Moody's upgrades Great Lakes

Moody's Investors Service said it upgraded the ratings on Great Lakes Dredge & Dock Corp., including the company's corporate family rating to B2 from B3 and probability of default rating to B2-PD from B3-PD.

Moody's also said it upgraded the company's senior unsecured notes due 2022 to B3 (LGD 4) from Caa1 (LGD 4) and upgraded its speculative grade liquidity rating to SGL-2 from SGL-3.

The outlook is stable.

The one-notch upgrade reflects a view that the company's leverage will be sustained within the 3x to 4x range, Moody's said.

The agency said it recognizes that the company's earnings are highly variable from year-to-year and the business requires sizable capital investment in equipment and vessels.

But, the company's cash balances of $123 million and recent extension of its now undrawn $200 million ABL revolver provides credit support through the business cycle, Moody's said.

The ratings reflect the company's volatile earnings that are exposed to a highly cyclical industry susceptible to a number of factors beyond management control, the agency said.

The company's revenues are highly dependent on the domestic dredging industry, which is limited in the absolute number of contracts that go to bid each year, Moody's said.

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