Great Lakes Dredge & Dock Corporation

Company Overview

Business Model: Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States, complemented by a history of significant international projects. The Company is actively expanding its core business into the offshore energy industry. Dredging operations primarily involve enhancing or preserving waterway navigability and protecting shorelines through the removal or replenishment of soil, sand, or rock. Offshore energy projects service the offshore wind, oil and gas, and power and telecommunication industries.

Market Position: Great Lakes Dredge & Dock Corporation holds a leading position as the largest provider of dredging services in the U.S. Over the three-year period ended December 31, 2025, the Company achieved an average combined bid market share in the U.S. of 29%, including 36% in domestic capital, 46% in coastal protection, and 15% in maintenance sectors (exclusive of liquefied natural gas projects). The Company is establishing a unique business position with its subsea rock installation vessel, the Acadia, which is the first and only Jones Act compliant SRI vessel being constructed in the U.S.

Recent Strategic Developments:

• Pending Acquisition: On February 10, 2026, Great Lakes Dredge & Dock Corporation entered into a Merger Agreement with Saltchuk Resources, Inc. and Huron MergeCo. Inc. for Saltchuk Resources, Inc. to acquire all outstanding shares at $17.00 per share. The transaction is expected to close in the second quarter of 2026, subject to customary conditions including antitrust clearance.
• Offshore Energy Expansion: The Company is expanding into the offshore energy market with the Acadia, a subsea rock installation vessel, launched in July 2025 and expected to be operational in the first half of 2026. The Acadia has secured offshore wind rock placement contracts for Equinor’s Empire Wind 1 and Ørsted’s Sunrise Wind projects, providing full utilization for 2026. The Company also secured two international offshore wind contracts in Europe, with work expected to commence in early 2027.
• Fleet Modernization: The Amelia Island, a 6,500 cubic yard trailing suction hopper dredge, began operations in the third quarter of 2025. The Galveston Island, another 6,500 cubic yard trailing suction hopper dredge, began operations in the first quarter of 2024. In 2025, the Company sold one smaller hydraulic dredge and one mechanical dredge as part of its ongoing fleet modernization.
• Legislative Support: The Water Resources Development Act of 2024 was signed into law on January 4, 2025, authorizing several capital projects for flood protection, coastal resilience, and ecosystem restoration. The U.S. Army Corps of Engineers' 2026 budget was signed into law at a record $10.4 billion on January 23, 2026, with increased utilization of the Harbor Maintenance Trust Fund for major maintenance dredging initiatives.

Geographic Footprint: Great Lakes Dredge & Dock Corporation primarily operates on the East and Gulf coastlines and throughout many inland U.S. waterways. The Company also performs international projects, with its Middle East operations managed by 15 foreign nationals and 3 local staff. The Company's headquarters are in Houston, Texas, with other office locations including Staten Island, New York, and Cape Girardeau, Missouri. Key yard locations are in Staten Island, New York; Morgan City, Louisiana; Norfolk, Virginia; Chesapeake, Virginia; Little Rock, Arkansas; and Cape Girardeau, Missouri.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 22.9% (2025) vs. 21.1% (2024)
• Operating Margin: 14.4% (2025) vs. 12.2% (2024)
• Net Margin: 8.3% (2025) vs. 7.6% (2024)

Investment in Growth:

• Capital Expenditures: $147.2 million (2025)
• Strategic Investments:
  • $32.3 million invested in the Amelia Island hopper dredge in 2025.
  • $69.1 million invested in the Acadia subsea rock installation vessel in 2025.

Business Segment Analysis

Dredging and Offshore Energy

Financial Performance:

• Revenue: $888.3 million (+16.5% YoY)
• Operating Margin: 14.4%
• Key Growth Drivers:
  • Increased domestic capital and coastal protection project revenues.
  • Delivery and operational commencement of the Amelia Island hopper dredge in Q3 2025.
  • Revenue generation from offshore energy projects in New York in 2025.
  • Improved utilization and project performance.
  • A larger proportion of higher-margin capital projects in the mix.

Product Portfolio:

• Dredging Services:
  • Capital Dredging: Port expansion, channel deepening, land reclamation, trench digging for pipelines/tunnels/cables, construction of marine structures.
  • Coastal Protection: Moving sand from the ocean floor to shorelines to combat erosion and protect assets.
  • Maintenance Dredging: Re-dredging waterways and harbors to remove accumulated sediments, ensuring navigability.
• Offshore Energy Services:
  • Subsea rock installation for offshore wind, oil and gas, and power and telecommunication industries.

