Dredging and coastal protection company Great Lakes Dredge & Dock (NASDAQ: GLDD) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 13.9% year on year to $193.8 million. Its GAAP profit of $0.14 per share was 51.4% above analysts’ consensus estimates.

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Lasse Petterson, President and Chief Executive Officer, commented, “Great Lakes delivered a solid second quarter, driven by strong project execution and high equipment utilization. We ended the quarter with revenue of $193.8 million, net income of $9.7 million, and adjusted EBITDA of $28.0 million, despite four dredges undergoing their regulatory drydocking. Our substantial dredging backlog stood at approximately $1.0 billion as of the end of the second quarter, with an additional $215.4 million in low bids and options pending award, providing expected revenue visibility for the remainder of 2025 and well into 2026. Capital and coastal protection projects account for 93% of our dredging backlog, which typically yield higher margins.

Company Overview

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ: GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Great Lakes Dredge & Dock’s 2.9% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Great Lakes Dredge & Dock’s annualized revenue growth of 18.1% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Great Lakes Dredge & Dock also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Great Lakes Dredge & Dock’s backlog reached $1.01 billion in the latest quarter and averaged 25.4% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Great Lakes Dredge & Dock’s products and services but raises concerns about capacity constraints.

This quarter, Great Lakes Dredge & Dock reported year-on-year revenue growth of 13.9%, and its $193.8 million of revenue exceeded Wall Street’s estimates by 9%.

Looking ahead, sell-side analysts expect revenue to decline by 1.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

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Operating Margin

Great Lakes Dredge & Dock was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Great Lakes Dredge & Dock’s operating margin rose by 4.3 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, Great Lakes Dredge & Dock generated an operating margin profit margin of 8.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Great Lakes Dredge & Dock’s flat EPS over the last five years was below its 2.9% annualized revenue growth. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

We can take a deeper look into Great Lakes Dredge & Dock’s earnings to better understand the drivers of its performance. A five-year view shows Great Lakes Dredge & Dock has diluted its shareholders, growing its share count by 2.2%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Great Lakes Dredge & Dock, its two-year annual EPS growth of 90.8% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q2, Great Lakes Dredge & Dock reported EPS at $0.14, up from $0.11 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Great Lakes Dredge & Dock’s full-year EPS of $1.05 to shrink by 24.3%.

Key Takeaways from Great Lakes Dredge & Dock’s Q2 Results

We were impressed by how significantly Great Lakes Dredge & Dock blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 9.4% to $11.61 immediately after reporting.

Great Lakes Dredge & Dock put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.