Great Lakes Dredge & Dock Corp (GLDD) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2012 Great Lakes Dredge & Dock Corporation earnings conference call. My name is Mimi, and I'll be your coordinator for today.

At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. As a reminder, this conference is being recorded for replay purposes.

I would now turn the presentation over to your host for today's conference, Ms. Katie Hayes, Treasurer and Director of Investor Relations. Please proceed.

Good morning. Thank you. This is Katie Hayes, Treasurer and Director of Investor Relations of Great Lakes, and I welcome you to our quarterly conference call.

Bruce Biemeck, our President and Chief Financial Officer, will begin our discussion representing the highlights of the 2012 first quarter. Then 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 statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain factors inherent in our business are set forth in our filings with the SEC, including on our 2011 form 10K and subsequent filings.

During this call we will also refer to certain non-GAAP financial measures including EBITDA, which are explained in the net income to adjusted EBITDA reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.

I'll now the turn the call over to Bruce.

Thanks, Katie. We issued our press release this morning, and it should help in understanding how our first quarter results fit into our annual and our long-term plan.

Some of the highlights from the quarter ended March 31st, were revenues in the first quarter were $154.9 million, which is essentially flat from revenues of $155.3 in the first quarter of 2011. You'll recall the first quarter of '11 was positively impacted by the nonrecurring Louisiana berm work with revenues of $15.7 million in that first quarter of '11.

The primary reason revenues were flat in the first quarter was weather impacts in January and February affecting east coast dredging operations. The weather was mild as measured by temperature, but in our work environment, which is two to five miles offshore, the wind produced rough seas, affecting our ability to execute on projects.

The demolition business got off to a strong start with quarterly revenue of $32.5 million, a 74% increase from $18.7 million a year ago. A continuing strong bridge demolition market has helped the division, but market growth is prevalent in all sectors. Demolition gross profit margin improved to 12.5% from a loss of 1.6% in 2011. The demolition margins continue to be affected, adversely affected by projects which required setting of loss reserves in 2011. The projects, once the loss reserves are established operate at zero margin through completion. The good new is, we should be finished with the final project that is loss reserve, in the second quarter, and that will be a small component of the second quarter for demolition.

During the quarter, we won an impressive 53% of our domestic dredging market and also added $180 million for the Wheatstone LNG Project in Australia resulting in a record-high backlog of $584 million. In our Rivers and Lakes Division, backlog and pending awards at March 31st, totaled $43.4 million, a record level.

Regarding the state of the markets in the first quarter of '12, the domestic bidding market -- domestic dredging bid market totaled $230 million, compared to $197 million in the prior year. As I said, the company won 53% of the overall domestic bid market, above its prior three-year average of 39%. Specifically, we won 76%, or $20 million of the beach nourishment projects awarded, 100%, or $53 million of the capital projects awarded, 22%, or $23 million of the maintenance projects awarded, and 56%, or $24 million of the rivers and lakes projects awarded.

Great Lakes bidding success, coupled with the Wheatstone LNG project in Australia, resulted in record backlog and pending awards of $539 million at March 31st, 2012, which compares favorably to $355 million at December 31st, 2011.

The company's contracted dredging backlog was $523 million at March 31st, compared to $319 million at December 31st, 2011.

Our demolition business experienced further improvement in the first quarter in all areas of work, which includes bridge demolition, and Yankee, the environmental remediation division.

Of note, management has been successful at improving projects that had loss reserves recorded. So those loss reserves that we did record, the projects actually improved as we determine ways to better execute. There has been noted improvement in all areas of operation, including bidding, estimating, and controls. So we have had success with our backlog, with projects that we have won and added to backlog. And we see a strong market ahead in many of the markets that demolition serves.

Demolition segment backlog improved to $60 million from $51 million at March 31st, versus December 31st. The dredging team right now is busy preparing for the Australian project and the Scofield coastal restoration project. These projects are significant and will be of great benefit to operations in late '12, and in 2013, but require upfront working capital investment. Our cash balance has declined due to the usual first-quarter equipment maintenance and capital spending, as well as the investment necessary to prepare people and equipment to mobilize to the projects mentioned.

In February, we received favorable judgment in our loss-of-use claim for the dredge in New York from an incident in 2008, when the dredge was struck by a tanker in New York. The judgment was in the amount of $13.2 million for damages, including interest. The case was appealed, as expected, but we feel the judgment was merited and we will collect this just compensation following the appeal process. The legal expenses for preparation experts and the trial were expensed in the first quarter as required. This was the primary reason for an increase in G&A expense in the first quarter.

