This represents a decrease of $174.4 million, or 31.6%, over our December 31, 2021 backlog of $551.6 million. Backlog at the end of 2022 does not reflect approximately $584.7 million of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog.
Total dredging backlog at the end of 2023 does not reflect approximately $44.6 million of performance obligations related to offshore wind contracts or approximately $179.4 million of domestic low bids pending formal award and additional phases (“options”) pending on projects currently in dredging backlog. At December 31, 2022, the amount of domestic low bids pending award was $584.7 million.
Results of Operations—Fiscal Years Ended December 31, 2022, 2021 and 2020 The following table sets forth the components of net income attributable to common stockholders of Great Lakes Dredge & Dock Corporation and Adjusted EBITDA, as defined below, as a percentage of contract revenues for the years ended December 31 2022, 2021 and 2020.
At December 31, 2023 and 2022, our goodwill was $76.6 million. 36 Results of Operations—Fiscal Years Ended December 31, 2023, 2022 and 2021 The following table sets forth the components of net income (loss) from continuing operations and Adjusted EBITDA, as defined below, as a percentage of contract revenues for the years ended December 31 2023, 2022 and 2021.
Primary Factors that Determine Operating Profitability The Company’s results of operations for a calendar or quarterly period are generally determined by the following three factors: • Bid wins and dredge employment — The Company recognizes backlog upon a project being awarded. We begin to recognize revenues when a dredging contract commences a major activity on the project.
The Company is a party to numerous collective bargaining agreements in the U.S. that govern our relationships with our unionized hourly workforce. 34 Primary Factors that Determine Operating Profitability The Company’s results of operations for a calendar or quarterly period are generally determined by the following three factors: • Bid wins and dredge employment — The Company recognizes backlog upon a project being awarded.
The 2022 domestic dredging bid market totaled $1.97 billion, an increase of $156 million, or 8.6%, compared to the 2021 bid market total of $1.82 billion.
The 2023 domestic dredging bid market, excluding LNG projects, totaled $2.22 billion, an increase of $247 million, or 12.5%, compared to the 2022 bid market total of $1.97 billion.
At December 31, 2022, the Company had outstanding performance bonds with a notional amount of $730.3 million of which $17.4 million relates to projects from our historical environmental & infrastructure businesses. The revenue value remaining in backlog related to the projects totaled $308.5 million.
At December 31, 2023, the Company had outstanding performance bonds with a notional amount of $960.9 million. The revenue value remaining in backlog related to the projects totaled $546.8 million.
The Company anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations, revolver availability and potential new sources of financing. Commitments, contingencies and liquidity matters Refer to Note 6, “Long-term debt,” in the Company’s consolidated financial statements for discussion of the Company’s Amended Credit Agreement and Senior Notes.
The Company anticipates that remaining new build program payments will be made with cash on hand, future cash flows generated from operations, revolver availability and potential new sources of financing.
The decrease in operating income during the year ended December 31, 2022 was a result of lower gross profit and a one-time non-cash $8.1 million loss from the write-down for an asset retirement. This is partially offset by a decrease in general and administrative expenses, as described above.
The increase in operating income during the year ended December 31, 2023 was a result of higher gross profit and an increase in other gains and losses. This is partially offset by an increase in general and administrative expenses, as described above. The Company’s net interest expense for 2023 totaled $12.1 million compared to $14.1 million in 2022.
The Company will perform its next scheduled annual test of goodwill in the third quarter of 2023 should no triggering events occur which would require a test prior to the next annual test. At December 31, 2022 and 2021, our goodwill was $76.6 million.
The Company will continue to monitor for changes in facts or circumstances that may impact our estimates. The Company will perform its next scheduled annual test of goodwill in the third quarter of 2024 should no triggering events occur which would require a test prior to the next annual test.
Income tax benefit in 2022 was $9.4 million, compared to an income tax provision of $13.4 million in 2021 due to the change in pretax net income. The effective tax rate for the year ended December 31, 2022 was 21.3%, unchanged from the year ended December 31, 2021.
The increased expense was due to the increase in pretax net income. The effective tax rate for the year ended December 31, 2023 was 24.1% compared to 21.3% for the year ended December 31, 2022.
This vessel represents a significant critical advancement in building the U.S. logistics infrastructure to support the future of the new U.S. offshore wind industry.
