Great Lakes Dredge & Dock Corp (GLDD) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the fourth-quarter 2013 Great Lakes Dredge & Dock Corporation earnings conference call. My name is Karen, and I'll be your coordinator for today.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would like to turn the presentation over to your host for today's conference, Ms. Katie Hayes, Controller of Great Lakes. Please proceed.

Good morning. This is Katie Hayes, and I welcome you to our quarterly conference call. Jon Berger, our Chief Executive Officer; and Bill Steckel, our Chief Financial Officer, will discuss operational and financial results for the quarter and year ended December 31, 2013. Following their comments, there will be an opportunity for questions.

During this call, we'll make 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 risk factors inherent in our business are set forth in our filings with the SEC, including our 2012 Form 10-K and subsequent filings.

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

I'd first like to turn the call over to Bill Steckel, our CFO.

Thank you, Katie. As is customary, we issued our press release this morning containing important information about our fourth quarter and full year of 2013. Some of the highlights for the Company were a sequential quarterly increase in our Dredging segment revenue, a strong quarter from our Terra Contracting business, and a continued high level of backlog.

The Dredging segment delivered record revenue in 2013, driven by coastal protection and foreign capital projects, along with sound earnings. We also reached a decision to sell the historical Demolition business and, as a result, we have renamed the segment that holds Terra Contracting and related business as Environmental and Remediation.

The Demolition business we are selling is now presented for all reporting periods as discontinued operations and is no longer reflected in continuing operations. Jon will speak more about the status of the sale of the Demolition business in a few minutes.

Dredging activities stepped up from the third quarter, resulting in a sequential quarterly growth of over 13%, but Q4 decreased from the exceptionally strong fourth quarter of 2012. At the end of the fourth quarter of 2013, we began working on the PortMiami deepening project. We have now been fully awarded the contract for approximately $206 million, and we will continue to work on this project for approximately the next 18 months.

The Environmental and Remediation segment had a robust quarter and full year. Terra Contracting continued its work on an approximately $50-million environmental remediation project in the Midwest that contributed significant revenue and earnings. In addition, we continued to execute on a brownfield development project in New Jersey with good margin.

The strong Dredging execution and increase in revenue, coupled with the performance of Terra, resulted in gross profit of $28 million. On a percentage basis, gross profit of 13% was down, compared to 15% in the prior year quarter, when the Dredging segment delivered very high revenue and executed higher margin capital in coastal restoration projects.

General and administrative expenses increased by approximately $4.9 million compared to the same quarter last year, with the new Terra Contracting business adding $2.9 million of that increase. Select headcount additions in our corporate office, and legal and professional expenses primarily related to the revenue recognition issues, also contributed to the increase.

The Company recorded an operating income for the quarter of $11.3 million. In addition, we completed the sale of an unused domestic dredge for a gain of $2.6 million.

EBITDA of $25 million for the quarter was down approximately $4.7 million from the strong fourth quarter of 2012. Full-year 2013 adjusted EBITDA from continuing operations was $98.9 million, an increase of over 32% from 2012. The earnings were driven by improved performance in our Dredging business and the addition of Terra, partially offset by an increase in general and administrative expenses.

As we look forward, Dredging has $515 million in backlog at December 31, and another $136 million in low bids and options pending award -- the highest backlog we have experienced for the Dredging segment. We expect this book of projects to drive activity in the Dredging segment in 2014.

As I noted, we have carved out the financial results for our discontinued Demolition business for all periods presented. While we have no firm offer in hand, based on indications of sales price, we have written down that business to fair value.

Now, let's move on to bidding activity. The domestic bidding market for Dredging was $1.3 billion, a record year in 2013 and a substantial increase over the $939 million of bidding in 2012. The Company won 54% of the overall domestic bid market in 2013, well above the prior three-year average of 37%.

The combination of increased market activity and our win rate, which was driven by the award of the first two phases of the PortMiami project and by capturing 57% of the coastal protection market, sets the stage for 2014. However, please remember that variability in contract wins from quarter to quarter is not unusual, and the win rate for one quarter is not indicative of the win rate the Company is likely to achieve in the full year.