On debt and liquidity, a cash balance at March 31st, was $85.6 million. The decrease related to the items that I mentioned, working capital, maintenance expense, and CapEx, as well as -- well, those are the components of our usual cash usage in the first quarter.

Our revolving credit facility matures in June of 2012. We've been working on this for a while. We had no borrowings on the facility at the end of the first quarter of '12. We're currently finalizing the new credit agreement, pretty close to a final draft of it, and have a bank group that has signed up for participation in the facility. The new facility will be larger, $175 million, and provide, we believe better flexibility to the company going forward.

Important ratios we focus on as an internal measure and for credit agreement purposes, our total leverage ratio net of cash and equivalence is just under 2 at the end of the first quarter and our interest coverage is 4.7 times. So despite some usage of cash, we remain strong financially. As we look at and project cash in coming periods, we normally expect that cash will be at somewhat of a low point at the end of the first quarter or through the first quarter, and would expect to build cash from this point forward.

Those are some of the summary comments. And, of course, you'll have an opportunity to ask questions a little later. But right now I'm going to turn the call over to Jon Berger who's going to discuss some of the initiatives that I referred to, as well as strategic planning and growth considerations for moving forward.

Thanks, Bruce. Although the first quarter was not at our expectations, largely due to the related weather delays, we are pleased with our backlog, the firming up of our schedule in 2012, and the opportunities we see in front of us in 2012. And, therefore, we feel that we're in a good position to provide full-year guidance this year at this time. I can't promise you this will be our standard going forward, but we do feel good this year about where our backlog and our schedule is, so we'd like to give you guidance now.

As we mentioned in the press release, our forecasted adjusted EBITDA from operations will range from somewhere in the $93 million to $100 million range for the full year. And I think it's important to point out, exclusive of the asset sales in 2011, this would result in double-digit growth over 2011. So we're excited about that.

To meet those goals, it will require us obviously to execute as planned for the year. But as we said, based on the plan, the backlog, and the focus of the total organization, everyone supports our optimism for achieving these results.

We have spent significant time with leadership emphasizing the importance of our execution throughout the year and our need to execute this year to hit those numbers. Additionally, we believe that 2013, is shaping up very nicely for our long-term plans for growth.

Let's talk a little bit about the market - first, international. We see growth internationally in many areas. Obviously, the Wheatstone is a tremendous win for us, and, as Bruce said, will be mobilized in the second half of the year with a nice equipment package going down there. If you look at the long-term prospects in Australia, there's tremendous natural resources that the country hopes to exploit. And we believe being down there will create other opportunities for us.

We've talked about Brazil, and we are in the process of mobilizing in the third quarter a dredge package to go down there. This dredge package is different than our [sail-in/sail-out topper] dredges. So once we bring it down there, we expect this clamshell package to be there for a long period of time and be utilized.

Additionally, as we have mentioned, we hired a Vice President to focus on South and Central America, to call on that, and we believe that that will result in us opening up that market to us nicely.

Additionally, we see the Middle East opportunities, both in Bahrain and some other surrounding countries picking up. So we believe the Middle East will also provide us, again, solid numbers and be able to grow those numbers from the last year.

Domestically, we talked about Miami. And in the last couple of weeks, they have settled their environmental lawsuits, and we believe that the project should be on the street in the early part of the third quarter. And if that is the case, we anticipate that it will be awarded and whoever wins will mobilize by the end of the year.

Again, we feel we are best positioned to complete that work. We have the best equipment package. We have the best history in Miami. We can do it with the least environmental damage. So we believe we are in a good position and hope to win that project.

Let's move now down to the Gulf. As we've stated, Gulf Coast restoration is becoming a reality. There is money set aside. We see the [safe] letting contracts. We have two projects of good note, Pelican Island where we're working on now, and Scofield that we announced during the first quarter that we are starting to do some mobilization. Scofield's a very interesting project. It's a significant amount of pipe that we're laying over marshland, and the hope is that that installation of pipe can feed multiple projects. And there's been discussions with the state about them doing other projects off of that. So we feel that that is a good foothold for us for future projects in the Gulf, and the money is there to do it.

As Bruce mentioned, our Rivers Division that we acquired at the end of '10, executed in '11, and, as planned, it's sitting there with the biggest backlog it's ever had. We are excited for its expected performance this year, and it also will support our growth in our environmental dredging with our TerraSea joint venture. So we like the position we are [in], in our rivers.

