Great Lakes Dredge & Dock Corp (GLDD) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Great Lakes Dredge and Dock Corporation earnings conference call. I will be your operator for today. At this time all participants are in listen only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today's call, Ms. Katie Hayes, Investor Relations. Please proceed.

Good morning. This is Katie Hayes and I welcome you to our quarterly conference call. Bruce Biemeck, our President and Chief Financial Officer, will begin our discussion by presenting the financial highlights for the 2010 fourth quarter and full year, and , Jon Berger, our Chief Executive Officer, will share his market overview. Following their comments there will be an opportunity for questions.

During this call we will be making certain forward-looking statements to help you understand our business. These statement involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations . Certain risk factors inherent in our business are set forth in our filings with the SEC, including our Form 10-KA, 2009, and subsequent filings.

During this call we will refer to certain non-GAAP financial measures including EBITDA, which are explained in the net income/EBITDA reconciliation attached to our earnings release and posted it in the Investor Relations section of the Company's website, along with certain other operating data. I will now turn the call over

Thank you. Good morning. I hope you had a chance to look at the press release and I will make some comments about it and Jon will too in a little bit. We had a strong quarter, as we had expected, and which brought the year-to-date numbers to above the range that we had talked about. We are very proud of the effort for the quarter and for the year, and again I thank our many employees who put out great effort to achieve these results.

Some comments about the quarter. For the quarter we continued to operate at elevated levels. The quarter included strong capital Dredging and Demolition revenue as we had expected. Revenues in the quarter were $172 million, an increase of 7% from the $160.1 million in the fourth quarter of 2009. We had strong domestic Dredging performance during the quarter, which included a nice contribution from the Louisiana berm project that we have talked about in past calls and talked about in the press release.

Maintenance revenues declined when compared to 2009, and you might remember there were a number of stimulus projects that helped 2009, including the fourth quarter. So those were maintenance projects and so we did see a decline in maintenance revenue as we expected.

Foreign Dredging revenue increased. We began the final phase of DR, which was awarded during the quarter and have been working forward on that project. The margin -- the gross margin of the Company improved to 14.5% during the quarter, which compares it to 9.7% during the fourth quarter of 2009, largely influenced by higher-margin capital projects versus maintenance projects in the 2009 quarter.

Additionally, as we look back at the fourth quarter of 2009, we had adverse weather during the quarter, and that means that the weather was worse than the average downtime we expect in the fourth quarter. We also had a write-down on certain demolition projects. We experienced a higher utilization rate in the fourth quarter of 2010, and actually throughout 2010, which included the execution on the berm projects.

Operating income gained significantly to $12.7 million versus $3.9 million in the fourth quarter of 2009 due to work mix and the utilization factors I just discussed. The strong performance resulted in EBITDA for the quarter of $21.5 million versus $13.7 million in the fourth quarter of 2009, and brought us to a record year for Great Lakes with EBITDA of $103 million.

As far as the bid market, I will talk about that a little. First, Dredging. We had $217 million awarded, bringing 2010 to $875 million versus $1.137 billion in 2009. That does not include berm work, as we have talked about in the past . It is contracted as direct award rather than the bid basis which we historically measure for market share. So there is a difference when we look at the bid market and market share. 2009 did include stimulus plan projects, which was a boost to 2009.

The Company in 2010 won 73% of the beach projects bid on, 30% of maintenance projects and 21% of capital projects, bringing us to 30% of the overall market, which is below the average that we have talked about and been able to achieve in recent years. And, again, it doesn't include the berm, so that skews it, but, as we have also mentioned before, we lost -- we were unsuccessful in a bid in 2010 for a large capital project that was over $100 million.

And we've talked about the factors leading up to that and how that impacted the year. It was a job that is really suited well for our equipment and we may end up doing a portion of that work on a subcontract basis, but none of that of course is in backlog. Since January 1, the market has produced $142 million of new projects. We have won $51 million, or 37%, so can see that the 37% is closer to the 40% or so that we usually talk about.