This vessel represents a significant critical advancement in building the U.S. logistics infrastructure to support the future of the new U.S. offshore wind industry. Additionally, in July 2023, the Company announced the signing of the first ever subcontract for procurement of rock with Carver Sand & Gravel LLC, a U.S. quarry in the state of New York.
The decrease in rivers & lakes revenue during the current year was mostly attributable to lower revenue earned on projects in Mississippi and Texas in the current year compared to the prior year. This decrease was partially offset by revenue earned on projects in Arkansas and Tennessee in the current year.
The increase in rivers & lakes revenue during the current year was mostly attributable to higher revenue earned on projects in Arkansas, partially offset by decreased revenue earned on projects in Mississippi in the current year compared to the prior year. For the year ended December 31, 2023, we earned 100% of our December 31 2022 rivers & lakes backlog.
We have contracted dredging backlog related to rivers & lakes of $5.2 million at December 31, 2022, which is $2.4 million lower than the backlog of $2.8 million at December 31, 2021. We expect substantially all of our rivers & lakes dredging backlog at December 31, 2022 to be performed in 2023.
We have contracted dredging backlog related to rivers & lakes of $6.8 million at December 31, 2023, which is $1.5 million higher than the backlog of $5.2 million at December 31, 2022. The increase in our backlog for 2023 relates to the exercise of options that were previously pending on existing projects as of December 31, 2022.
In 2021, the Company began building three 7,100 cubic yard dump scow barges, and in July 2021, the Company announced a contract to build two multifunctional all-purpose vessels (“multicats”). During the year ended December 31, 2022, the Company invested $58.3 million in the new hopper dredges, $29.8 million in multicats and scows and $17.1 million in the rock installation vessel.
In 2021, the Company began building three 7,100 cubic yard dump scow barges, and in July 2021, the Company announced a contract to build two multifunctional all-purpose vessels (“Multi Cats”).
WRDA 2022 featured among many other things authorization for New York and New Jersey shipping channels to be deepened to 55 feet, estimated at $6 billion, as well as the Coastal Texas Program, estimated at $30 billion. In addition, this legislation includes policy changes that will allow future port, waterways, and coastal projects to be more readily approved and funded.
WRDA 2022 featured among many other things authorization for New York and New Jersey shipping channels to be deepened to 55 feet, projects which are estimated to be approximately $6 billion, as well as the Coastal Texas Program, estimated at $34.4 billion, which includes dune and marsh restoration to safeguard the Texas Gulf Coast from hurricane surges.
The Company won 57%, or $204.0 million, of the coastal protection projects awarded in 2022, compared to 58%, or $195.9 million, in the prior year.
The Company won 52%, or $213.8 million, of the coastal protection projects awarded in 2023, compared to 57%, or $204.0 million, in the prior year. During 2023, the Company was awarded seven coastal protection projects in North Carolina, New York, New Jersey and Florida.
Gross profit margin (gross profit divided by revenue) for the full year 2022 decreased to 4.8%, compared to the prior year's gross profit margin of 20.0%.
Consolidated gross profit for the year ended December 31, 2023 increased by $46.5 million, or 149.2%, to $77.7 million from $31.2 million for the year ended December 31, 2022. Gross profit margin (gross profit divided by revenue) for the full year 2023 increased to 13.2%, compared to the prior year's gross profit margin of 4.8%.
Liquidity and Capital Resources The Company’s principal sources of liquidity are net cash flows provided by operating activities, availability under our revolving credit facility and proceeds from issuances of long-term debt. See Note 6, “Long-term debt,” to our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K.
We expect substantially all of our rivers & lakes dredging backlog at December 31, 2023 to be performed in 2024. Liquidity and Capital Resources The Company’s principal sources of liquidity are net cash flows provided by operating activities, availability under our revolving credit facility and proceeds from issuances of long-term debt.
As a result of the extreme storm systems in prior years involving Hurricanes Harvey, Irma, and Maria, Congress passed supplemental appropriations for disaster relief and recovery which includes $17.4 billion for the Corps to fund projects that will reduce the risk of future damage from flood and storm events.
Congress passed supplemental appropriations for disaster relief and recovery which includes $17.4 billion for the Corps to fund projects that will reduce the risk of future damage from flood and storm events. The Corps is beginning to provide visibility on its plans for this money, and it is expected that approximately $1.8 billion will be allocated to dredging-related work.
