Houston Ship Channel work finalized. A contract valued at $92.5 million was signed with the Port of Houston Authority. The award represents the first phase of the Houston Ship Channel Widening and Improvement Project 11. Work has a 1Q2022 start and a 4Q2022 finish. The initial approval totaled $95.4 million so options could total ~$2.9 million. 3Q2021 Backlog moved up to $599 million and 4Q2021 awards now total $135.4 million. 4Q2021 bidding off to good start and more optimistic on LNG potential. 4Q2021 awards include South Atlantic Regional Harbor for $25.8 million (ex options of $3.6 million), Oak Island Renourishment Project 2021/2022 of $17.1 million, and Port Houston for $92.5 million. A large $225.1 million award in Rockaways, New York was announced last week and it might offer a dredging opportunity on a sub contracting basis. Additional phases in Port Houston and Norfolk are already on the horizon.4Q2021 Guidance sets tone for strong finish to year. Revenue should jump into the $225- $235 million range with gross margin close to 3Q2021, implying gross profit in the $48 million range. COVID-19 cost drag is moderating and our EBITDA estimate is $42 million, or EBITDA margin of 18.8%. Looks like the strongest quarter in almost two years.Recovery expected next year. With higher backlog and moderating COVID-19 costs, we estimate that 2022 EBITDA will recover to $147.8 million. Ellis Island will dry dock in mid-year and revenue expected to be flat, but profitability should improve, with gross margin in the 21.6% range and EBITDA margin of close to 20%.Maintain Outperform rating and price target of $17.05/share. With new awards and higher backlog, we are encouraged that the stock is shaking off the lackluster performance following softer 2Q/3Q2021 results. Since the 3Q2021 disappointment, the stock has fully recovered from the dampened stock price performance over the past three months. We think the 2Q/3Q2021 results shortfall should prove to be speed bumps and believe that the risk/reward profile remains favorable. Trading at EV multiples of 10.0x 2021E EBITDA and 8.3x 2022 EBITDA, the stock remains attractive due to recent awards, recovering backlog and solid 4Q2021 guidance. Read More >>