When we break down our win rate in 2013 by type of work, Great Lakes won 65%, or $284 million, of the capital projects awarded; 57%, or $245 million, of the coastal protection projects awarded; and 37%, or $131 million, of the maintenance projects awarded. We won 73%, or $31 million, of the rivers and lakes market.

To put this high level of bid activity in perspective, the Company's contracted backlog, without pending domestic awards, was $515 million at December 31, 2013, which, again, compares to the $389 million at December 31 last year. Since year end, the Company won a $90-million rivers and lakes project at Lake Decatur, and we were also awarded the final phase of Miami, as I noted earlier.

Environmental and Remediation segment backlog was $28.3 million at December 31, compared to $31 million at December 31, 2012. Our continued focus on recovering investments and working capital yielded improvement at year end.

Working capital decreased by $42 million and cash increased by $34 million from the previous quarter. We were able to collect -- in full -- a large international receivable that had been outstanding for an extended period of time. And we are recapturing our working capital invested in Wheatstone and certain domestic dredging operations.

We spent approximately $63 million on equipment in 2013, including $17 million on the ATB vessel. As we announced in January, we have contracted with Eastern Shipyard to build the ATB. The Company intends to secure financing for this construction phase and upon completion of the vessel.

We continue to be very excited about the capabilities and the capacity of this new vessel. We remain in compliance with the covenants for our revolving credit facility, and we are mindful of the importance of generating cash flow.

I'd like to now turn the call over to Jon Berger, who is going to discuss some of our important activities and initiatives, as well as strategic and growth considerations.

Thank you, Bill. As stated, our addressable bid market was a record this year, at a total of $1.3 billion. As we noted, we won 54% of this market. And that has resulted in a record backlog for the second quarter in a row.

Now, let me turn to some of the specific markets and address updates since the November call. First, as you can see from our revenue market and backlog, coastal protection work was a huge part of this authority in 2013, and will continue to be in 2014. As we expected, work needed -- due to Sandy -- drove the increase in this market this year.

Coastal protection in the Northeast and the Southeast was funded by a special Sandy Appropriations Bill, as were several maintenance projects. We expect more projects in the Northeast will be bid in 2014, and that will be critical to rebuild and fortify the Northeast coastline. However, as we saw in 2013, the market is slow in developing currently. And we need to be -- we need to see some projects let on a consistent basis. We expect this work to come out in the second and third quarter of this year.

Now let's turn to the Gulf -- coastal restoration in Louisiana and the Gulf Coast. There continues to be a long-term focus on rebuilding the Gulf Coast of Louisiana and the full Gulf. There was one project bid in the early part of 2014, which was won by a competitor, and we expect more projects to be bid in the second half of 2014.

Included among those will be projects which will use the pipeline that we laid and used for two projects and completed in 2013. We expect some of these projects to be funded by the $340 million that has already been allocated from BP for restoration projects. Plus, we expect to see an ultimate settlement with BP after the trials.

As we noted last quarter, the House and the Senate each passed versions of the water resources bill. They are currently in contract and reconciling the bill, and expect the bill to be passed by both Houses and to the President for signature. He has indicated that he will sign the bill, and our current view is that the bill will be passed before the summer. As you all remember, the bill includes increased allocations for Harbor Maintenance Trust Fund over the next 5 to 10 years, until full allocation of the funds from the trust fund, going forward, would be spent towards maintenance dredging.

We continue to see support for the ports from both Congress and the President. The FY14 budget that was passed in January included increased funding for the Army Corps, where most departments saw a decrease in funding.

In addition, in the budget, money was allocated -- there was money allocated to the deepening of the Savannah Port. Our expectation's that Savannah is the next major port deepening to be bid, and that will happen in 2014. And we continue to see support for capital dredging in the foreseeable years to come.