Market Dynamics:

• Dredging: The U.S. Army Corps of Engineers is the largest domestic customer. Most projects are competitively bid, with few economical alternatives to dredging services. The Foreign Dredge Act of 1906 and the Jones Act provide significant barriers to foreign competition in the U.S. market.
• Offshore Energy: The U.S. offshore wind market is developing, with the Acadia targeting this sector. International offshore wind and interconnector cable markets are strong, with significant capacity awards in the United Kingdom and investment pacts in Europe. Competition in the international market is dominated by four large European companies and a large Chinese dredging company.

Sub-segment Breakdown:

• Capital Dredging: $441.1 million revenue (+26.7% YoY). Driven by port expansion projects in Alabama, Texas, Florida, and Louisiana.
• Coastal Protection: $281.6 million revenue (+11.1% YoY). Driven by projects in New Jersey, South Carolina, Delaware, and New York.
• Maintenance Dredging: $135.4 million revenue (-16.1% YoY). Decreased due to lower revenue in Florida, Mississippi, Puerto Rico, and Texas, partially offset by increases in Virginia, New York, South Carolina, Louisiana, and Arkansas.
• Offshore Energy: $30.2 million revenue (N/A YoY, as no revenue in 2024). Attributable to projects in New York.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $11.6 million (1.3 million shares) repurchased in 2025. A program authorizing up to $50.0 million in repurchases was approved on March 14, 2025, through March 14, 2026.
• Dividend Payments: The Company does not currently pay dividends to its common stockholders.
• Future Capital Return Commitments: The share repurchase program has $38.4 million remaining as of December 31, 2025.

Balance Sheet Position:

• Cash and Equivalents: $13.4 million (as of December 31, 2025)
• Total Debt: $378.2 million (as of December 31, 2025)
• Net Cash Position: ($364.8 million) (as of December 31, 2025)
• Credit Rating: Moody’s Investor Services reaffirmed a B2 corporate credit rating with a stable outlook in Q2 2024. S&P Global Ratings upgraded the corporate credit rating from B- to B with a stable outlook in Q4 2025. On February 11, 2026, S&P placed the rating on a credit watch with positive implication, reflecting potential strengthening upon the close of the pending transaction.
• Debt Maturity Profile: $380.0 million of principal payments are scheduled for 2029.

Cash Flow Generation:

• Operating Cash Flow: $246.7 million (2025)
• Free Cash Flow: $99.5 million (2025)
• Cash Conversion Metrics: The increase in operating cash flow in 2025 was primarily due to higher earnings, a significant reduction in accounts receivables, an increase in billings in excess of contract revenues, and an increase in deferred income taxes.

Operational Excellence

Production & Service Model: Great Lakes Dredge & Dock Corporation's operations involve the enhancement or preservation of waterway navigability and shoreline protection. The Company utilizes a diverse fleet of specialized equipment, including hopper dredges, hydraulic dredges, and mechanical dredges, along with material barges and Multi Cats. The mobility of the fleet allows for repositioning in response to demand changes and environmental restrictions. The Company operates a reliability-assured maintenance program to ensure equipment longevity and minimize unscheduled downtime.

Supply Chain Architecture: Key Suppliers & Partners:

• Surety Providers: Liberty Mutual Insurance Company, Philadelphia Indemnity Insurance Company, Ascot Surety and Casualty Company, Ascot Insurance Company, Endurance Assurance Company, Endurance American Insurance Company, Lexon Insurance Company, Bond Safeguard Insurance Company, AXIS Insurance Company, AXIS Reinsurance Company, Argonaut Insurance Company, Westchester Fire Insurance Company, Travelers Casualty and Surety Company of America, Berkley Insurance Company, and Zurich American Insurance Company.
• Shipyard Partners: Philly Shipyard (for the Acadia SRI vessel).
• Financing Partners: PNC Bank, National Association, Guggenheim Corporate Funding, LLC, Guggenheim Credit Services, LLC, CIBC Bank USA, Bank of America, N.A., and Truist Securities, Inc.