Our demolition business, as Bruce said, is an extremely exciting story for us - very strong first quarter, both on the revenue side and on the operating side. And we've made investments there in people to be able to continue to grow that business. We see that marketplace picking up. We see opportunities. We see opportunities to expand the skill set into, as Bruce has said, on the water with bridge demolition, brownfield, the utilities, and also working with our dredging business.

We have two projects, one we just completed and another we're working, where we're actually working in unison with our dredging business and we're finding opportunities there.

Finally, I'd like to talk a minute about Washington. As many of you are aware, and I think we announced it last week, the Transportation Bill is going to conference. And there are many nuggets in the Transportation Bill that bode very well for navigable waterways and coastal restoration. The RESTORE Act, which would mandate 80% of the NERDA [funds] from the Horizon Oil Spill, would go to Gulf Coast restoration. That has had bipartisan support and that is in the Transportation Bill.

Additionally, the long-discussed Harbor Maintenance Trust Fund, it is in the House part of the bill, and there is a sense of the Senate vote on the Transportation Bill on the Senate side, that has a sense that they should also do the Harbor Maintenance Trust Fund.

So we are in the game, as we like to say. I can't tell you whether or not we'll actually get a Transportation Bill and whether or not these two portions of the bill actually stay to fruition and have the teeth we're looking for, but we've never been closer and we seem to have continued bipartisan support and we will work hard with the other constituents we work with to try to make that a reality.

But one thing I want to point out, whether or not the Transportation Bill actually gets passed this year or not, we have seen language in Washington and support for the navigable waterways and Gulf Coast restoration. There has been more money allocated to the Mississippi River in the last year. There's been more money allocated to the O&M budgets of the core, even the appropriators, which are probably the tightest people with money have said that they would support in the House a minimum of a billion dollars on the O&M budget, which is, again, a step up from this year.

And there has been -- a day doesn't go by that we don't talk about capital for port deepenings in (inaudible).

So we're making progress in Washington in protecting our waterways and supporting that growth. And we're still in the game with both the RESTORE Act and ACMF in a very tough Washington environment. So I just want to make sure everybody understands we are making success there.

And finally, before we open up for questions, we continue to make strides as a management team in implementing our longer-term strategy of looking beyond what I call our historical four walls for growth of our company. As you can see, there's opportunities for us to take our core skills and competencies to different geographic regions - Brazil, Australia, India we've had discussions with. We're taking our skills to new markets - environment dredging, brownfields, and remediation services in our demolition side. We're joining forces with demolition and our dredging business for marine demolition.

We are in deep discussions about adding equipment so that we can grow for another generation in our dredging businesses. And we are looking carefully to add new services to our core. And as we continue to do that and as we continue to grow, we will focus on executing in our core business. We think that is [obviously] paramount in identifying ways to continue to reduce costs. And we believe as a company we have good forward markets and ample opportunities for us to grow, to execute in '12, and for '13 to be a significant growth for us.

With that, I'd like to open it up for any questions everybody might have.

(Operator Instructions) Andy Kaplowitz of Barclays. Your line is open.

It's actually Mark on for Andy this morning. Thanks for taking my questions. Just firstly, can you provide any color on what type of gross margin do you think you could achieve on Wheatstone when the project eventually ramps? There seems to be two offsetting factors. I mean, one, margin could potentially be lower, given the international nature of the job. But this could be offset by the size and complexity of the job. So would you say potentially average gross margins is [fair], maybe mid- to high teens? Or are you more optimistic or pessimistic around margin now versus when the award was initially released?

Sure. First, as we look at Wheatstone, the project payments come in three currencies and they're fashioned after the participants who are in the project. We don't, as we project forward, we don't see any currency risk. So that's one of the risks we've eliminated.

We have built -- Dave Simonelli, our President of Dredging Operations, has built a good team to execute on the job, very knowledgeable, experienced team. And we think we'll be able to hit the ground running.

Now, as far as the project, there are really two components of margin. One is a fixed margin based on equipment contribution - that is the equipment we put on the project. And there are good standby rates. So we look at that as kind of a fixed portion. And that's lower than, obviously lower than our usual dredging margins.

And the other portion is variable. On balance, we think that the project overall can do better than our historical dredging margins that we report.