As with Miami, we will continue to see increased state support for these projects. Florida had helped fund the PortMiami project, and they could potentially help with other ports in the state, such as Jacksonville and Ft. Lauderdale, as examples. Georgia, Texas, and South Carolina have also indicated they would help fund their port-deepening needs in their individual states.

Additionally, we are having discussions with those involved in major LNG facilities in the Gulf. As you can expect, these can be major projects. They will be slower in developing, and our best guess is that they will be 2015 and beyond projects.

One last note on the Dredging segment. As Bill noted, we signed a contract with a shipyard in January to build our ATB. We are very excited to be working with the Eastern Yard in this project, and have every confidence this project will go well and be on time for a mid-2016 delivery.

The price has increased significantly from our initial expectations, but we are confident this vessel will be the most efficient in the industry and a true game changer. In addition, we have successfully settled our dispute with the first shipyard we separated from, and received a $10-million settlement.

Due to the pending divestiture of our historical Demolition segment, we have renamed the business -- the remaining business, our Environmental and Remediation segment. Terra Contracting, which we bought at the end of 2012, is the primary business in that segment now.

Our Terra Contracting team has been a solid perform for the Company since acquisition, and significantly exceeded our first-year plans. They have been fully integrated into GLDD, and our Environmental and Remediation product offering has gone to market, with our rivers and lakes dredging business and our TerraSea joint venture, to provide a comprehensive set of services for a very attractive growth market for us.

Now, let me turn to our historical Demolition business. Much effort went into transforming that business into an operation that can be successfully run under public ownership, but we were not successful. As we mentioned last quarter, we have engaged a financial advisor to help us explore our strategic alternatives.

We are currently in active negotiations with potential buyers of that business and hope to conclude a deal in the coming months. We have put in countless hours executing on projects, working to remediate a material weakness in our internal controls, maintaining the operations of this business, and now supporting activities associated with the sale of the business. It is our belief that Great Lakes and our NASDI employees will be better served under alternative ownership.

Our management team has successfully focused on reducing our investment and working capital, and increasing our cash balances. We continue to focus on driving our cash conversion cycle down in 2014.

Additionally, Bill stated our G&A has increased -- some of that through the acquisition of Terra, but also through the legal issues we've been managing through. We continue to be extremely focused on driving that number back down in 2014, and fully expect that, with successfully managing those issues, we should reduce our G&A back down to a more historical operating level in the second half of 2014.

As always, we appreciate the support of our shareholders, our employees, and our business partners. And we thank you for joining us in discussion and important developments and initiatives of our business. Now, we are open to taking questions.

Thank you.

(Operator Instructions)

The first question comes from the line of Scott Levine from Imperial Capital.

Good morning, guys.

Good morning, Scott.

So firstly, with respect to the Environmental and Remediation business -- obviously, a very strong gross margin there, and changes in the project mix versus last year. A large proportion of this attributed today this large Midwest project. But hoping you can give us a sense of what we can expect going forward from that business, and what type of margin assumption we can use, generally speaking, given the types of projects you're looking at there.

Yes.

I'll start with the type of projects, and then I'll ask Bill to address the margins, Scott. But our thesis of acquiring both the land- and water-based environmental remediation business -- and adding to that, our TerraSea joint venture and our historical Rivers & Lakes dredging business -- has really come to fruition. They gel together very well.

We're looking at an abundance of very interesting projects, both in the Midwest, where we're working on a significant pipeline spill. But also throughout the country.

So we expect to see continued growth in that business. I think we expect to continue to invest in that business.

And we expect to see nice, meaty projects from an environmental side. I think we are quickly branding ourselves as kind of a go-to player that can provide a broad set of services, both on land and water, for environmental remediation.

From a margin perspective -- Bill, do you want to take it here -- a crack?

Yes. I think the way to think about that margin for the Terra business is that, at these revenue levels -- this volume -- the margin we achieved this year is pretty representative of what we would expect to see on an ongoing business.

