Helix Energy Solutions Group Inc (HLX) 2013 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Helix Energy Solutions Group review of third-quarter 2013 results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, this conference is being recorded Tuesday, October 22, 2013. I would now like to turn the conference over to Mr. Terrence Jamerson, Director of Finance and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us this morning. Joining me today is Owen Kratz, our CEO; Tony Tripodo, our CFO; Cliff Chamblee, Executive Vice President and Chief Operating Officer; Alisa Johnson, our General Counsel; and Erik Staffeldt, our Finance and Treasury Director. Hopefully you all have had an opportunity to review our press release and related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the investor relations page on our website at www.HelixESG.com. The press release can be accessed under the press releases tab, and the slide presentation can be accessed by clicking on today's webcast icon. Before we begin our prepared remarks, Alisa Johnson will make a statement regarding forward-looking information.

During this call, we anticipate making certain projections and forward-looking statements made on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical fact, are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in our slide (inaudible) and in our annual report on Form 10-K for the year ended December 31, 2012. Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation, along with this presentation, the earnings press release, our annual report, and a replay of this broadcast, are available on our website. Owen.

Thank you, Alisa. Good morning, everyone. We're going to start on slide 5 out of the presentation, which is a high-level summary of first-quarter results. When adjusting for the impact of the contribution of the pipelay assets, which have since been sold, quarter three's revenues increased 10% from quarter 2. The introduction of the Skandi Constructor into the well intervention fleet had the most significant impact, but robotics revenues increased slightly as well. While reported EBITDA went down from quarter to quarter some $4 million, again, when adjusting for the contribution of the pipelay assets in Q2, EBITDA for the way Helix has [contributed] today actually increased sequentially some $11 million in Q3.

Over to slide 6, our reported earnings per share of $0.42 included two nonrecurring items, a gain from the sale of the Express, which occurred in mid-July of $15.6 million, and a loss on the early redemption of the remaining $275 million of senior unsecured notes of $8.6 million pretax. Combined on an after-tax basis, these two item amounted to $0.04 a share. Thus without these two items, our reported EPS of $0.42 per share would have been $0.38 per share. Our robotics business realized 98% utilization on our long-term chartered vessel fleet, producing our best quarter of the year for this business segment. However, Q3 is normally a seasonally active quarter for this business, due to our exposure to the North Sea. While the well intervention fleet saw fleet utilization flip to 84% in Q3, this was entirely due to the Skandi Constructor being off hire for most of the quarter while being fitted for its well-intervention equipment. She went into well-intervention mode in early September, and we're pleased so far with her operating performance. With the sale of the Express in mid-July, for the most part, Q3's results essentially reflect the business Helix has transformed into.

On to slide 7, from a balance sheet perspective, our cash and liquidity levels remain very strong. Cash stood at $480 million, with liquidity levels remaining strong, approximately $1.1 billion. We made two major shipyard payments during Q3; $58 million progress payment for the Q5000 and the $69 million down payment for the recently announced Q7000. With the redemption of the remaining 9.5% senior unsecured notes in July, our net-debt capital structure has now been transformed to a much lower cost profile. I'll now turn the call over to Cliff for an in depth discussion of our contracting service results.

Thank you, Owen. Good morning, everyone. In looking at the summary results for contracting services, we see that the revenues, including subsea construction were up $17 million, or 8%, in Q3 compared to Q2. The $4 million of revenues in subsea construction was for remaining work performed by the Express pipeline vessel before being sold in the middle of July. Both revenues and profits remained roughly the same in the production facilities, while overall gross profit margins in the contracting services increased to their highest levels of the year. Primarily due to the strong utilization of the charter vessel fleet in robotics, and now having three vessels in the North Sea performing well-intervention work.

If we move on to slide 10 for the well ops review, in the Gulf of Mexico, we achieved 100% utilization of the Q4000 for the quarter. Our spare intervention riser system, IRS number 2, remained on hire to a client and stand-by rates throughout the quarter, and we expect the system to go on hire at full operating rates sometime in December of this year. As for the latest on the 534, she began transit in mid-September and is expected to arrive in the Gulf in November. And if all goes well, we hope to put it to work in late December. Over to the North Sea, we achieved 97% utilization on the Seawell and 100% for the Well Enhancer. The Skandi Constructor, if you recall, was chartered at the beginning of Q2 and she initially went to work as a support (inaudible) project. At the end of Q2, we brought the vessel dockside to undergo upgrades and insulation of the well-intervention equipment for approximately two months. Thus the reason for the decrease in utilization of the overall well intervention fleet this quarter versus last quarter. However, as Owen stated in the executive summary, I'm glad to report that the Skandi was back on hire on September the 1st, where she continues to successfully perform her first contracted well-intervention backlog approximately 60-day campaign in the North Sea.

