Okay. Good afternoon, everyone, and thank you for joining the Sidoti September 2024 Small Cap Conference. My name is Julio Romero. I'm the Building Products, Industrials, and EMC analyst at Sidoti. We're really pleased to be able to host Great Lakes Dredge & Dock. Their ticker is GLDD. With us today is Scott Kornblau, Senior Vice President and Chief Financial Officer. We're gonna go through the presentation, that'll be followed by some Q&A towards the very end. If you have any questions for Great Lakes, please type them to the Q&A section at the bottom of your screen, and I'm happy to ask on your behalf. With that, Scott, thanks so much for being here, and the floor is yours. Great. Thank you, Julio. I really appreciate you hosting us. So I'm Scott Kornblau, CFO. I will go through this presentation, and again, we'll open up for Q&A at the end. I'll give an overview of the company and what we've been up to over the last year or so, and then also give a financial overview. The highlights that I just blew through, I'm gonna hit all of that as I go through it. As you'll see, it's been a very, very positive year. But who are we, and what do we do? So we are the largest dredging company in the United States. We've been doing this a very, very long time, for over 134 years. Our largest client is the U.S. Army Corps of Engineers, but we also do work for other government agencies, and we do dredging work for private companies, including LNG producers. We are also entering the U.S. offshore wind industry as a first mover in the United States. As you'll see in the upcoming slides, we have had three extremely strong quarters in a row, and our expectations is that this is going to continue for the foreseeable future. What is the work that we do? Our projects help improve and protect our nation's coastlines. There are really three different categories of projects that we work on, but they're all dredging. The first we call capital projects. That is the deepening and widening of ports. With the recent expansion to the Suez and Panama Canal, larger ships are coming through and coming to the ports of the U.S., and that is causing a large deepening cycle that we are in the middle of right now. These capital deepening projects are complex, and therefore, they typically come with the highest margins. The next category of work is coastal protection. That is the creation and rebuilding of beaches, either creating new ones or rebuilding from storm damage, that does occur to the beaches. These projects are also at more complex than some of the simple ones, and therefore, you do get returns close to the same kind of margins that you can get on the capital projects. These two type of projects, capital and coastal protection, is really the focus of Great Lakes. We like these very complex projects, and we typically get rewarded for doing them. The third type, which we don't ignore by any means, is maintenance dredging, and that is maintaining the waterways once you dredge them from natural sediment, that does build up. It is recurring revenue in nature, 'cause you do need to come back, you know, every year or so to maintain the waterways. You could see historically, we've had a pretty even mix of revenue between the three categories. That's changing in 2024, as you'll see in a little bit. We have a very high number of capital projects in our backlog that we have already started executing. Great Lakes has historically worked internationally, but right now we are 100% domestic with a very robust U.S. dredging market. One of the big advantages that we have at Great Lakes is the very diverse fleet that we have in order to execute projects. There are three major type of dredges. Each one is capable of doing different things, and they're very fit for purpose, depending on the project that you're working on. By us having a large concentration in all three type, it allows us to bid on all type of dredging project and gives us a lot of flexibility in the execution of projects, as we can move different dredges in and out to find the most efficient way to perform that project. As I mentioned earlier, we are the market leader, not only by market share but by number of dredges. We historically have anywhere between a 33%-40% market share. This is numbers through 2023. 2024 has been extremely strong for us on the bidding side, and that market share is likely to grow this year, and I'll get into some of those numbers in a little bit. As I mentioned, 2024 bid market has been extremely strong. That is driven by another record budget from the Army Corps of Engineers. This is the sixth or seventh year in a row that the Army Corps has had a new record budget, and this has led to this extremely strong bid market. Through August, we have already seen over $2.2 billion of projects bid, and that already exceeds all of 2023's market, excluding the LNG work, and we're only eight months into the year. In addition to the record budget, because of the storms that decimated the East Coast in 2022 and 2023, there was a supplemental appropriation for just under $1.5 billion to help clean up the beaches, and we're seeing a number of those jobs come out, as well. Early indications for the 2025 budget is that it will be a new record budget, so it looks like this momentum that we're seeing is going to continue for some time. Last thing I'll point to on this page, on the Water Resources Development Act of 2022, this is a proposal that comes out every two years, and what's in this is projects that Congress will start studying for future infrastructure and dredging projects. The one to note for 2022 is they have begun the study of a very large deepening project in New York. This project is estimated to be $6 billion, and we think could start in the second half of this decade and go well into the following decade. So that's something we very closely have our eye on. Because of the extremely strong bid market last year, which is continuing to this year, we entered this year with the largest backlog that we have ever had at just over $1 billion. We continued to win projects this year. We entered the third quarter with just over $800 million