There's a little bit of seasonality in this business, maybe even more than the Dredging business, typically in the first quarter of the year. But for the rest of the year, you'll see margins like what we just experienced. And as revenue increases, you'll see it gradually step up -- going forward, as that revenue picks up.

Understood. Thanks.

Follow-up question, I guess, on the coastal side. Obviously, a huge year in 2013.

What I believe I heard was optimism regarding 2014, but maybe with a bit more of a back half ramp. I think, Jon, you mentioned Q2, Q3 and the release rates 2H14].

But could you give us a sense on your visibility on that business? And in terms of magnitude, are we talking potentially approaching 2013 levels or -- additional color, regarding your expectations for that business this year?

Yes. Visibility is a little tough. There's a lot of projects out there talked about. But we're moving away from the emergency work and just the re-nourishment to redesign work.

And we're having a little bit of difficulty seeing a clear direction from the Army corps, as you get to more engineered projects. So, there's certainly a lot of work out there talked about. We believe it'll get there. But it's a little slow in developing right now.

So, will it be as strong in 2014 as it is in 2013? It's tough to guess. It's going to have to be -- like I said, it'll have to be a second-half-based business again. But I think it will be interesting projects when they get out there, because this will be more engineered-designed projects. As opposed to just purely, emergency reclamation.

Got it.

And would that imply, maybe, a better margin profile? Or similar -- based on what you can tell?

Well, I think the margin -- it was good work last year.

Okay.

And so, that really just depends on how the overall bid market shapes up for the year. Because it's also, don't forget, it's a highly utilized market. When you have a very high bid market, you get to be able to drive up margin.

Understood. Thanks.

One last one, if I may. On the maintenance side, you mentioned the WRDA bill. If that does get passed, would you expect an improvement in the market in the back-half 2014? Or is that more of a 2015 story?

Now, it's really a long-term growth in the market. The budget that was passed in January will be the maintenance market this year, unless there's any emergency work that comes out. So, that's really just giving us stability of a heightened market and a continued growth in the market over the coming years.

Got it. Thanks.

Thank you. And our next question comes from the line of Andrew Kaplowitz from Barclays.

Good morning. This is Vlad Bystricky, on for Andy. How are you?

Sure. Good morning. Thanks.

My first question is around your comment on evaluating opportunities in Environmental and Remediation for growth. Should investors take this to mean that you're looking at potential further M&A in the business? And if so, can you give us a sense as to the scale of possible transactions you would consider?

Yes. We've -- we bought the Rivers & Lakes business specifically to get into that market, but also to get in the environmental business. We bought Terra specifically to get both land-based and water. I would suggest that we have some geographic and customer-type additions that we'd like to make.

I don't think they -- these companies don't tend to be very significant, size-wise. There's a lot of $50 million to $100 million revenue businesses out there that we think are attractive that we can buy at reasonable multiples -- and then add value to.

But from a strategy standpoint, I think the Southwest is very interesting to us. Getting into the oil and gas business down there, where we have a name from our Dredging business, is attractive to us. So, we continue to be on the lookout for transactions.

I don't think, in the marketplace where we play, these are tremendous size. I think -- if you look at what we did with the Matteson acquisition, you look what we did with the Terra acquisition -- I think those are the size that we expect to do. Because that's what's out there, really, that we think is attractive and we can add value to.

Okay. Thanks. That's very helpful.

And then, maybe just separately -- we've had some pretty harsh weather, here in the early months of 2014.

Yes.

Can you comment on how weather has impacted your ability to operate so far, during the quarter? And whether we should expect to see any headwinds from the weather in the early part of the year?

Yes. And let's go, a little bit, business by business.

Certainly, our Environmental, where right now we're -- it's significant Midwest-based. Weather certainly is -- slowed us down in the first quarter. And that's one of the reasons why one of our pushes with them over the next 12 to 18 months is to expand down to warmer [climes] so we can get rid of that seasonality that Bill talked about.

On the Dredging side -- it's certainly been a very rough start of the year. And that certainly affects our ability to execute. When it's so darn cold and you're on the water and you have storms blowing through, safety is first.