Moving on to the robotics slide, for the second straight quarter, Canyon achieved 98% utilization of our chartered vessel fleet in this business. Utilization of our ROVs and trenchers was up 8% quarter over quarter as well. The REM Installer, our newest chartered vessel, entered the fleet in July, where she continues to work on accommodations project. We performed approximately 150 days of trenching work in the quarter, all in North Sea, utilizing three of our four trenchers. We also completed a ROVDrill campaign in the North Sea, while transiting to West Africa at the end of the quarter to commence another road drill campaign late in Q4. Our Olympic Canyon vessel remains in India on a long-term ROV services contract. Thus far, the quarter has been our strongest quarter for robotics, both in terms of gross profit and wells margins.

Moving on to slide 12, basically I'll leave this slide detailing the vessel utilization to your reference. And with that, I'll turn the presentation over to Erik.

Thank you, Cliff and good morning. Please turn to slide 14. Slide 14 provides an illustration of our debt-maturity profile at September 30. As previously disclosed, during the third quarter, we retired the high yield notes with proceeds from the term loan, significantly decreasing the cost profile of our capital debt structure. Debt reductions during the quarter reflect the quarterly payments of the term loan and the semi-annual payments of the MARAD debt.

Moving on, slide 15 provides an update on our gross and net debt levels historically, and at September 30. We continue to maintain a strong liquidity position, with approximately $1.1 billion of liquidity. Our net debt levels increased from the second quarter, primarily as a result of the Q7000 shipyard payment, previously disclosed. Tony.

Yes, moving on to slide 17, which reflects our updated 2013 outlook. We adjusted our outlook assuming a late December in-service date for the H534, resulting in very little contribution from this vessel for 2013. Although the vessel is expected to arrive in the Gulf of Mexico in early November, with an estimated 30 days of work needed to get the vessel ready to be placed in service, we believe it was prudent to lower our expectations for EBITDA contribution for this vessel in 2013. Thus, we have adjusted our forecast at total EBITDAX for 2013 to approximately $290 million from the prior $300 million. Again, as we've stated in prior quarters, when backing out the stub impact of our discontinued operations, both oil and gas and pipelay and thrown into the equation a full year's impact for the two vessels that entered the fleet in 2013, the Skandi Constructor and the Helix534, expect a pro forma exit-rate EBITDA for 2013 is more like $350 million. We'll actually provide our initial guidance for 2014 in February.

Both the Well Enhancer and Skandi Constructor have short duration dry docks in 2014, and we may, in our evaluating to perform a life-extension project on the Seawell. If we do so, she may come out of service in late December of next year to commence this project. Year over year for ongoing operations, we're forecasting a revenue growth of 22% in 2013. $1.8 billion of backlog at September 30 and $2 billion when including the backlog for the Helix Producer 1 provides a solid foundation for our revenue base on a go-forward basis. For instance, the Q4000 is spoken for through 2015 with additional commitments in progress beyond. The Seawell, Well Enhancer, and Skandi Constructor have relatively high levels of backlog and commitments through 2015, which should lead to continuing high levels of utilization. The only exception being the dry docks I mentioned earlier and the possible [life] extension for the Seawell.

The Helix534 has high level of backlog through 2015, with backlog filling in for 2016. We're forecasting total CapEx for 2013 at $400 million. That's up from the previous $360 million, and this increase is entirely related to the decision to proceed with the Q7000 new build, of which we've paid a $70 million deposit in September. The major items represented in this number are as follows; down payment plus design engineer and expenditures for the Q7000 of $75 million. I think it's important to note that the balance of the shipyard contract will not occur until the vessel is delivered in 2016. So the major spending for this vessel has now been made this September. Progress payments and spending on the Q5000 currently under construction in Singapore at $70 million; modifications and refurbishments of the H534 at $90 million; additional intervention riser systems for the well intervention at $45 million; additional robotics vessels and trenchers of $45 million, preliminary engineering work for the Seawell of $10 million, and dry dock on the HP1 of $15 million. I'll skip slides 21 and 23, leave them for your reference, and turn the call over to Owen for closing remarks.

