2Q2020 operating results were slightly ahead of expectations due to strong execution. Total revenue of $167.9 million was ahead by ~$7 million and profitability was slightly higher than expected. Gross profit of $33.0 million was $2.4 million above our estimate of $30.6 million, and gross margin improved to 19.7%, which was above our estimate of 19.0%.Maintaining 2020 EBITDA estimate of $159.0 million due to the positive dredging market outlook. Our 2020 EBITDA is about 17% higher than 2019 EBITDA of $135.6 million. Similar to last year, 1Q2020 will be the strongest quarter. While revenue and gross margin moderated in 2Q2020 and are likely to moderate over the rest of the year due to planned fleet downtime, several factors remain positive for 2020 versus 2019 and full year operating results are on track to move higher.Backlog down, but large projects are on horizon. News expected on shortly several large opportunities and Jacksonville C in 3Q/4Q2020. While backlog dropped for the third consecutive quarter to $433 million from $475 million in 1Q2020, $589 million in 4Q2019 and $654 million in 3Q2019, a solid rebound is expected in 2H2020.Fleet renewal on the horizon. New build one approved and option for new build two creates optionality. Cost of new build one is $97 million and option for second one is $93 million.Stronger credit profile with lower net debt of $91.5 million, down $25.8 million from 1Q2020, makes debt refinancing likely and new build funding manageable. Also, stock buyback of up to $75 million sends a strong positive signal.Maintain Outperform rating and increase price target to $14.35/share due to continued confidence in 2020 outlook and the added positive of the new stock buyback program. Despite the positive 10% response to 2Q2020 operating results and the stock buyback program, GLDD is still down 21% this year. We believe that GLDD is poised to continue to rebound since concerns about the below average project win rate and backlog direction should not linger after additional work is awarded. We also view that the current valuation of 4.5x 2020 EBITDA and the stock buyback program as positives.Read More >>