Sounds good. And then in terms of Brazil, you spoke about how you're in the process of mobilizing for 3Q. What are your expectations now to be awarded your first major project in the region?

There's one project that we are told we will have. They actually came up to visit the dredge last week. They've got the environmental issues resolved there. The project is about a $20 million project. It's not great margins because we're absorbing the [mob] in that project. But we expect to have it awarded by the end of the second quarter and mobilizing down to that. And, most importantly, it absorbs the mobilization of getting a package down there. And once we're there, we feel very comfortable that there's a market for clamshell dredge down in Brazil. So we think that we will be able to -- on future projects down there, do better margins than our first project. But getting it into market we think is very important. So we're pretty excited about getting this contract awarded finally.

Great. Thanks very much for the color, guys.

Jack Kasprzak of BB&T. Your line is open.

Thanks. Good morning, everyone. First question is, is it possible to try and quantify the weather impact in the first quarter, either on sales or margin or both?

Well, we've said that our EBITDA of 14.7 was off 15%, 16% from our plan. And we believe that had we not been impacted by weather in January and February, we would have been very close to our budget level, maybe below, maybe above, maybe right in there. But we have determined that the weather impact is what affected our ability to meet our budget plan.

Now, our budget plan was down from our previous year. And I think it's fair to say the reason is we had the nonrecurring project in the first quarter of '11. And so we anticipated a lower first quarter '12, than '11.

The guidance you guys give in your press release around building to the EBITDA of $93 million to $100 million, seems to suggest a tax rate in the high 20s for the year. Do I have that right? And if so, why would it be lower than your typical high 30s tax rate?

Jon --

Well, EBITDA is without taxes. So it doesn't --

Well, we have the reconciliation to net income.

Yes.

And I'm pretty sure the tax rate in there is about 38%.

Okay. And are you guys seeing any improvement in lettings from the Army Corps, any pickup in project lettings?

Well, yes. The answer's yes. We've seen more coming out of on the Mississippi River. And we've seen a continuation of what we expected. It's hard to say, given any one or two quarters, whether it's meeting expectation because it doesn't come out -- [the punch lists] don't come out uniformly. So you really need to kind of look over a longer period of time. But we're pleased with what we see and we believe that although there is a tendency to think about government reducing spending, I think that the infrastructure piece is something that is important and has more growth possibilities than reductions.

Yes. I think, Jack, we've done a good job in Washington, like we said. In the basic O&M budget, we think it's going to be pretty stable. We think there's additional moneys, as Bruce has said, on the Mississippi. We think there's going to be solid capital projects coming out - Miami, there's another project in New York. There's some project that'll be driven by the states in both Mississippi and Louisiana from Gulf Coast restoration money. So we think there'll be some good capital projects coming out that hit our wheelhouse.

So we're optimistic that it'll be a decent year.

Okay. And do you think -- are you expecting more Gulf Coast island work to come out this year? Is that part of the plan?

Yes, we think there's at least one more in Louisiana that should be let. And we think that Mississippi's talking about some work. So we think there will be and we think there'll be a pretty constant stable over the next two or three years of barrier island work.

Two to three years, okay. Great. Thanks a lot.

Trey Grooms of Stephens, Inc. Your line is open.

Good morning. This is actually B.G. Dickey sitting in for Trey. Just to kind of build upon that last caller's questions about the Army Corps. It seems like the Army Corps is a little late this year releasing its budget. So I'm just kind of wondering, looking at your full-year EBITDA guidance, does that assume that you'll see a pickup in EBITDA from Corps lettings in the back half? Or just given how long it takes to mobilize your fleet, that it would be more impactful to 2013?

Yes. B.G., like in every year, we lay out the equipment, we lay out the schedule, and we figure out what jobs are the right jobs that we've heard from the Army Corps coming out that fit our pieces of equipment.

The fourth quarter, as we sit here today, there are jobs that we have to be let and we have to win. But we're pretty comfortable what we've heard with the Army Corps that this work will come out and the right work will come out that fits our equipment.

So like every year, we have to obviously look forward and say, we have to fill this hole, this hole for these pieces of equipment, and based upon us reading the tea leaves or where the Army Corps is. So we're banking on the fourth quarter being able to -- things being let in the second and third quarter for us to fill the fourth.

A critical schedule that we use in our forecasting is a schedule that forces out the remainder that we would have to win and perform to meet the forecast expectation for the year, so. And we measure that against previous years. How does that number compare to what we had to win and execute in previous year [or] two years ago. I'm sorry. And what we can say is that there always is a piece of potential. But at this point in time, we don't see it as a significant number. So we have a good, solid backlog to work on in the next couple of quarters, and there's a potential on the fourth, but not an extraordinary amount.