Thank you, Tony. Well, I'm pleased to report that all is going well and we're on track with the execution of our growth strategy. While the H534 is arriving to markets lower than we had hoped for, our strategy for adding capacity to the growing well intervention market is solidly in place. The slower start with the introduction of the H534 into the Gulf of Mexico intervention market was due to a prolonged refurbishment that has delayed the asset to market by almost six months. The vessel is now en route to the Gulf and is expected to be in service prior to year end, as Cliff said. On the robotics side, the new 1200 Trencher went into service on board the Grand Canyon, and we did add some new ROVs to update our fleet, so we'll expect some stronger results ahead for robotics. As Cliff mentioned also, we added the Skandi Constructor back in Q2, but just recently completed our required modifications that will allow it to go into full light well-intervention mode. While a tad later than we expected, this vessel is now working in intervention mode and working well. It's performing well.

While we didn't get the assets working as fast as we had planned, our exit-rate EBITDA rate is still forecasted to be $350 million. So by the end of the year, we will be where we wanted to be. The delays related to the H534 and Skandi Constructor means that 2013 results are not quite as good as they could have been. But in spite of this, strong performance from the rest of the Company has allowed us to come really close to the $300 million EBITDA that we did forecast. The two new builds, Q5000 and the Q7000, are progressing on schedule in the shipyard. Q5000 is on schedule to be delivered in early 2015, with the Q7000 around mid-year 2016. And both projects are forecasted to be on or under budget.

In general, we are pleased with the 32% operating margins that we achieved this quarter, and even see areas where we might improve. The balance sheet remains strong, with planned growth capital allocations paced to keep debt low. We're 16 months from delivery of our first in the series of new intervention assets and market demand is developing as we predicted. All is well, and we should expect even better results ahead. So at this time, we'll be happy to take any questions.

(Operator Instructions)

Our first question comes from the line of Jim Rollyson from Raymond James. Please proceed.

Owen, you talked about the robotics side of things with the Rem Installer coming in last quarter, a couple more ROVs you mentioned, and generally sounded pretty positive. Yet your revenue guidance for that business came down a little bit just for the rest of the year. Trying to square those two items and trying to figure out what's -- maybe what drove that and how we should think about the robotics business going into the latter part of this year and really into next year.

Let me let Cliff address that, since he's a lot closer to it.

Yes, okay well on the robotics side, if you remember on the long-term chartered vessels we had, we were running about 98% utilization. Obviously, that's a good thing; that's been pretty consistent lately. We had a little bit of a slow start in the winter with those. One of the objectives that we haven't achieved, and it doesn't look like we will this year, and we have historically, is we have not been able to pick up any spot boats that we didn't have on -- already on long-term charter, just because the market wasn't there to pick those spot boats up and make some extra money in addition to our long-term chartered vessels. We do expect that to get back to the normal levels next year, like we've had in the last three or four years in the past. So that's our biggest shortfall, I believe, there.

Okay. So it's not a lack of opportunity. It's just lack of available vessels. That makes sense.

No, it's a little of both. It is a little bit of a market also, that there has been a little bit of a lack of opportunity as well there. So it's not just lack of vessels. I'd say more so lack of opportunity there in this year.

Okay. That's helpful. And Tony you talked a little bit about -- certainly gave us detail on CapEx for the rest of this year. Maybe give us some idea, just thinking about how to schedule the payments on the 5000, the 7000 as you go through the rest of the construction cycle, so we time that right.

Okay. Jim, from a Q5000 only, the major milestone payment for 2013 are now behind us this year. I would expect us to add two more milestone payments next year, totaling about $120 million, and then the final payment upon delivery in 2015. As far as the 7000 goes, that shipyard contract is different than the Q5000. We essentially negotiated 20/80 terms, which is 20% down, 80% on delivery. So the rest of the shipyard payment won't occur until the vessel is delivered in 2016. That being said, we have ongoing expenditures internally for engineering that will go on constantly, as well as some equipment we buy for the vessel that will happen from time to time. But the majority of the cost for both vessels is a shipyard-related cost. And it's as I outlined previously.

That's what I thought you said. That's helpful. Lastly, Owen when you built the -- announced the Q5000, you waited until you got some work for that before you looked into seriously considering the Q7000. And you obviously picked up a contract. Curious how marketing is going at this point, or discussions at least, for the 7000 and maybe how you think about the timing and what needs to happen if you were to built a third new build.

That is one component of it, Jim, is having the work booked up for the current vessel under contract or construction. I'd say that the market demand for the Q7000 is strong or stronger than what we had expected. Timing-wise, I'm going to go out on a limb here, and say -- well, let me go into the second part of that. Another reason why you build these vessel sequentially is so that you can allocate your resources properly and gain some economy of scale and efficiencies. So we wouldn't want to start the next one too soon. We want to get down the road with the Q7000 before starting the next one. I'll just leave it to say that I'm pretty confident that before we get to that inflection point, we will have sufficient contracted dates for the Q7000 to proceed with the next vessel, maximizing the efficiency of our current resources.

