Dredging and coastal protection company Great Lakes Dredge & Dock (NASDAQ: GLDD) missed Wall Street’s revenue expectations in Q3 CY2025 as sales rose 2.1% year on year to $195.2 million. Its GAAP profit of $0.26 per share was 50.7% above analysts’ consensus estimates.

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Lasse Petterson, President and Chief Executive Officer, commented, “Great Lakes delivered another solid quarter, driven by strong project execution and high equipment utilization. We ended the quarter with revenue of $195.2 million, net income of $17.7 million, and adjusted EBITDA of $39.3 million. Our substantial dredging backlog stood at $934.5 million as of the end of the third quarter, with an additional $193.5 million in low bids and options pending award, providing revenue visibility for the remainder of 2025 and well into 2026. Capital and coastal protection projects account for over 84% of our dredging backlog, which typically yield higher margins for GLDD due to our experienced project teams and our extensive fleet.

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

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Great Lakes Dredge & Dock grew its sales at a sluggish 2.8% compounded annual growth rate. This fell short of our benchmarks and is a rough 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 22.7% 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 4.2% year-on-year growth over the last two years. Because this number is lower than its revenue growth, we can see the company fulfilled orders at a faster rate than it added new orders to the backlog. This implies Great Lakes Dredge & Dock was operating efficiently but raises questions about the health of its sales pipeline.

This quarter, Great Lakes Dredge & Dock’s revenue grew by 2.1% year on year to $195.2 million, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.8% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Great Lakes Dredge & Dock has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.1%, higher than the broader industrials sector.

Looking at the trend in its profitability, Great Lakes Dredge & Dock’s operating margin rose by 5.6 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Great Lakes Dredge & Dock generated an operating margin profit margin of 14.4%, up 5.7 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

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 weak 1.6% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Great Lakes Dredge & Dock, its two-year annual EPS growth of 101% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, Great Lakes Dredge & Dock reported EPS of $0.26, up from $0.13 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 $1.19 to shrink by 24.2%.

Key Takeaways from Great Lakes Dredge & Dock’s Q3 Results

It was good to see Great Lakes Dredge & Dock beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 5.3% to $11.98 immediately following the results.

Indeed, Great Lakes Dredge & Dock had a rock-solid quarterly earnings result, but is this stock a good investment here? 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 for active Edge members.