Normal increases or decreases in the level of working capital relative to the level of operational activity impact cash flow from operating activities.
The Company’s net cash provided by operating activities for the years ended December 31, 2023, 2022 and 2021 totaled $47.4 million, $1.7 million and $49.0 million, respectively. Normal increases or decreases in the level of working capital relative to the level of operational activity impact cash flow from operating activities.
Investing activities in all periods primarily relate to normal course upgrades and capital maintenance of our dredging fleet.
Investing activities in all periods primarily relate to normal course upgrades and capital maintenance of our dredging fleet. The Company took delivery of a 6,500 cubic yard trailing suction hopper dredge, the Galveston Island , which began operations in February 2024.
Through the increased appropriation of HMTF monies, the Company anticipates increased funding for harbor maintenance projects to be let for bid. The Company won 48%, $59.1 million, of the rivers & lakes projects in the markets where the group operates during the current year, compared to 31%, or $24.0 million, in 2021.
The Company did not win any of the rivers & lakes projects awarded in the markets where the group operates during the current year, compared to 48%, or $59.1 million, in 2022.
Likewise, changes in terminal value and discount rate assumptions, unfavorable economic environment or market conditions and other factors in the future may cause a different assessment. Changes in these estimates and assumptions could materially affect the determination of fair value, and may result in the impairment of goodwill in the event that actual results differ from those estimates.
The assessment used estimates based on assumptions that the Company believes to be reasonable, but such assumptions are subject to unpredictability and uncertainty. Likewise, changes in terminal value and discount rate assumptions, unfavorable economic environment or market conditions and other factors in the future may cause a different assessment.
The Company performed its annual test of impairment as of July 1, 2022 and an interim test of impairment as of October 1, 2022 with no indication of impairment as of either test date.
The Company performed its annual test of impairment as of July 1, 2023 with no indication of impairment as of the test date. When performing the quantitative test, the Company assessed the fair values of its reporting unit using both a market-based approach and an income-based approach.
The decrease was partially offset by a $22.8 million decrease in the income tax provision resulting in net tax benefit, a $7.5 million decrease in net interest expense and a $11.0 million decrease to general and administrative expenses during the current year when compared to the prior year.
The increase was partially offset by a $13.8 million increase in the income tax provision and a $5.9 million increase to general and administrative expenses during the current year when compared to the prior year. Adjusted EBITDA (as defined and reconciled on page 37) was $73.0 million and $17.0 million for the years ended December 31, 2023 and 2022, respectively.
As of the test date, the fair value of the reporting unit was in excess of its carrying value by at least 10%. The Company will continue to monitor for changes in facts or circumstances that may impact our estimates.
Changes in these estimates and assumptions could materially affect the determination of fair value, and may result in the impairment of goodwill in the event that actual results differ from those estimates. As of the test date, the fair value of the reporting unit was in excess of its carrying value by at least 10%.
We earned 98% of backlog relating to maintenance dredging projects that had been carried forward from December 31, 2021. Rivers & lakes revenues were $15.5 million for 2022, a decrease of $4.8 million, or 23.7%, from $20.3 million in 2021.
For the year ended December 31, 2023, we earned approximately 95% of our December 31, 2022 maintenance dredging backlog. Rivers & lakes revenues were $16.3 million for 2023, an increase of $0.8 million, or 5.2%, from $15.5 million in 2022.
Adjusted EBITDA (as defined and reconciled on pages 36 and 37) was $17.0 million and $127.4 million for the years ended December 31, 2022 and 2021, respectively. The decrease in Adjusted EBITDA of $110.4 million, down 86.7% from 2021 was attributable to lower gross profit, excluding depreciation, partially offset by a decrease in general and administrative expenses.
The increase in Adjusted EBITDA of $56.0 million, or 329.4% from 2022 was attributable to higher gross profit, excluding depreciation, and higher other income partially offset by an increase in general and administrative expenses.
We earned 86% of backlog relating to coastal protection operations that had been carried forward from December 31, 2021. 37 Revenues from maintenance dredging projects in 2022 were $98.1 million, a decrease of $34.5 million, or 26.0%, from $132.6 million in 2021.