Facility Network:

• Manufacturing: The Company contracts with shipyards for new vessel construction.
• Research & Development: The Company continually assesses its need to upgrade and expand its dredging fleet to take advantage of improving technology.
• Distribution: The Company owns or leases yards in Staten Island, New York; Morgan City, Louisiana; Norfolk, Virginia; Chesapeake, Virginia; Little Rock, Arkansas; and Cape Girardeau, Missouri.

Operational Metrics:

• Fleet Composition (2025): 16 dredges, 13 material transportation barges, 2 Multi Cats, and 74 other support vessels, totaling 105 vessels.
• Average Vessel Age (2025): Hopper Dredges (22 years), Hydraulic Dredges (48 years), Mechanical Dredges (50 years), Scows (14 years), Multi Cats (3 years), Other Support Vessels (27 years). The total average age of the marine fleet is 27 years.
• Regulatory Compliance: Vessels are subject to U.S. Coast Guard certification and American Bureau of Shipping load line establishment, with the Company making substantial investments to maintain these certifications.

Market Access & Customer Relationships

Go-to-Market Strategy: Great Lakes Dredge & Dock Corporation primarily obtains contracts through competitive bidding processes, with awards typically going to the lowest qualified bidder. For government contracts, the U.S. Army Corps of Engineers prepares cost estimates, and bids must be within 125% of this estimate. Offshore energy projects involve a pre-qualification and request for quotation process, with selection based on schedule availability, price, and contractual terms.

Distribution Channels:

• Direct Sales: The Company engages directly with federal, state, and local governments, foreign governments, and private customers.
• Channel Partners: The Company works with third parties operating under contracts with federal agencies.
• Digital Platforms: Not explicitly mentioned as a primary sales channel.

Customer Portfolio:

• Federal Government: The U.S. Army Corps of Engineers is the largest domestic customer. In 2025, approximately 48% of total revenues were generated from federal agencies or third parties operating under federal contracts, a decrease from 57% in 2024 and 74% in 2023.
• Private Customers: In 2025, private customers contributed $319.7 million in dredging revenues and $30.2 million in offshore energy revenues. Approximately 41% of the Company’s total backlog at December 31, 2025, is from five private customers.
• State and Local Government: In 2025, state and local governments contributed $115.8 million in dredging revenues.

Geographic Revenue Distribution:

• United States: The vast majority of revenue is derived from U.S. operations.
• International: Foreign project operations generated no contract revenues in 2025 and 2024, and less than 1% of total contract revenues in 2023, primarily from the Middle East.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The U.S. dredging industry is highly fragmented, with many small operators primarily in maintenance dredging, who generally do not compete with Great Lakes Dredge & Dock Corporation. The domestic market is characterized by significant barriers to entry for foreign competition due to the Foreign Dredge Act of 1906 and the Jones Act. The international market is dominated by four large European companies and a large Chinese dredging company, which operate larger and more extensive fleets.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• U.S. Dredging: Great Lakes Dredge & Dock Corporation and two other companies comprised approximately 56% of the Company’s defined bid market related to domestic capital (excluding LNG), coastal protection, and maintenance over the three-year period ended December 31, 2025. (Specific company names not disclosed in the filing).
• International Dredging & Offshore Energy: Four large European companies and a large Chinese dredging company. (Specific company names not disclosed in the filing).

Emerging Competitive Threats:

• International subsea rock installation vessels, though the Jones Act provides significant barriers for certain U.S. projects.
• Potential changes to the Jones Act or its interpretation by Customs and Border Protection could increase foreign competition.