The Dredging, overall Dredging backlog, at December 31, $282 million versus $365 million at December 31, 2009, and the $282 million does include $25 million for the Matteson acquisition. This inventory -- this backlog level, rather, is up from the end of last quarter and we have continued to see positive momentum in the bid market. As always -- as is always the case, there are low bid projects not included in backlog awaiting formal contracts, as well as options on existing contracts and foreign projects in the negotiating stage.

But let me say, while backlog overall in Dredging is lower when we look at what we have ahead of us for additional berm work, and that comes in pieces, as we have indicated before. And we look at what we picked up in January, I think, overall, we feel very comfortable about where we are, particularly with the bidding prospects ahead of us and which ones we feel our suited for our equipment.

Demolition backlog was a story in the other direction, at year-end it was $81.1 million versus $16.4 million at the end of 2009 . As we have discussed, we have moved into some new geographic areas and are bidding on and winning projects that the Demolition business has historically not competed in. So, as I said, Demolition backlog is strong. It does have one big component, the removal of a bridge in Louisiana, which we are just gearing up to get started on and feel very good about going forward on this project.

Equipment spending for the year, we had $29.7 million of a capital spending included $14.6 million spent to upgrade -- finish upgrading the Dredge Ohio. The Dredge Ohio is now completed and a cutter dredge that we think is on par with the Dredge Texas, I think you all might remember how well the Dredge Texas has performed in recent years.

As we looked at -- as we look at 2011 spending, we don't see anything unusual. We have our typical level of $15 million to $20 million for capacity maintenance spending, and then anything above that will be looked at on the basis of justification to increase, which increases revenue or decreases expenses. Bottom line is there has to be a return on investment.

But I think it is fair to say that in 2010, Capital Expenditures were lower. One reason for that was we were pretty busy. A lot of our equipment was working and perhaps we would've it spent more on capacity maintenance than we did, but when the dredges are busy we keep them working if we can.

A few comments on debt and liquidity. We continued to experience strong cash flow and succeeded in continuing to reduce our investment in foreign working capital, which has been an initiative here. So we finished the year with cash of $48.5 million, and that was after paying $37.5 million on December 31 for the Matteson acquisition. And, of course, there was a $7.5 million note for that, too, but we ended up the year with $48.5 million.

Remaining outstanding at quarter-end, year-end, was $175 million of 7.75% senior subordinated debt. In January we redeemed the notes and issued $250 million in new eight-year senior unsecured notes with an improved interest rate of 7.375%. Coming up, we have a -- our revolving credit facility matures in June of 2012, and we had $133 million of borrowings available at December 31, 2010.

Key financial ratios and liquidity comments at quarter-end. Our total leverage ratio netting domestic cash and equivalent, 1.4 times, interest coverage, 7.9 times . Our -- as I said, our foreign Dredging investment and working capital has been reduced, and we see additional opportunity to reduce it. However if business picks up in the region, there may be some increase in that.

Also new project start-ups in Brazil. We are working in Brazil, we are bidding on a number of projects in Brazil. Anytime we leave the domestic market there is a higher working capital component, however we don't expect that our operations in Brazil would increase working capital requirements significantly.

And as I said, we are currently contemplating replacement of our revolving credit agreement in accordance with our strategic plan to address the maturity that is upcoming. So let me turn this over to Jon Berger, our CEO to discuss some of the considerations for moving forward and our outlook as

Thank you, Bruce. First off I want to acknowledge our Great Lakes team for their performance, and we are excited to deliver another record year for investors. With an increase of 32% in our EBITDA over 2009 and almost doubling our EPS from our 2009 level. Once again, when an emergency need for dredging arose, like the berm construction work off the coast of Louisiana, our large diversified fleet and experienced team enabled us to readily respond to this large effort.

As you know, the beginning of every year presents challenges and opportunities for the Company. As the year progresses these challenges and opportunities evolve and change. We are confident that we will be able to take these challenges in stride as they present themselves and with the efficiency and expertise we have demonstrated in the past.