And we're not -- and our equipment can't operate at very heightened levels when the seas get rough. And certainly, everything slows down when it gets very cold.

So, my expect is that our first quarter numbers will be affected by weather to a certain extent.

Okay. That's helpful. Thank you.

Yes.

Thank you. And our next question comes from the line of Jon Tanwanteng from CJS Securities.

Good morning, guys. Nice quarter.

Thanks, Jon.

Can you talk about the WRDA bill for a bit? What appears to be the holdup, given that both the House and the Senate have passed their versions already? Is there a particular sticking point in the contract?

You know, there is the merging of the two bills. And it's our understanding that they've largely come together. I mean, they'll never tell you directly until they're putting it out to vote.

But all indications are, that we hear, is that it will come to vote in the second quarter. And when it does, it should pass.

You know, without spreading rumors, we hear the Gulf Coast is really fighting hard for a couple of projects that they expect -- they would like to get in there. The Gulf Coast and the political members from the Gulf have been tremendous supporters of the WRDA Bill, and of dredging, in particular. They've certainly gotten beaten up over the last 10 or 12 years. They're looking to get some projects in there.

And that's the last part I hear. But that's -- listen, that's all secondhand rumors. But everything that we hear is that it should be the second quarter. It should get done.

Okay. That's helpful.

The run rate in domestic capital Dredging was a bit below where we thought it would be. Is that going to increase sequentially as you get Miami ramped up to full speed? And what are the capital projects that you're working on right now?

Bill, do you want to take that one?

Yes. Jon, to answer your first question -- typically, the way that we plan for 2014, yes, we would be seeing sequential increases. I think that, as Jon mentioned, the weather has given us a pretty rough start this year. So we'll have to see what the full impact is on Q1.

Yes. And then your other question is -- certainly, Savannah is our expectation. We bid.

Will it be a big contributor if we win it in the second half of 2014? Probably not. Probably more of a 2015, 2016 venue. And then on the capital side, I think we'll continue to see things in the second half, when funding gets more solidified in the Gulf Coast, for projects that are capital-oriented.

Okay. Got it.

And then, can you break down the increase in the cost of the ATB versus the original contract, which was below $100 million?

Yes. Let me give you some high-level numbers, if I could.

One, it started out, with our contingencies, something below $100 million. When we went to final design, I think there was probably close to $10 million or more of incremental steel in there. Just as we looked to file design and went through the various approval processes, it was required to add some steel to support the frame.

There's probably -- the fact that it's a year later, there's just cost increases from a year. And just in design increases.

And then, I think we paid a penalty for switching yards. And I think, in our view, we came to a fair settlement with the first yard, that I think will recoup what our guess is the cost associated with switching yards. And we did it very efficiently, without prolonged litigation or arbitration.

So, yes. That's where it is. I think the biggest chunks are pure steel. And that's totally a mathematical exercise. If you add tons of steel, you just pay more.

And then there were some design increases. And then the third part is the penalty, which -- like I said -- we probably negotiated a fair settlement to absorb that.

Okay. Great.

And then finally -- any update on demand or projects out in the Middle East or Brazil and India? Just your international picture?

Yes. Great question.

We are wrestling and hope to have some -- a nice-size project in the Middle East in the next couple of weeks. We're -- which would give us some visibility. We'll obviously announce it when we get it.

India is a very difficult market. We spent some time looking at that market. I'm not very encouraged by what we can expect to see in India.

Though Brazil, I think we'll continue to operate in Brazil, with the equipment that we have down there, on a reasonably consistent level, going forward. We see nice demand there.

And we are looking at projects in a broader international spectrum that we find interesting. And so the activity is up. But these are big capital projects, so we do need to get something in the boat. Gaff some. Gaff a decent-sized fish and get it in the boat to keep that equipment utilized.

We think we have something in the Middle East. But until it's signed on the dotted line -- it's not as predictable as it is domestically.