worth of project, but as you can see from that chart, the vast majority, 85% of those, are these complex, higher-margin capital projects that's setting us up very, very well for the rest of this year into 2025 and into 2026. This has been a very busy third quarter for us. So far, two and a half months in, we were low bidder on an additional 12 projects for over $640 million of backlog, so this backlog number will be growing this year once we get those awarded and put into backlog. The reason this year from a financial standpoint has started off so strong was because of the robust 2023 market, in which Great Lakes was very successful in landing some large projects. The total bid market last year, including two large private LNG facilities, which Great Lakes won both, totaled $2.7 billion. We won the three largest of those projects and four of the five largest projects that went out last year, and all of those projects are being executed as we speak. We are currently in the late innings of a pretty intensive new build program that we kicked off a little over four years ago. Earlier this year, we took delivery of our newest hopper dredge, named the Galveston Island, which is performing extremely well, and in about a year, we expect to take delivery of the Amelia Island, which is a sister vessel to the Galveston. We have also, over this period of time, invested in new support equipment, which is focused on improved efficiencies and safety. Once we take delivery of the Amelia Island next year, we have no plans in the foreseeable future for building additional dredges, but instead, we'll likely undergo modest upgrades focused on efficiencies on some of our dredges over the next few years. And finally, we're getting closer to taking delivery of the Acadia, which will be the first and only Jones Act-compliant subsea rock installation vessel in the world to service the offshore wind space. So let me talk a few minutes about the U.S. offshore wind market. As I mentioned, we're a first mover in this space, building the only Jones Act vessel of its kind, and we'll take delivery in the second half of next year. We do already have two contracts awarded. The first is Equinor's Empire Wind project, which we will execute in the latter part of next year once we take delivery of the vessel, and then after that, we'll move on to Ørsted's Sunrise Wind project, also off the northeast coast. So having two contracts well before the vessel is delivered is a very, very promising sign. We are also in the middle of negotiating reservation agreements with two additional wind developers for use of the Acadia. Though there were some negative headlines related to offshore wind in 2023, 2024 has been a very successful year so far for offshore wind. There are actually a couple of projects on the Northeast coast that are producing offshore wind power, and also throughout the first half of the year, we have seen a number of power purchase agreements awarded by the states to various wind developers, and also there were some very successful offshore wind auctions that will add additional capacity to offshore wind. The story for offshore wind appears to be very promising in the U.S. A few months ago, Bloomberg came out with a report, and they think by 2040, U.S. will be tied with Europe as the second-largest offshore wind market behind China. So we think that the future is really, really bright. The map on the Northeast is a number of the... On the top right, is the number of named projects in the Northeast right now, that we have tenders outstanding for a lot of them. So while we are focused on the US market and think there's a lot of potential, there is an undersupply of these type of vessels worldwide, and in parallel to bidding work in the US, we are also bidding work in the European markets as well. Earlier in 2023, we were honored to have President Biden attend our steel cutting ceremony for the Acadia at the Philly Shipyard, and earlier this year, the keel was laid. The vessel is starting to look a lot like a ship. We're very excited to get her into the portfolio next year. Let me talk some numbers now. This is a five-year look. We did have a dip in 2022 that was driven by a lot of external factors, including a slow bid market. That bid market has absolutely recovered. With that recovery, so has our business. Our execution plan has really taken off, and as you can see, not only are we seeing big improvements on the top line, it is bottom line and margins as well. Right now, our trailing 12-month EBITDA is $115 million. As we had predicted earlier last year, 2024 would be the return to normalcy, and with the backlog and the type of projects that we have in backlog, the next handful of years look to be very, very strong. Our balance sheet is also in really good shape. We have liquidity of over $300 million. We have no debt maturities until 2029. Our weighted average interest rate is under 7%, and we have a undrawn $300 million revolver that doesn't mature until the third quarter of 2027. And then on the bottom left, as I mentioned, we'll be winding up our new build program next year. We have roughly $150 million left to spend between the second half of this year and next year to complete that new build program. A comparison, first half of this year to first half of last year, and as you can see, having the backlog and the projects in that backlog that we have and the execution that we've had has made a big difference. Revenue has increased $80 million year over year, and we have more than doubled our EBITDA and our margins, and nothing is pointing to looking for the second half of this year or 2025 or 2026 looking any different. The reason that I'm comfortable saying that is because of our backlog profile. I'd mentioned a billion dollars at the end of the year, $800 million entering this quarter. So far this quarter, two and a half months in, the bid market has been well over a billion dollars, and we have so far this quarter won 12 additional projects totaling just over $640 million. That will get into backlog during this quarter and next quarter. And our utilization is really almost full for 2025, and