Let me give you a little color on where we see the outlook going forward. Of utmost importance is the Harbor Maintenance Trust Fund, we have talked about this numerous times. It adds about 500 or more to the domestic dredging market. Almost a day goes by you can't find an article in one of the papers in the US talking about it. Over the last year, we have established a major presence in Washington, and our trade association, the DCA, has worked with a strong coalition of interested parties from the maritime community to form RAMP. RAMP's sole purpose is to win passage of the Harbor Maintenance Trust Fund Legislation.

When Congressman Boustany reintroduced House Bill 104, he actually called it the RAMP bill. With new Congress in place, the HMTF bill has already been introduced by Senator Levin in the Senate and Congressman Boustany. We have seen many congressmen and senators already jump on board and we've garnered support from both sides of the aisle and really have met little opposition. Again our focus this year will now be to continue that momentum and having -- and getting the help needed to navigate the bill through the legislative process.

We all hear what's going on in Washington, so it's going to take some skill and a lot of effort on our part and the coalition's part to be able to see if we can get it passed this year. As we've said in the past, once funded, the bill can provide meaningful opportunities in the fourth quarter of 2011 and going forward.

Another area of promise is the coastal restoration. We've talked some about that also. It's gaining significant momentum in the Gulf and we expect to see bidding and opportunities coming up in 2011. Funding will come from fines from accidents, like the BP spill, will fund this work, so we look forward to that.

As many of you know, in October of 2010, the president issued an executive order establishing the Gulf Coast Restoration Task Force whose goal is to coordinate intergovernmental responsibilities planning and exchange of information, to better implement the Gulf Coast ecosystem restoration, and also to facilitate appropriate accountability and support through the restoration process.

The committee -- the task force, excuse me, includes representatives from all five of the Gulf Coast states, in addition to many of the cabinet-level positions in the Obama Administration. So we believe that we will see some work coming out of that and we are excited to continue the work in the Gulf and help restore the Gulf.

Let's talk a little bit about 2011 and beyond. Without both stimulus and berm work we expect 2011 to be a solid bidding year. We as a Company need to increase our foreign Dredging revenue and our Demolition business, with a very good backlog, needs to perform at historical levels. Again, almost a day does not go by that you don't hear the East Coast ports talking about deepening associated with the Panama Canal. We hope that work and expect some of that work to start trickling out in 2012 and beyond.

Beach projects that have been deferred for many years are now scheduled for bid and we see over $200 million of awards in the next 12 months. Our Middle East market has been flat and recently trending down. We have undertaken a review of the market to initiate cost reduction plans as necessary, but we are seeing some opportunities coming out in the Gulf.

We have been working on a project in Brazil and see numerous opportunities for our equipment in that market. As we've talked about our Demolition expansion has resulted in higher revenue projections, and as we get through the learning curve in working some of these new markets we expect to capitalize on that expansion.

As we look to 2011 and beyond, we look forward to further honing and implementing our strategy. As we have talked about, we started, in September, in building a strategy that is critical to our long-term growth. I want to walk you through some elements of that strategy to perform both in short-term and long-term. First point is we will continue to support and invest in our core domestic market. We are actively reviewing our equipment needs and balancing them with our expectations of the domestic market as we see it over the next five to 10 years.

Secondly, we plan to expand our domestic Dredging opportunities out of our core coastal business. The LW Matteson acquisition we completed at the end of the 2010 is a beginning, and we believe this is a potential growing segment of the market where we can profitably take advantage of and add value.

Thirdly, we are a Company that is in the water and the dirt. We see our skills and existing service offerings being able to expand into environmental services on the execution side. We like these markets, we believe they have inherent growth, and we also like the competitive landscape and the position we believe we can afford into those markets. And finally, we believe those markets will diversify our client base and potentially smooth some of our revenue, and let us be less reliant on the Army Corps budgets.

Fourthly, we see some operating efficiencies we can garner. We believe that some of these operating efficiencies can meaningfully provide opportunities for our operating margin and just need some focused attention. We are seeing initial encouraging results and need to continue to focus on this area.