Our next question comes from the line of Joe Gibney from Capital One. Please proceed.

Owen, just wanted to get your bigger picture perspective on well intervention. Certainly seems a little bit more perception versus reality in the market a little bit. Sounds like everything proceeding well in terms of market demand. Curious to get your perception a little bit on mid-water and legacy deep-water, offshore driller rate declines in the market. There seems to be a bit of a perception that this could put a bit of a cap on well-intervention rates and/or create the notion that some rigs might step down into the market. Curious to get your thoughts, if you're seeing that, if you're not, whether or not you deem that material, your market opportunity as it stands today.

In the long-term, Joe, I would say that it's immaterial. I think there is a shift in the market to non-rig solutions for well intervention. I think there's a growing awareness by the operators that they need this solution. Near term, could it put some downward pressure on pricing? Probably, but keep in mind that historically we've priced at a discount to rigs already, so there's room there. Also, I think it's just highlighting the efficiency argument greater than it has been. There is an efficiency gain by using our assets versus a rig that has to be taken into consideration. And then finally, consider the fact that 80% of all of the intervention in the world currently is done by rigs. What's happening is they shift from rigs to non-rig vessels. That may slow a little bit with more rigs doing, but a few more rigs doing intervention, when 80% of all the intervention is done by rigs already, is not material in my mind.

Okay. Helpful. I appreciate it. Just had a couple --

Let me add one thing, Joe. The 534, I think, demonstrated that converting one of these old drill ships to intervention is not an easy task.

Sure. Specifically, my next question was curious, I know the incremental costs on that asset look up a little bit again here sequentially. Is that just a function of some of the incremental yard time in getting it ready, the longer stay or some other bells and whistles here as you've peeled it back? Curious on the cost creep on that particular asset.

I think we had three things that occurred on the 534. One is we expanded the scope of the refurbishment that we originally had planned, because we do want an asset that performs well in the market. Second, I think the condition of the vessel, when you get into these old vessels, you can go through a refurbishment and put band-aid fixes on things and get working. Or you can look at root cause and try and really dig down, and that takes time and money. We opted to take the second route. And then third, we did have some vendor issues where some of the vendors that we gave engines and things out to, the work was sub-par and had to be reworked. So that was the cause of the delay.

Okay. Helpful. And last one from me, Tony just some modeling-related questions. G&A, curious and this is a minor needle-mover, but I thought we might have seen a little bit more step down as you pare back on shore-based costs and some of the things associated with the construction side of things. The Express is out of the mix now. Can we see G&A step a little bit lower here? And also a little bit of help on tax, where do we go with that on a reasonable run rate going forward? I certainly know it can dance, but 3Q was a little bit abhorrent. Trying to get a decent run rate going forward.

Sure. SG&A from a pure spending standpoint was actually pretty flat to Q2. We did book additional bad-debt reserves in Q3 of some $2 million, so that's why you saw the tick up. I would expect in Q4 it to come down. In terms of tax, we had some discreet items that benefited our tax rate in Q3. 13% plus I would say is unusually low. We expect the rate for the total year to be 20%, and I think from our thinking and from everybody on the outside's thinking, we think low to mid-20s is the right type of rate going forward, although this year, we'll be around 20%.

Our next question comes from the line of Jeff Campbell from Tuohy Brothers Investment Research. Please proceed.

I wanted to ask you a quick question with regard to the Seawell. Assuming that you do choose the life extension, you mentioned that there might be a bit of a headwind if it goes into its work late in the year. I was wondering, do you have any flexibility to work around that with the Skandi Constructor during the fourth-quarter '13 dry docking?

Well, the reason we picked that timing is historically in the North Sea, that's the slow time of the year, the work efficiency and we struggle for keeping the utilization there, so that's why we chose that. The other vessels are -- and we are booked up beyond that, and we have work for the Seawell beyond that as well. So we're trying to pick the period where the clients would like for us to be out of service. And that's the -- obviously, the North Sea is in the middle winter. So our goal right now is to get it in in December of next year, and be in December, January, and probably into February as well.

Okay. Well, that was helpful. I wanted to ask a little bit broader question. When we spoke with Owen back in August, he was -- he told us that [plug in] abandonment is the dominant business in well intervention, but that production enhancement is increasing in demand. And I was wondering, are you still seeing that trend for production enhancement increasing in the most recent quarter and looking ahead?

Yes, definitely that's production enhancement is more of what we're doing. And there's talk on the horizon about more decommissioning work as well, but that's still out in the future out there.

