GLDD - Not sure if this one exactly matches the qualifications for the board. In their last quarter, they posted a slight loss on lower revenues, however, over the last twelve months they've posted a $3 million profit.
On January 4 they completed a reverse merger (IPO) with Aldabra Acquisition Corporation, a special acquisition corp.(SPAC) to become a public company. Here's a little blurb on what they do: Great Lakes Dredge & Dock Corporation provides dredging, and commercial and industrial demolition services in the United States.
Prior to their last quarter, they were growing revenues at a 20% growth rate. In their last quarter, revenues fell short of results posted from their previous quarters due to the timing of mobilizations to the company’s new project in Bahrain and several domestic projects, dry dockings on certain vessels and the inability to work on certain beach projects due to typical environmental window restrictions during this time of the year.
The outlook for the remainder of the year, though, was very positive:
- In addition the domestic bidding activity continued to strengthen in the third quarter and there is still work scheduled to be bid in the fourth quarter, including LNG work that should provide opportunities to add to backlog in the upcoming months. Currently, there is adequate backlog and contracts pending award at September 30, 2006 to produce a robust fourth quarter including the start up of Diyaar, environmental window work and the new LNG terminal project.
Here is some backlog information:
-Dredging backlog at September 30, 2006 was $350.3 million. This compares to $286.8 million at June 30, 2006 and $266.0 million at September 30, 2005.
- In addition, the Company’s September 30, 2006 recorded backlog does not reflect approximately $230 million of low bids pending award and other options pending on projects currently in backlog, including approximately $156 million for the second phase of the Diyaar contract in Bahrain.
Other financial stats:
-Based on LTM(last twelve month) results from March 31, 2005, Net Income margins have steadily improved from -5.1% to .6% currently. EBITDA margins have steadily improved from 7.6% to 12.7% and have historically reached levels of 15%.
-The company is heavily levered, with debt at $251.1 million at quarter end (9/30/2006). However, they used $50 million fo the merger proceeds to pay down long-term debt, which will also dramatically lower interest costs and improve profitability. They also have a history of paying down debt with cash flows earned from operations.
-After the merger, they have approximately 40 million shares of common stock outstanding
-Industry-wise, they should benefit from higher oil & gas activity with work on LNG terminal projects. They will also benefit from the expansions of ports across the world as well as the addition of new ports as global trade grows. They also provide maintenance to ports. They could also benefit from increased beach nourishment projects after storms hit coastline areas.
Overal, given their improving margins, backlog, debt situation, and the favorable industry outlook, I feel that this one should be seriously looked at. I am invested in the warrants, which trade which trade on the NASD as well with a $5 strike price and a February 17, 2009 expiration date. Currently the common stock trades at $6.88 with the warrant trading at $1.91, which in my opinion would be the better buy given the time left before expiration and the company's potential in the next few quarters. I'm in at an avg. of $1.93, so no better than whats available now. Also, the company is going to report year-end results this friday with the common stock trading strongly the past few days.
Let me know what you guys think. Good luck to all...