And, fifthly, we will either more fully integrate our secondary lines of business or exit these businesses. We really do like our Demolition business and our Aggregate and Stone businesses, but we believe we need to see more synergy and cooperative efforts be able to fully realize their potential and our investment in them. We do see them as being additive to our proposed growth into the environmental services area but we must have a coordinated effort. We have challenged the management of both those businesses to work with our core business as we grow into the environmental service business.

And finally, we like the Jones Act businesses. The market position they afford participants like us, we believe we should be exploring other maritime businesses of that nature. As Bruce highlighted, we are very pleased with the execution of our recent refinancing of our notes and we believe it provides us the flexibility to execute on our strategy.

Finally, I would like to take the opportunity to thank our leadership of Great Lakes, our Board on down. We laid out an ambitious plan at the beginning of 2010 which included significant disruption in our historical operating mentality. I think we've executed beyond our expectations and believe we are well-positioned to grow Great Lakes in the future. With that, I would like to open it up for questions. Any questions?

(Operator Instructions).

Your first question comes from the line of [Gau Sho] from Barclays. Please proceed.

Good morning, guys. Nice quarter.

Thanks, Gau.

Hello. Can you talk about your current exposure to the Middle East? How confident are you that work wouldn't uninterrupted by protests in the region that could spread, and particularly is there anything you are working on that's effected in Bahrain.

Well, sure. We are working in Bahrain. We have been down for one day during the current situation. We are following it closely. Our team on the ground, they are working with our team here, has put together, or rather updated, an evacuation plan if the situation declines. We are staying in constant touch with our -- through our new insurance brokers, Arthur Gallagher, we are staying in touch with the London markets to see how the London markets are assessing the exposure.

We do have war risk insurance and the war risk insurance includes war, civil war, revolution, rebellion, strikes, riots, civil commotion, and it covers our personnel and our physical property. The way that the coverage works is that there would be a number of trigger points to warn us as the situation might threaten us.

First one would be a warning to any insureds of future possible actions affecting coverage. We -- the second step would be a notice to not bring new personnel our assets into the region. Thirdly, we'd receive notice to evacuate personnel and assets, and finally, a notice of cancellation of the war-risk coverage.

That's kind of how it would work. None of those trigger points have been reached and we feel comfortable with this situation at this point. We communicate constantly with our operating Management on the ground there, and, as I said, stay in touch with the financial markets to get a read on what's ahead.

Yes, and, Gau, it's also important to point out that our equipment is not in Manama directly, we are on the coast and there hasn't been significant demonstrations at all there. Over the last couple of days the State Department has actually eased up some of their recommendations for US businesses and interests in Bahrain. But, as Bruce said, this is something we have a team in place and we are very carefully watching.

The insurance doesn't cover forgone revenue, does it?

It does not.

It does not.

Okay, and can you remind us how many dredges and slurry vessels do you currently have in Bahrain and overall in the Middle East?

Nine vessels in the Middle East.

Dredges.

No they are all dredges in the Middle East, I don't know how many are actually located in Bahrain. There might be -- most of them are, or in close countries, and then all the support vessels. There's really not a specific number but there are support vessels that go along with those dredges.

Okay, got you. So shifting gears a little bit, you talk about $200-million-plus of potential beach work in the next 12 months. Can you see anything different in 2011 that would cause you to have, let's say a lower percentage market share versus 2010 . And if you win the same 73% of beach projects in 2011, we are talking about $150 million worth of beach awards, which triples 2010. Is that what you are really seeing? What I'm trying to say, if we really see $250 million worth of projects, would you have capacity to take on all the

Well, sure, we would have the capacity. I mean, many beach projects are done with hopper dredges and there are competitive dredges in the marketplace, and those same dredges can be deployed for maintenance work. And so, part of the outlook has to make -- we have to make assumptions as to how people will use their equipment on certain of the beach projects.