For the year ended December 31, 2023, we earned approximately 64% of our December 31, 2022 coastal protection backlog. Revenues from maintenance dredging projects in 2023 were $187.6 million, an increase of $89.5 million, or 91.3%, from $98.1 million in 2022.
We earned 79% of backlog relating to our domestic capital dredging operations that had been carried forward from December 31, 2021. Revenues from foreign dredging operations in 2022 totaled $0.1 million, a decrease of $6.5 million, or 98.5%, from 2021 revenues of $6.6 million.
For the year ended December 31, 2023, we earned approximately 85% of our December 31, 2022 domestic capital dredging backlog. We did not earn revenues from foreign dredging operations in 2023. Revenues from foreign dredging operations in 2022 were $0.1 million.
Total domestic dredging bid market for the current year period included awards for multiple coastal protection projects in North Carolina, Florida, New York and New Jersey, another phase of the Houston channel deepening, an access channel dredging project in New Jersey, and a coastal storm risk management project.
Total domestic dredging bid market for the current year period included awards for eleven domestic capital projects in Florida, Virginia, New Jersey, Alabama and Texas, eighteen coastal protection projects in Florida, Pennsylvania, Alabama, New York, New Jersey, North Carolina, Virginia, Louisiana and Delaware, forty six maintenance projects in Texas, Louisiana, Delaware, Florida, South Carolina, Alabama, Massachusetts, Maryland, New York, Georgia and Pennsylvania, and eleven rivers & lakes projects in Louisiana, Mississippi, North Carolina and Texas.
These wind farms are expected to provide over 2 Gigawatts (“GW”) of renewable energy to the state of New York, which is enough renewable energy to power more than one million households in New York. 33 In 2021, the current presidential administration announced the ambitious goal of 30 GW of Offshore Wind by 2030 and provided $3.0 billion in federal loan guarantees for offshore wind projects.
Globally installed offshore wind capacity is targeted to reach about 260 GW by 2030, up from 40 GW in 2020. In 2021, the Biden Administration announced the ambitious goal of 30 GW of U.S. offshore wind by 2030 and provided $3.0 billion in federal loan guarantees for offshore wind projects.
We expect substantially all of our domestic capital dredging backlog at December 31, 2022 to be performed in 2023. We continue to see strong support from the current presidential administration and Congress for the dredging industry.
During 2023, the Company earned revenue from deepening projects in Texas, Virginia and Louisiana, which were in dredging backlog at December 31, 2022. We expect approximately 50% of our domestic capital dredging backlog at December 31, 2023 to be performed in 2024, with the remainder performed in 2025 and 2026.
The Company’s net interest expense for 2022 totaled $14.1 million compared to $21.6 million in 2021. The decrease in net interest expense was primarily due to the refinancing of the senior notes in May 2021 at a lower interest rate and an increase in capitalized interest due to the extensive new build program.
The decrease in net interest expense was primarily due to an increase in capitalized interest related to financing the Company’s new build program, partially offset by an increase in interest due to increased borrowings under the Company’s revolving credit facility. Income tax provision in 2023 was $4.4 million, compared to an income tax benefit of $9.4 million in 2022.
In addition, 2022 expenses were lower for technical and consulting expenses, severance expenses and relocation expenses related to the headquarters move to Texas. Operating loss was $27.7 million and operating income was $83.4 million for the years ended December 31, 2022 and 2021, respectively.
This amount was offset by gains on disposals of assets during 2022 of $0.4 million. Operating income was $28.2 million and operating loss was $27.7 million for the years ended December 31, 2023 and 2022, respectively.
The Company won 26%, or $191.4 million, of the maintenance dredging projects awarded in 2022 compared to 8%, or $57.4 million, in 2021.
Most of this work is anticipated to be coastal protection related, but some funding may be provided for channel maintenance. This increased budget and additional funding support our expectation for a stronger market in 2024. The Company won 30%, or $292.8 million, of the maintenance dredging projects awarded in 2023 compared to 26%, or $191.4 million, in 2022.
The Company won 26% of the overall 2022 domestic bid market, down from a 40% win rate of the overall 2021 domestic bid market and down from the win rate of 35% over the prior three years. In 2022, the Corps delayed letting bids to market and many of those projects were lower margin maintenance projects.
The Company won 34% of the overall 2023 domestic bid market, up from a 26% win rate of the overall 2022 domestic bid market and consistent with the win rate of 33% over the three year period ended December 31, 2023. Variability in contract wins from period to period is not unusual.