That's helpful. And then just switching gears a little bit, your demolition business. You guys have done a great job of turning that around. I was just kind of curious to how we should think about margins in that business going forward. Do you have any kind of target rates that we could assume for that business?

Well, we've been battling with the loss reserves, as I pointed out. So that's been dragging margins down, and we hit a little under 13% in this quarter, dragging along some loss reserve jobs. We think of moving that margin level above the 15%. And as we get into some of the new sectors, some of the new markets and customers, we think that we could see some upside as we deal with the more sophisticated projects.

Yes. B.G., as Bruce said, and as we've talked about in the past, we're repositioning that business to a more industrial and away from some of the smaller projects that we have done in markets. And as we better penetrate industrial markets such as remediation work, brownfields, work with utilities, we believe that will [garner our] higher margin work.

So we're going to need another 6 to 18 months until we fully get ourselves entrenched in that market to the point where I think Bruce and I and Marty really feel comfortable. But when we do, as Bruce says, I think we'll consistently put up those higher margins.

Great. Thanks. I'll pass it on.

Thank you. Philip Volpicelli, D.A. Davidson. Your line is open.

It's Phil Volpicelli of Deutsche Bank. Good morning. First question is in regard to the Orange Sun, New York dredge litigation. Bruce, I think you mentioned that that was the entire difference between G&A year-over-year. I just wanted to see if you could give us a more precise number. And, Katie, whether or not that was added back to EBITDA?

Well, no, it was not added back. And it was not the only difference in G&A. I mean, we [have] some other increases in expenditures as well. But that was the primary change or reason for the increase in G&A over the period.

So roughly $1.2 million?

Well, that was the difference in G&A. The expenses -- as I say, the whole $1.2 million was not related to the litigation. But more than half of it was, and I don't have the exact number. But it was really -- had it not been for that, it would have been an increase, but not worth talking about much.

Great. And then I didn't catch if you guys disclosed capital expenditures for the quarter.

I thought we did at 9.6, I think.

9.6 or 9.8.

Okay. And then in the past, we've talked about you guys possibly building a new dredge, and you continue to evaluate that. Can you give us any update on where you are with actually building a new dredge?

Yes. We keep getting closer. I think we keep talking about it, and I'd suggest to you that we're even closer than we were last quarter. I mean, we'll announce it when we announce it, but --

Maybe I can go at it this way, John. Is it something that you guys think you'll make the decision in 2012?

Yes.

Great. And then just lastly, on the timing of the revolver, I know you guys have been working on that. Any update on when you think you might have that closed?

Boy, I've predicted this a few times and it's been a long process. As you know, we wanted to change the structure of our revolver to that of a secured revolver to an unsecured revolver, and that's what we've done. The new revolver will be unsecured, but with a (inaudible) [lien] feature, if our leverage, our net leverage, gets above a certain level.

So it's been a lengthy process, and we haven't had any need for borrowing. So I suppose that that has factored into it too. We thought it important to get our new surety agreement in place and then move on to the credit agreement. It has been a long process, as I say.

I would like to say that within the next two weeks, we should be able to get there.

Thank you very much.

Thank you. John Rogers of D.A. Davidson. Your line is open.

Good morning. Bruce, and I apologize if I missed this. Did you give us the operating earnings by segment, demolition versus dredging?

We did not.

No. Operating income for dredging is about $4.9 million and demolition is about $1.9 million.

Okay. So the demolition was profitable?

Yes.

Yes.

Oh, absolutely.

That's what I wanted to confirm. And then in terms of some of the projects that you talked about, upcoming projects, you referenced a couple of them. But at this point, what's your expectation for the size of the Miami project?

Well, it's a project that --

I mean, it sounds like it's going to come in pieces, but --

No, I don't think so.

It won't, John. And it's a [good set]. Yes, it's going to be somewhere between 100 and 200.

Okay, that's fine.

It's a nice project. I mean, we don't want to give you --

No, no, no, that's fine [or --] yes, pre-bid it. But I just --

Exactly. But it's a nice size project, yes.

Okay. And in terms of the -- I assume as you look at the year, I mean, you factored in additional weather risks and things like that or lost days.

Yes.