But we do see a robust market ahead. There have been projects deferred, and as we've talked through our budgeting plan before, we do -- we start with a large population of projects in each of the areas and for each customer, and that we do a pretty rigid analysis and review to determine which ones we think will actually come out. From what we see we think it is a good market ahead in 2011.

Okay.How is the run rate for the new Rivers and Lakes segment in 1Q 2011?Is it in line with your expectations of $35 million to $40 million a year in revenue? Is there any seasonality to that business and how are the EBITDA margin so far? Is it in line with your expectations?

There is seasonality. The portion of the river where the Matteson Rivers and Lakes group works is usually not workable in the early months of the year, as has been the case, it has been iced out. However, we have a decent backlog of $25 million, and we see good project opportunities ahead. There was a pretty rapid melt in the Midwest over the weekend, or late last week, and the river was raging. And that usually is a good sign if you are a dredging contractor because that means it will silt in at a more rapid rate. So I think what we see ahead is exactly as we expected when we closed the transaction. Having said that, we are 45 days or so, 50 days into the new year and what we have really encountered to date is icing conditions.

I know it's a little early, but I wonder if there's any progress with bidding on new projects for Matteson, projects that it wasn't able to bid on prior to the acquisition. You talked about bidding projects across the US?

I think the answer, it is a little early, but I think we are very encouraged by how the marketplace and the influencers of this type of work have acknowledged the transaction ,and that we believe it's going to work as we expect it. Talking to some of the bigger environmental service engineering firms, they understand the reason why we did it. They like the fact that a big company is stepping in and we are very encouraged by the initial discussions we've had.

If I could just squeeze in one more, sorry.Could you tell us how much core work was deferred when you took on the Louisiana berm project? Are those on track to be restarted?

There was some work deferred. We have -- we really only have one dredge working on the berm right now, but our big dredge is Dredge Texas, which is a good revenue generator.Other dredges have been -- have now been moved onto other projects, some of which are deferred projects. I don't have a number for you as to what was deferred. I can't tell you but I think it's part of what we see as included in the opportunities for 2011.

Okay.

I might add to what Jon said. In fact, we have had quite a bit of communication with the Rivers and Lakes employees. In fact, the -- one of the two key guys in our office at yesterday and today working with our team here to look at some opportunities that that group would not formally have looked at. So it's so early that it's hard to talk about specifics, but that's the point of the meeting right now, and it is clear that is part of the plan to recognize and try to take advantages of opportunities that might not have been possible before.

Okay. Thanks very much guys.

Your next question comes from the line of Trey Grooms from Stephens Inc. Please proceed.

Hey Jon and Bruce.

Hi, Trey.

Would you mind talking a bit about your thoughts on the proposed Army Corp budget that came out of the White House, I guess a few weeks ago, for 2012. And looking at it where it is today and the steps that take place before we get something finalized I guess more towards September timeframe, and your thoughts on how that could progress from here?

Yes. It is so fluid, what is going on in Congress right now that it's hard for us to get a tremendous handle. We are very heartened again by what is happening with the Harbor Maintenance Trust Fund. There's been big discussion about the Mississippi River and whether they keep it open or not and the thought process behind that, and focusing on some navigation of the Mississippi River. So we are on top of DC, we have people there on a regular basis. We are going to invest more in Washington.

The big question becomes, what are the capital projects that come out? I think if you're going to look anywhere, those will be the things that are probably the most difficult to get through in a budget. And oftentimes that's what comes through, an [award or build], are some of the major capital things. I think navigation and maintenance will ultimately be okay and I think the Harbor Maintenance Trust Fund, if that gets passed, will deal a lot with that, and especially with a -- if there is a quote unquote no earmark issue. But there is so much talk about the deepening of the ports that it's going to be very fluid. I think that's where I have the greatest probably concern, is what happens with capital projects.

Okay, and then just going back to your comment in your prepared remarks where you mentioned that you hope some work for port deepening in the Northeast would occur in 2012 and beyond. Would that -- it doesn't sound like you're really expecting anything in 2011 from those type of projects? And is that, going to your calendar 2011, you're not really thinking anything is going to materialize on those fronts?