Great. Thank you very much.

Yes. Sure, Jon.

Thank you.

(Operator Instructions)

Our next question comes from the line of Phil Volpicelli from Deutsche Bank.

Good morning.

Good morning.

We've seen some -- lots of -- news articles about the delays on the Panama Canal expansion. Has that reverberated through the bid market for the port deepening? Or is it really -- no one's focused on that?

No. Honestly, I think we, as a US port, are so behind schedule. So, if the Panama canal ends up being three to six months behind their opening, of which now is pushed to 2015, I don't truly believe that is affecting anyone's thought process on the US ports.

Okay. Great.

And then, you obviously gained some cash during the quarter from the working capital recoveries. What amount do you think you can get back in working capital in 2014?

We have a significant amount tied up in the ATB, that we haven't done our financing yet. And we have about $40 million we've expended that has come out of our working capital. So, beyond just traditional cash flow, depending on how we structure the ATB, that's probably our pure biggest chunk.

We had some extended working capital out there, that I think Bill mentioned. A significant receivable in the Middle East, some ramp up on items in Wheatstone. And we did a really good job of getting those settled before the end of the year.

The other big chunk, like I said, is the $40 million tied up in the ATB that we funded out of working capital. So, it's just a matter of how we structure that.

Right.

And then, I might have missed this. What's the revolver availability, currently?

At year end, our net cash was about -- Bill?

Well, a $35 million outstanding on the revolver, and borrowing is probably $80 million in [unused] credit.

Yes. So -- and we have plenty of availability. But it's $175 million. And we had, like Katie said, we had $35 million out on a revolver, but we also had a significant amount of cash on our balance sheet. Right?

Yes. So we were about net cash of $0. So, we probably have, I'm just purely ball-parking, somewhere close to $100 million of availability.

But $60 million on the revolver, plus cash.

Yes. So about $100 million.

Yes. Great. Thank you very much.

Yes.

Thank you. And our next question comes from the like of Rick D'Auteuil from Columbia Management.

Good morning.

Hi, Rick.

A couple of questions. The SG&A targets that you set for the second half -- back to more historical levels. What -- can you get more specific on that?

I think SG&A is going to step down. I think that's our expectation, as we go into next year. I think what you saw in the fourth quarter will step down, and it will just keep stepping down over the course of next year. That's our expectation.

But you said return to historical levels. Is that -- is there a certain percent of revenues that you're targeting? I'm looking for something more specific.

Well, we're really not going to give that kind of guidance, Rick. I think it's just -- to go back to -- if you looked at what the business was like before we ended up with some of the issues we had in 2013. That's really the best that we can say about that.

Yes. But you also made an acquisition last year that had its own SG&A that came with it, right? So --

Right.

That creates some noise, I guess.

Right. But from a percentage basis, we hope to drive it back down to where we were in 2011, 2012.

Exactly.

Before we ate up all of these issues.

There were a number of things that you were seeking to recover, I think mostly on the demo side of the business. Any successes there? And I guess, what's the status of those?

Yes. I mean, we're still working through those. It would be probably less than totally prudent, as we're in deep negotiations on the sale of the demo business, to really give too much color right now. Because it would, potentially affect us on the sale process.

But our attention is on that. And we think we'll do okay on that stuff. Yes.

So I guess my question is -- the potential buyers, I assume, aren't going to want -- aren't going to give you much credit for recovery. So will that continue to be your benefit, post-sale?

Yes. My guess is that's correct. We're still trying to finalize that. And in any contracting business transaction, it's a -- with ongoing projects -- it's a delicate negotiation.

But I don't disagree with your premise. And so, there's a reasonable expectation in my mind that, for portions of that, we'll retain and work through that ourselves through the second half of the year.

Yes. Okay.

The -- how is Wheatstone doing?

From a project perspective, it's right on. Right on our budget expectations. I was out there, actually, last week. It's moving along well.

We are on schedule, and may actually be a little ahead of schedule from expectations. There's discussions of certain amounts of, potentially, add-on work there.