we're going a long way to fill it up in 2026. So this has played out almost according to script. We truly believe that the bid market we saw in 2022 was an anomaly, and I think that has proven out with the vast amount of work that we saw come out last year and this year, and fortunately, we are winning more than our fair share of that work. Julio, that's all I've got. I can turn it over to you for questions if there are any. Absolutely. Thank you so much for that rundown. And again, for folks on the line, if you have any questions, feel free to type them into the Q&A section at the bottom of your screen. Happy to ask on your behalf. So, appreciate the news there you gave us, Scott. So that's so for context, for folks watching us today, you know, you recently announced awards of $250 million or so earlier this quarter, and today, announced low bid of over $640 million. So I assume the $640 number post Q2 is inclusive of the $256 million of awarded work announced in late August. Is that fair? No, it's there. There may have been one or two projects that are in there, but no, most of the 250 that we announced were actually won in the first half of this year. Most of this is going to be additive to the 250 that we put out the press release a few weeks ago. Understood. So additive to the press release, but that's the full post Q2 number? Correct. Okay. As of this morning, this thing moves a lot. A moving target. Okay, excellent. And, can you maybe give us some highlights from these projects that you're low bid on, you know, in terms of the dredging category they might fall into? Yeah. Of the 12 projects, it's split almost exactly down the middle, 50/50, between capital and coastal protection projects. Okay, I didn't hear any maintenance in there. Actually, I lied. There's one $9 million maintenance job in that $640 million. Okay. So yes- Okay It is. It's capital and coastal protection. Okay, very good. And any color on conversion timelines for that? Is that something that starts in 2024, 2025? Yeah, some of that will start late Q3, Q4. Some of it starts 2025, goes well into 2026. Our schedule right now is written in pencil because you know, this is very fluid, and the thing we like about a lot of these capital projects is that they're very flexible on the timing, so we can dictate when we're going to execute certain projects. But as I said, our dance card for 2025 is looking very, very full. We can still bid on work, though, for 2025 because of the flexibility that we have, that you know, we can move some of these projects into 2026. Utilization for 2026 is starting to shape up very nicely as well. Yeah, and that's a key thing to highlight about the story, that I appreciate you touched on earlier, that you do have the most diverse fleet out there, and that gives you the benefit of, one, bidding on whatever project you feel like, and then two, you can... You You have the flexibility to move these vessels around, as you see fit. Is that fair? That's exactly right. You know, it gives us a lot of flexibility, and then having, you know, a good vessels in all three categories, we could bring a vessel in for a month just because there's a very small part of that job that this vessel is made for and will just be more efficient. So it just gives us a lot of flexibility. It's really why we like these large projects because, you know, we can dictate the timing on a lot of it. Yeah. And then, you know, earlier this year, you launched the Galveston Island, and next year you're expected to launch Amelia Island, the sister hopper. How has utilization with Galveston been? And can you maybe give us an update on Amelia? So the Galveston Island went straight from the shipyard to a job, has not stopped working since. Galveston, again, has penciled in work because we have a lot of flexibility of backlog well into 2026 right now. The Amelia's gonna be the exact same story. There is already backlog tied to the Amelia. She will go straight from the yard to the job, and she is contracted right now to the latter half of 2026. But again, we still have the ability to bid work for both of those vessels with the flexibility we have on a lot of these projects. Yeah, absolutely. And, and at the end of August, you also announced the credit ratings upgrade from S&P. Can you maybe talk about, you know, what drove the upgrade and how that might affect your debt service levels? Yeah. So, it was. It's been my pet project this year to get that credit rating where I truly believed that it should be. And it was, to me, very promising that just four months after they reaffirmed their rating in March, they saw all the positive news that I've just did, and they didn't wait a full calendar year until they went to committee again. They went to special committee, you know, to get it, you know, out of C category into B category. Yes, it definitely will have, you know, impact as we, you know, look at future financings. I also think it could have some positive momentum on the Title XI financing that we have been pursuing with the Maritime Administration for some time. Okay. What is your potential total pipeline of work look like now at this point? I had seen the August press release had a $1.2 billion number. Is that still the same or? Yeah, so that included a lot of jobs that were still within that low bid pending number. You know, the $600-plus million that we've just added over the last couple of months, depending on when the award comes. Just for those that don't know, the way most government contracts work is you are low bidder, and then it takes four to six weeks for that to become into an award. So we don't officially put it into our backlog until it becomes awarded. So we'll see at September 30th, how much of this $640 million actually equates into September 30 backlog as opposed. But, you know, the number that I share on the screen, you know, $800 million of backlog at the end of the second quarter will obviously have burn-off this year for the revenue that we do, but we just added another $640 million, you know, on top of that. So, you know, you can do the math that, you know, we expect our backlog to, you know, be very