There may be something bid towards the end of the year but we probably wouldn't begin to work on it until 2012.

Okay. That's helpful. Thank you. And also just, either Bruce or Jon, on the margins, there's been a significant shift in your Dredging business and then you've had a big ramp in the Demolition, then the addition of Matteson. Can you give us an idea of what impact of these changes could have on your margins going forward, even if it's just directionally? There's just been so many changes.

Well, I don't think there's any real shift from our traditional margins. I think that we've seen impact this year on capital Dredging margins because the berm work fit into that, and that carries lower margins of then capital dredging traditionally does. We've had a slowdown in beach work, so those margins also have a room to move up should -- if we are right about the amount of work that comes out. There is certainly no shift at all on what we expect from Matteson.

So I think in terms of looking at our business from an historical standpoint, I think we still stand by those margins. It's just that there could be shifts from time to time, and that's what we've seen this year. And although we've had some drop in capital dredging margins, we had very good utilization, which helped overall. So some different kind of mix implications, but as we look forward we see the same.

Now I guess I passed over demo. Demolition, we have our greatest margins in Demolition historically in the local market, that is the Boston market. And in demoing small buildings or tenant improvement projects. So we are embarking on something different with some of the marine demolition, but certainly see opportunities and when we bid a field that gives us encouragement that is -- can be a growth area for our Company and include the kind of margins that we think we should be able to earn in that business.

Okay. I guess what I was getting at is that there's been some things move around as far as mix, like you referred to, but on a more normalized basis, you would expect those things to revert to the historical average, I guess, with the mix of capital versus maintenance versus beach, et cetera.

Yes.

Okay, perfect. And then, I'm sorry if I guess this but you spoke of the berm work short -- just a bit ago. Can you give us an idea what you are expecting for berm work in the first quarter, or I guess in 2011?

Well, unfortunately, I can't, because we are just kind of on call. We are getting, as we have for a long time, we are getting short-term awards. It isn't bidding, but it's awards. And we have thought several times based on information we got from the prime contractor that the program was going to be phasing out -- phasing down, at least for the time being. And then the program -- then we got word to continue to work on the berms. And that's been the case now.

We know that we have the Dredge Texas employed through the first quarter, but that could change next week where additional dredges are called. We don't think there's a possibility of the Dredge Texas not going through the first quarter, but just can never be sure what's going to come up with that.

Okay. All right, well thanks a lot for the color.

Thanks, Trey

Your next question comes from the line of John Rogers from DA Davidson.

Hello, good morning.

Good morning, John.

Couple of things, can you tell us what the operating income was for the Dredging and Demolition segments?

Yes, operating income actually was a small loss in Demolition, about $2 million, which is a loss, but far better than the previous year. So that would mean that Dredging had approximately $70 million year.

Yes, $70 million.

Okay, great.And then, in terms of your tax rate, what -- it dropped down in the quarter. Does that -- is there a reason for that? And what are you looking at going forward?

It dropped from roughly 40% to 38%, I think the biggest component of that is that we prevailed with the tax position we took with respect to some state taxes, and conservatively provided for the taxes but took a position that we thought had merit and we prevailed, through audit. And so we had a pick-up there.

Okay, but, Bruce, does it stay at that level? Or go back up towards a 40%?

It goes more toward 40%, but with the absence of having to provide for those state taxes I think we can look for something a little lower than we've had but higher than what you've seen recently.

Okay. And then just going back to some of your comment earlier about the schedules as we look into 2011. And I know there is seasonality and other factors here, but it sounds as if you are starting off the year in pretty strong market conditions and booked out relatively well, but with the concerns about -- or at least uncertainty about the Army Corps and the timing of the Harbor Maintenance Trust Fund. Does the business drop off as we go into the second half of the year or is it just too early to tell, or this normal levels of visibility in your mind?

Well, as we said in the press release, we think we have a pretty good visibility for six months, so your question about the second half, it's more difficult to answer. What I can tell you is that those are concerns we have too. As we look at this business we think that the way we have to look at it is many of our costs are somewhat fixed within a range of activity, and so we've put together analysis and a plan for expense reduction in step fashion, as -- if revenue levels decline.