But is any of the delays that you saw in the first quarter, are you assuming that there's work to be made up or is it just higher margin -- or higher costs that brought down margins in the quarter? I'm just trying to understand whether it was revenue or margins or both.

Both.

It's a combination. We do incur ongoing costs when we hit weather patches. All our project estimates include an average number of down days for weather based on our database that shows what the weather's been working in that area, for a significant number of years. But weather is like that. I mean --

Yes, sure.

-- you rarely hit it right on. And so we normally -- but what we say is that our first and fourth quarters are clearly weather risk quarters, and we were off on this one and [every] opportunity to offset that with favorable weather. But, yes, some of that revenue does go into the second quarter.

Okay.

And I'm going to give you kind of an anecdotal thing.

Yes, please.

I was in Georgia this weekend. And on the local news, this was the earliest they've ever seen turtles on the beach laying the eggs. And, obviously, we don't think we're going to be affected by that because just the way our projects are laying out right now. But there are turtle windows, and you have to deal with that. And so the warmer temperature has caused the turtles to come to the beach way earlier than ever seen. And it kind of -- it's anecdotal and it's kind of unusual, but that kind of stuff does -- can have an effect on us.

Yes, it cuts both ways, so.

Yes, right. So, yes.

Thank you. What about -- and then just lastly, last year you reported I think total market activity of about a billion dollars. And this year, including the rivers and lakes and the Miami work, I mean, is this a $1.5 billion domestic market opportunity this year?

Well, it's hard to say. I mean, the billion dollars is always a safe number, and then you add from there.

Yes.

We expect some coastal restoration. We expect Miami to bid. I don't know -- Jon could answer better than I as to whether we might see anything if Harbor Maintenance Trust Fund passes, maybe some small piece.

But considering all of those, I think that we would say we would expect the market to be better than last year.

I mean, it sounds like it. But the benefits to you probably show up in '13, '14, at this point.

I think that's right. I mean, like Miami --

Yes.

-- at the end of the day, we probably, if we win Miami, we see minimal, other than probably mob cost this year, but '13. And that's the other point, and we talked to some people about that. '13, we think, [if we win] Miami, we think we stack up tremendously well for '13, and probably '14, because, as you look at it, we'd have two big capital projects employing a lot of equipment at historically better margins, our highest margin type of work, running at one time for pretty much all of '13, and a good part of '14, and the prospect for more capital work in the Gulf.

So we think, again, we think -- we told you what we think for '12, now, which we think is a solid operating performance year. But we think '13, can be a very exciting year for us if we win Miami and things in Washington play out even reasonably well.

Great. Thank you very much.

(Operator Instructions) [Jon Tanwanteng] of [CJ] Securities. Your line is open.

Thanks for taking my question. Assuming the RAMP Act and RESTORE Act pass and become law, in what time frame after passage would you expect to start seeing benefits? And is that dependent on the Army Corps budgeting process still?

It's dependent on -- well, yes, '13 would be where you stop seeing it. And then don't forget that the Army Corps has a lot of work they have to do to get projects out, right? They have to still do the engineering. They have to do the estimating. They have to run the process. They have to monitor it. So the Army Corps has a big job in this. And as good as they are, like everything else, they'll be stretched some.

But we do think '13, going forward, there'll be opportunities.

Got it. You guys had a nice win rate in the quarter. How sustainable do you see that if letting starts increase?

It really depends on the type of projects. The more capital [that] work comes out, we think we're better suited for that. They may be higher dollars. But we may then look beyond or not get as aggressive on the maintenance side. So it really depends on the mix of projects. But historically we've always been in that 42% range over a fairly long period of time.

And then within the RAMP Act funds, assuming that passes again, do you expect any of that to be used for capital or is it all purely maintenance?

The definition of it is to maintain navigable waterways. Now, when you get into conference, I [can't] tell you that there isn't some push and pull along the lines there. But we're going for the whole enchilada. And if you believe the economy is -- oh, and we're going to increase our exports and imports, we think there's plenty of money ultimately if the RAMP Act pass, where we are there.

But right now that is solely for the maintaining the navigable waterways.

Got it. Thank you very much.

I would now like to turn the call over to Katie Hayes for closing remarks.

Thank you very much for joining us this morning. This is a reminder, our annual meeting is next Wednesday, May 9th, at 10 o'clock here in Oakbrook if you're able to come out and join us. Otherwise, we will speak with you at our next quarterly conference call. Thanks again, and have a good day.

Thanks, everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.