Competitive Response Strategy: Great Lakes Dredge & Dock Corporation targets opportunities well-suited to its equipment and where it can be most competitive. The Company is proactively expanding the Acadia’s strategic target markets to include oil and gas pipeline protection, power and telecommunications cable protection, international offshore wind, and critical subsea infrastructure protection to mitigate potential delays in U.S. offshore wind projects.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Reduction in government funding for dredging or other contracts, or government cancellation of such contracts, or the inability of the U.S. Army Corps of Engineers to let bids to market. Inability to qualify as an eligible bidder for government contracts or to compete successfully.
• Technology Disruption: Costs necessary to operate and maintain existing vessels and construct new vessels may increase due to changes in applicable regulations or standards.
• Customer Concentration: Loss of a single customer contract could significantly decrease revenue. Approximately 41% of total backlog at December 31, 2025, is from five private customers.
• Transaction Risks: Failure to satisfy conditions for the pending merger with Saltchuk Resources, Inc., uncertainties associated with the transaction, failure to complete the transaction within the expected timeframe or at all, provisions limiting the Company's ability to pursue alternatives, restrictions on business conduct under the Merger Agreement, potential lawsuits, and stockholders' inability to benefit from future Company growth if the transaction is completed.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Disruptions to the supply chain could prohibit procurement of materials for vessel maintenance and new builds.
• Geographic Concentration: Project delays related to the increasingly negative impacts of climate change or other unusual weather patterns.
• Capacity Constraints: Equipment or mechanical failures could result in increased costs, project delays, and reduced revenues. Unforeseen delays and cost overruns could postpone delivery of or halt plans to build new vessels.
• Workforce Risks: Work stoppages by the unionized labor force. Inability to find, attract, and retain skilled labor and key personnel.
• Operational Hazards: Significant operating risks and hazards inherent in the business could result in personal or property damage, losses, or liabilities.

Financial & Regulatory Risks

• Market & Financial Risks: Significant number of fixed-price contracts subjects the Company to risks associated with cost over-runs, operating cost inflation, and potential claims for liquidated damages. Fluctuations in fuel prices and prices of new build/maintenance materials could adversely affect profits. Substantial indebtedness makes the Company vulnerable to adverse economic and competitive conditions. Adverse capital and credit market conditions may affect the ability to access capital and meet liquidity needs. Foreign exchange risks, particularly related to the Acadia build. Investments in privately financed projects could result in significant losses.
• Credit & Liquidity: Inability to obtain bonding or letters of credit would limit the ability to obtain future contracts.
• Regulatory & Compliance Risks: Failure to comply with government contracting regulations could lead to significant liabilities and loss of revenue. Environmental regulations could force the Company to incur capital and operational costs. Market or regulatory responses to climate change could affect the business. Failure to comply with Jones Act provisions or modifications to these provisions could adversely affect the business. Failure to comply with anti-discrimination laws could lead to legal action and reputational risk. Disruptions, failures, data corruption, cyber-based attacks, security breaches, or regulatory non-compliance affecting IT and OT systems.

Geopolitical & External Risks

• Geopolitical Exposure: Force majeure events, including natural disasters, war, and terrorist actions, could negatively impact business.
• Trade Relations: New tariffs have increased costs and could adversely affect business operations.

Innovation & Technology Leadership

Research & Development Focus: Great Lakes Dredge & Dock Corporation continually assesses its need to upgrade and expand its dredging fleet to take advantage of improving technology and address changing market needs. The Company's cybersecurity risk management program is informed by the National Institute of Standards and Technology framework.

Intellectual Property Portfolio: The filing does not explicitly detail the Company's intellectual property portfolio, patent strategy, licensing programs, or IP litigation.

Technology Partnerships: The filing does not explicitly detail specific technology partnerships or research collaborations beyond general supplier and shipyard relationships.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The filing does not explicitly detail succession planning or leadership development initiatives.

Board Composition: The Audit Committee of the board of directors oversees enterprise risk management, including cybersecurity, IT, and OT risks. The Chief Legal Officer holds a certificate in Cybersecurity Governance for the Board of Directors from the Massachusetts Institute of Technology Sloan School of Management.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2025, the Company employed 380 full-time salaried and non-exempt personnel in the U.S. An average of approximately 716 hourly personnel were employed in 2025 to meet domestic project requirements.
• Geographic Distribution: Employees are based across the U.S., with project locations on the coasts and offices in Houston, Texas, and Staten Island, New York. The Company also employs 15 foreign nationals and 3 local staff for its Middle East operations.
• Skill Mix: The Company's unionized hourly workforce is largely represented by the International Union of Operating Engineers Local 25 and the Seafarers International Union.

Talent Management:

• Acquisition & Retention: The Company aims to attract, select, hire, retain, incentivize, and integrate employees by offering a respectful and safe work environment with competitive compensation and benefits.
• Employee Value Proposition: Benefits include a 401(k) plan with employer contributions, health, life, and disability insurance, paid time off, parental leave, and paid employee assistance programs. Equity incentive plans are used to attract, retain, and motivate executives and selected employees.

Diversity & Development: The Company's safety culture emphasizes training, behavioral-based awareness, and mutual responsibility for employee well-being. The Company believes it is in compliance with anti-discrimination laws, including those pertaining to diversity, equity, and inclusion programs, as per a January 21, 2025 Executive Order.