But I don't want to be pessimistic. I don't look out and see anything negative for the second half, but as I said, we have the same concerns some of these questions raise, and we just want to make sure that we are ready in case if something does happen. No reason at this point to think that there's anything to worry about in the second half.

Okay. I appreciate it. Thank you.

Thanks, John.

Your next question comes from the line of John Parker from Jefferies. Please proceed.

Hi, I'm wondering if you can break out, and if not we can do a later, the stock compensation, either for the full year or for the quarter?

Yes, I don't have those numbers right in front of me butt they will certainly we disclosed in our K.

Okay. When is that expected out?

In a couple of weeks.

Okay, and then your cash position now I imagine is well above $100 million pro forma the new bond transaction.

Yes.

Can you give us an updated number on your cash position?

It's about $120 million, at this point. However, we are in the middle of the month and I guess I don't have a great sense of where we are receivable/payable balance. But we -- after the note of offering and redemption, we ended up north of $110 million and have been building pretty much since then. So it's much where we expected it to be.

And do you have your receivables balance at the end of fourth quarter with you now?

Yes. Just give us a second here.

Okay, while you're looking at that, just your backlog went up a little bit in the foreign segment, and I may have missed the beginning of the call, but was that related to work in Brazil? Or was there something else there that you won in the Middle East?

It's in the Middle East year, it's additional work for the DR project. Receivables at the end of December were $101.6 million.

Great. That's all I have. Thank you very much for your help.

Thanks John.

Your next question comes from the line of Philip Volpicelli from Deutsche Bank. Please proceed.

Good morning .

Morning.

My question is with regard to that cash balance that you have about $120 million. On the road show for the bonds you had mentioned possibly buying new dredge ships or possibly making tuck-in acquisitions. Just wondering if there was any update since that road show on when you might consider making the acquisitions or purchasing some of those dredges?

Yes, your first comment, purchase a dredge, we would build a dredge if we were doing that. And acquisitions, we are actively looking at things right now, but there is nothing that I can foresee us announcing in the very near-term, nor would I see us today in the short-term announcing a build.

One of the things we are looking at, as we've said in our statements, is that we are truly assessing how the domestic markets are going to progress over the near-term and we when see some solidity there with the Harbor Maintenance Trust Fund and some of the other things, we may be in a position to pull the trigger. We are constantly looking at balancing our equipment fleet with what we think the market is, but it's not as if we are going to pull the trigger on either an acquisition or a build in the very short-term.

There's never a time when we don't have at least two dredges on the drawing board in anticipation of the market that might come, and that's the case now. We do have plans that we are working on that -- actually we have plans that have been pretty well completed but constantly get tweaked for new assumptions and what we might see in the marketplace.

So we are kind of always ready to pull the trigger if the market supports it. And as Jon and I have talked, that's always the case with acquisitions too.We certainly have nothing to announce, but that's not to say we are not looking at some things as we speak.

Right. On the acquisitions front, is anything you're looking at of large-size or are they more in the LW Matteson size?

There's a little bit of both. But I don't think anything we are going to do is not going to be far afield of what we mentioned as our strategy.

Got you. And then you mentioned possibly divesting Demolition and aggregates , what kind of criteria and what kind of timeframe would you make that decision

Sure. Bruce and I both believe that both of those businesses that can be additive to our strategy of growing the environmental services segment that we look at. But we have to wrestle true integration to the ground. If within the next six to nine months we don't see a clear path of integration and the opportunity to work together, then I would suggest that those assets probably are worth more to somebody else then us. But I don't see in the next six months to nine months us announcing any transaction with either of those.

Great. Thank you very much.

There are no further questions at this time. This does conclude the question-and-answer portion of the call.

Thank you very much for joining us today. We look forward to talking to you after our first quarter results.

Thank you.

Thanks.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation, you may now disconnect. Have a great day.