close to that $1 billion that we entered the year in. That honestly, Julio, when I got asked questions at the beginning of the year, "Can backlog be maintained at this $1 billion?" I said, "Very unlikely," just with the burn-off that we were gonna have, and then bids kept coming out, and we kept winning them. So I think our year-end backlog is gonna look very close to what it did when we entered this year, which, as I mentioned earlier, is the largest backlog we've ever had in the history of this company. High-class problem to have. We love it. So, couple questions from the audience here: Are there any political winds that would affect the U.S. Army Corps of Engineers work, or is that a fairly nonpartisan in nature? Yeah, I think it's one of the few things that we historically have seen that truly is bipartisan. We do not see infrastructure being affected one way or another, depending on who's in office, and I think that's evident. You know, I mentioned earlier, we're seven years in a row and about to be an eighth year of a record budget for the Army Corps. Infrastructure is something both parties have always supported, and there's no reason to believe that that's going to change. Yep, makes sense. How do you think about M&A opportunities within some of the private dredgers, and would they be an opportunity for acquisition from Great Lakes? Yeah, I mean, it's something of course we look at all the time. We're very happy with our fleet right now. We think we've got a very strong, efficient fleet. You know, if an opportunity looked appealing, we could look at it, but I really don't think, you know, in the short term that, you know, any of that would transpire. The vessels that we would find intriguing are probably the ones that are not available. Gotcha. And, another one from the audience here: "Can we expect to keep the approximately 60% backlog conversion rate that we are used to in recent years, or are we moving to a higher percentage because of high utilization rate, less white space during the year? Yeah, I mean, I think it potentially could, you know, could go the other way as well. We're gonna have so much backlog, and as we've proven out this year, we are continuing to add to it. The thing that's really unusual about the construct of our backlog right now, you know, we're sitting in the, you know, middle of 2024, and as I mentioned, we've got a number of dredges that are completely full through 2026. And it's because of the large number of capital projects. So I would call that, you know, more of an anomaly. We actually have a vessel that has a contract that'll be working at the beginning of 2027. That is highly unusual, you know, in this type of business, to have that much visibility on, on as many dredges, going out. I said at the beginning of the year, I was proven wrong. At some point, our backlog will have to go down because we will burn it off at a quicker rate than we're gonna win it, only because of the lack of availability, and, and number of days we have left available to dredge, you know, over the next, you know, coming quarters. Yep. Shifting to Acadia a little bit, can you discuss how the Acadia will affect your cash flow on a daily and annualized basis? Yeah, so once we take delivery of the vessel, you know, the end of next year, you know, we have said that the margin profiles for the Acadia will be as strong, if not stronger, than the most lucrative capital-type projects, you know, on the dredging side of the business. As I mentioned earlier, there is a scarcity of these vessels worldwide, and we have the very unique proposition of being the only Jones Act vessel to service the U.S. market. When the Acadia goes to work, it is going to be very cash flow positive. We have said that the revenue potential of the Acadia, conservatively, you know, is over $100 million, and again, it's gonna have very healthy margins on that revenue. Yeah. Another question about Acadia here is just: "What's the likelihood that the offshore wind vessel receives Title XI financing? Great question. I wish I knew. This is a process we've been going through for quite some time. You know, it is not, it has not happened yet, and there hasn't been any Title XI, you know, loans that have been issued in the recent time. As I mentioned earlier, I think the ratings upgrade is going to help, and we are continuing a dialogue with MARAD on Title XI. You know, I'm not gonna handicap it, but I can say the last month or so, the cadence of conversations have increased, you know, from where it was in the first half of this year. Yeah. I guess with about a minute left here, if you could just sum up the value proposition for Great Lakes Dredge & Dock, from an investor's perspective? Yeah, absolutely. So I think we've proven out, you know, the dredging side of the business. It's a solid business. It's bipartisan. There's support for it. These vessels are going to work. There's going to continue to be investment, and it's a very, very cash flow positive business. To me, what's really exciting now is utilizing, you know, the cash flow profile from the dredging business to become a first mover in, you know, what I think is a very exciting market in the US offshore wind. And being a first mover, you know, in the very, very early innings of offshore wind is very, very exciting for us. We do believe over a longer period of time that offshore wind will be a large part of our business. We're in no hurry to grow it. This is a long-term growth story for Great Lakes. We're making the first entry right now. We're starting to win some contracts. We'll continue to pursue them in the U.S., but it's great that we also have this very robust European market that we can service as well. So we have really an emerging market and a very established market that we can put the vessel to use. So we're really, really excited about the prospects on the wind side, and it's being supported now what looks to be a very strong dredging market for years to come. Scott, thanks so much for coming here with some news today, and thanks for taking the time. Julio, again, appreciate the invite. Thanks, everybody, for joining. Thank you.