… 70 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+2 added−0 removed0 unchanged
Biggest changeAt December 31, 2022 we had outstanding arrangements to hedge the price of a portion of our fuel purchases related to domestic dredging work in backlog, representing approximately 80% of its anticipated domestic fuel requirements through December 2022. As of December 31, 2022, there were 7.3 million gallons remaining on these contracts.
Biggest changeAt December 31, 2023 we had outstanding arrangements to hedge the price of a portion of our fuel purchases related to domestic dredging work in backlog, representing approximately 87% of its anticipated domestic fuel requirements through December 2023. As of December 31, 2023, there were 13.0 million gallons remaining on these contracts.
Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk. In May 2021, the Company sold $325 million of unsecured 5.25% Senior Notes due June 1, 2029 pursuant to a private offering. The Company used the net proceeds from the offering, together with cash on hand, to redeem all $325 million aggregate principal amount of its prior outstanding 8% Notes.
Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk. In May 2021, the Company sold $325 million of unsecured 5.25% Senior Notes due June 1, 2029 pursuant to a private offering. The Company used the net proceeds from the offering, together with cash on hand, to redeem all $325.0 million aggregate principal amount of its prior outstanding 8% Notes.
A significant operating cost for the Company is diesel fuel, which represents approximately 11% of our costs of contract revenues. We use fuel commodity forward contracts, typically with durations of less than one year, to reduce the impacts of changing fuel prices on operations. We do not purchase fuel hedges for trading purposes.
A significant operating cost for the Company is diesel fuel, which represents approximately 12% of our costs of contract revenues. We use fuel commodity forward contracts, typically with durations of less than one year, to reduce the impacts of changing fuel prices on operations. We do not purchase fuel hedges for trading purposes.
The 2029 Notes were priced to investors at par and will mature on June 1, 2029. At December 31, 2022, the Company had long-term senior notes outstanding with a recorded face value of $325.0 million.
The 2029 Notes were priced to investors at par and will mature on June 1, 2029. At December 31, 2023, the Company had long-term senior notes outstanding with a recorded face value of $325.0 million.
Based on our 2023 projected domestic fuel consumption, an approximate 10% increase in the average price per gallon of fuel would have a $0.4 million effect on fuel expense, after the effect of fuel commodity contracts in place at December 31, 2022.
Based on our 2024 projected domestic fuel consumption, an approximate 10% increase in the average price per gallon of fuel would have a $0.5 million effect on fuel expense, after the effect of fuel commodity contracts in place at December 31, 2023.
A 10% change in forward fuel prices would result in a 2.4. million change in the fair value of fuel hedges outstanding at December 31, 2022.
A 10% change in forward fuel prices would result in a $3.4 million change in the fair value of fuel hedges outstanding at December 31, 2023.
The fair value of these existing notes, which bear interest at a fixed rate of 5.25%, was $252.7 million at December 31, 2022 based on market prices. Assuming a 10% decrease in interest rates from the rates at December 31, 2022 the fair value of this fixed rate debt would have increased to $265.6 million.
The fair value of these existing notes, which bear interest at a fixed rate of 5.25%, was $276.3 million at December 31, 2023 based on market prices. Assuming a 10% decrease in interest rates from the rates at December 31, 2023 the fair value of this fixed rate debt would have increased to $287.1 million.
Under these agreements, we will pay fixed prices ranging from $2.29 to $3.95 per gallon. At December 31, 2022, the fair value liabilities on these contracts was $0.6 million, based on quoted market prices and is recorded in accrued liabilities.
Under these agreements, we will pay fixed prices ranging from $2.35 to $2.90 per gallon. At December 31, 2023, the fair value liabilities on these contracts was $2.9 million, based on quoted market prices and is recorded in accrued liabilities.
Added
We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate indebtedness. As of December 31, 2023 we had $90.0 million of variable rate indebtedness. All of the outstanding borrowings under the revolving credit facility are at variable rates based on the Secured Overnight Financing Rate (“SOFR”).
Added
At December 31, 2023 our weighted average interest rate was 6.71%. A hypothetical 10% increase in the weighted average interest rate on our variable rate indebtedness as of December 31, 2023 would increase our annual interest cost by approximately $0.6 million.

Other GLDD 10-K year-over-year comparisons