So, we're happy with where it is. We're happy with the margin the project has been keeping.

And we continue to potentially engineer in some solutions there. So it's going well.

And so no weather impact there, obviously. Right?

Well, we certainly bid in, when we bid the project we bid in cyclone times. Cyclones are the big weather issue as you get down there. And this is cyclone season.

This cyclone season has not been greater than what we budgeted. So, we're not having any adverse effects from weather.

Okay. Thank you.

Thank you. And our next question comes from the line of Trey Grooms from Stephens.

Hello. Good morning, guys, and congratulations on a great quarter.

Thanks, Trey.

I just really have one question. It's really, more big picture.

If you look at Great Lakes overall, the Company, 2010, 2011, you had some of the highest margins that we've seen. Obviously, pretty high utilization rates, domestically, at that point. I think you were doing the emergency berm work and things of that nature.

But now, as we step back and look -- looking forward, it looks like the demand should continue to increase. You guys should have higher, nice utilization rates here, domestically.

Now with all of the puts and takes and things that have changed since that time frame, you've done a few acquisitions, and now, obviously, getting rid of the Demolition business, or the legacy Demolition business, can you give us a sense of, in that kind of environment, what has changed? Or has anything changed on how we should look at margin potential, as we look at Great Lakes today after all of the changes we've gone through over the last few years?

Yes. Great question, Trey.

There's obviously been a tremendous amount of noise. 2010 -- we had all the berm work. I think we're seeing, in our domestic Dredging business, we're seeing -- and I think we will continue to see, going forward, with all of these deepening projects and some of the expectations from Gulf Coast restoration, Sandy, and hopefully in 2015 and 2016 some LNG projects out there, I think we see a significant domestic Dredging business that rivals that 2010 number.

When we get our -- we'll see significant margin increase when we get our ATB online, because that truly is a game-changer. It's going to allow us to, one, both increase the amount of volume we can do, and it should increase our margins nicely. We basically replaced that Demo business with a much more reliable, we think, much more aligned business, in the Environmental and Remediation business that we think we can grow.

And our international is, to me, the other part that we have to figure out. If we can -- we have a lot of equipment internationally. And it's been an up and down couple of years in the Middle East.

We've replaced some of that work, obviously, with Wheatstone. Wheatstone will certainly go through the end of 2014. With the potential to go into 2015 a little bit.

But we've got to focus our attentions on keeping the level of volume up in both the Middle East or internationally. And if we do that, with the ATB coming online, with some growth expectations we see, yes. I think we should be in pretty decent shape.

Thanks a lot. And thanks for the color on that.

Yes.

And I guess, from this point, we're expecting to hear, hopefully, good news out of the international -- the international project that you have been talking about.

How far along in that -- in the process of getting that international business where it needs to be? Because it sounds like a lot of the potential really hangs on that -- this big project you're talking about. How far does that get us to where that needs to be, from a utilization standpoint, to where we should feel a lot more comfortable about that side of the business?

Yes. It gives us, certainly, it would give us better visibility into this year. But the challenge we have, as a management team, is getting some level of better consistency internationally.

And it's not the same thing as it is our domestic business. Our domestic business is a -- we have a power purchaser in the US government that we have, generally, a reasonably good feel of where the market's going.

Internationally, it's much more of a hunter -- hunting business, than it is a farming business -- if I can use those two analogies domestically. And we've got it -- we're spending a lot of time on our strategy of figuring out internationally how to get that better.

And the truth of the matter is, we have certain equipment in international markets that have been older equipment and things like that that we have to grapple with. But I think that we hope to have reasonably good visibility, if we can get this project put to bed, for the next year. And that gives us the run room to fully define the strategy.

That makes sense. Thanks a lot. Best of luck, Jon.

Thanks, Trey.

Thank you. I'll now turn the conference back to Katie Hayes for closing remarks.

Thanks, everyone, for joining us today. We will talk to you again, after our first quarter, in May of this year. Thanks.

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