Environmental & Social Impact

Environmental Commitments:

• Climate Strategy: The Company's operations are subject to various environmental laws and regulations related to dredging, dredged material disposal, wetlands protection, water discharges, and air emissions. The Company has updated its modeling for current and future weather patterns to better estimate project costs related to climate change impacts.
• Emissions Targets: The Company uses low sulfur fuel in many domestic operations. Many jurisdictions, including the European Union and California, require emissions data reporting.
• Responsible Sourcing: The Company takes steps to limit potential liability by hiring qualified subcontractors for hazardous material removal and securing indemnification obligations from customers or subcontractors.

Social Impact Initiatives: The Company's Incident & Injury Free® (IIF®) safety approach management program is integrated into all aspects of its culture, prioritizing incident prevention in business planning, operations, and maintenance.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Many East Coast coastal protection projects are limited by environmental windows requiring work in winter months. Rivers and lakes in the northern U.S. freeze during winter, reducing operational ability. Fish spawning and flooding can also affect dredging operations.
• Economic Sensitivity: Capital dredging work can be impacted by budgetary constraints and economic conditions.
• Industry Cycles: Severe weather events like hurricanes, flooding, and droughts can increase the need for maintenance and coastal protection dredging.

Planning & Forecasting: The Company makes allowances for project downtime due to adverse weather conditions, consistent with historical weather data, when bidding on fixed-price contracts.

Regulatory Environment & Compliance

Regulatory Framework:

• Industry-Specific Regulations: The Company is subject to the Foreign Dredge Act of 1906, the Jones Act, the Shipping Act, 1916, and vessel documentation laws (Chapter 121 of Title 46 of the United States Code), which restrict dredging and maritime transportation in U.S. waters to U.S.-flagged, U.S.-built, U.S.-citizen-owned (at least 75%), and U.S.-crewed vessels.
• Environmental Regulations: Operations are subject to environmental laws such as the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act, and the Oil Pollution Act of 1990.
• Cybersecurity Regulations: As a federal contractor, the Company is subject to cybersecurity and information security requirements under federal standards, including the National Institute of Standards and Technology cybersecurity framework and the Cybersecurity Maturity Model Certification framework. Vessels under U.S. Coast Guard jurisdiction must comply with maritime cybersecurity regulations.
• International Compliance: The Company operates in jurisdictions with differing privacy, data protection, and cybersecurity laws, including cross-border data transfer restrictions such as those under the General Data Protection Regulation.

Trade & Export Controls: In February 2025, a 25% tariff was imposed on imported steel and aluminum, which was raised to 50% in June 2025. The Company does not expect a material adverse impact from these tariffs on its operating results, cash flows, or financial condition.

Legal Proceedings: The Company is not currently a party to any material legal proceedings or environmental claims.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 26.8% in 2025, compared to 24.0% in 2024 and 2023.
• Geographic Tax Planning: Domestic operations generated $101.5 million in income before income taxes in 2025, while foreign operations incurred a loss of $1.2 million.
• Tax Reform Impact: The One Big Beautiful Bill Act, signed July 4, 2025, includes provisions for elective deductions for domestic research and development, permanent reinstatement of bonus depreciation, and modifications to the excess business interest expense limitation. No material impacts were observed in 2025. The Company does not expect the Organisation for Economic Co-operation and Development's proposed global minimum tax (Pillar 2) to have a material impact on its consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework: The Company maintains various insurance policies and partially self-insures certain risks. It also utilizes bonding agreements and letters of credit as risk transfer mechanisms.

Insurance Coverage: The Company maintains hull and machinery, pollution liability, general liability, and personal injury insurance. It self-insures costs associated with seagoing employees covered by the Jones Act, workers’ compensation claims, hull and equipment liability, and general business liabilities up to certain limits.

Risk Transfer Mechanisms:

• Performance and Bid Bonds: At December 31, 2025, the Company had outstanding performance bonds with a notional amount of approximately $1.3 billion, covering projects with a remaining revenue value in backlog of $554.4 million.
• Letters of Credit/Bank Guarantees: For certain foreign, private, and offshore energy projects, letters of credit or bank guarantees are required as security for performance and advance payments. The Company had $57.9 million in outstanding letters of credit at December 31, 2025.