Our next question comes from the line of Michael Marino from Stephens Incorporated. Please proceed.

Tony, you called out a couple dry docks, and then the Seawell life-extension potential as headwinds for 2014 versus the Q -- the '13 exit rate. Is maybe the embedded day-rate increases within well intervention and growth in the robotics, is that enough to offset those discreet items?

Michael, that's a good question. We believe that $350 million exit rate is a good proxy right now looking forward, despite those dry docks and the possible life extension. So I will say this, we're in the middle of our budgeting process for 2014. We haven't finalized it yet, so -- but based on our analysis of what 2014 should look like, I think that exit rate is a good proxy now.

Okay. Thank you for that color. And then two more, more housekeeping things. The announced or the planned sale of Ingleside, what kind of proceeds are we expecting there, or is it too early to say?

Let's see. I think the major terms are we already received a $5 million deposit. And I think we're going to see progress payments over four years of about $10 million, $8 million apiece, so it's going to be spread out over four years.

First one's in January.

Yes, January is the next payment. We close in January, so that's when we'll receive the next payment.

Okay. And then one final one to make sure I have this in my model right, but the dry dock of the HP1, that's Q4 of this year. And you're still expecting 45 to 60 days; is that correct?

It's in dry dock right now. It's about, I don't know, halfway through, so we'll be on budget for that as our -- as our prognosis at this time.

But 45 -- I mean, 45 to 60 days is still the thought?

It's less than that. It's going to be between 30 and --

(Operator Instructions) Our next question comes from the line of Martin Malloy from Johnson Rice. Please proceed.

Could you talk about what you're seeing in terms of pricing for well intervention services as you look forward, maybe on a year-over-year basis from '13 to '14 with you already having good contract coverage for almost all of '14?

I think in general, I'll speak first and then let Cliff add something to it. But we -- I'd just like to point out that we have moved the intervention rates up pretty aggressively over the past two years, so we are seeing stronger rates. We've already talked about could there be some downward pressure from older rigs? And the answer is probably yes, so trying to predict how much further rates would go up is difficult. There is greater demand than there is supply right now, so that's working in our favor, and we do -- there is a big difference between long-term commitment and short-term spot market rates. So the answer's not easy, but I think we have been successful in pushing them up. I think there is probably some incremental additional increase coming, but I'd be cautious about predicting too great an increase.

Okay.

Our biggest (increase)is going to come when we get the new vessels, the 5 and the 7, towards the incremental increase. I think the fact that the clients have now recognized the efficiencies in well intervention versus trying to use the older rigs is helping us sustain those higher rates as well.

Okay. And then to go back to the robotics segment, and from the 2Q presentation, 3 Q presentation, it's about 10% decline in terms of your revenue expectations for that this year. I know you mentioned unable to pick up some spot charter vessels, but is there anything else that's going on on the robotics side that gives you concern? Are there projects that are on the renewable side that are not materializing or anything like that?

Well, as I mentioned the first quarter of the year, we had a slow start in the North Sea. So that had a couple vessels sitting at the dock, which hurt us right out of the gate. And then as you mentioned, we haven't had the spot vessels. But it has been a little bit of a slow year on the renewable side, but not anything substantial. And we do project-wise, that is picking up for next year and beyond.

I think maybe expectations for this year, if you go back to last year talking about this year, there was a lot of talk in the industry about how strong the subsea market was going to be in the coming year and out into the future. And I think our experience is that it didn't materialize quite as strongly as what everybody was thinking.

Especially here in the Gulf.

Our next question comes from the line of Trey Stolz from Iberia Capital Partners. Please proceed.

A lot of my questions have been answered already. Looking at Canyon with the additional charter vessel there, can you quantify or help us understand what the contribution was quarter over quarter in terms of revenue, how we might think about that? Was there a shake-down period for a vessel like this, and we expect higher contribution on a relative basis going forward?

Now if you're talking about the new vessel, I think what you're getting at the Rem Installer.

Yes.

Yes, there was not a shakedown period. It came out of the yard and went pretty much straight to work. And it's on -- actually, it's on a field maintenance contract, where we're supplying a [flow tell] or what we call a walk-to-work contract. So there's people staying on the vessel and working on the platform. So it's not a real high dollar earner contract for us, and it's on there until I think the end of this month actually. And so it's not on a trenching campaign or a construction campaign. It's a little bit more on a lesser return than a normal construction-type project.

So would you expect incremental operating income after this month from that vessel?

Yes, we expect to put it back in the construction side of work, but also be aware that the winter time is fast approaching here in the North Sea. So you could be seeing in the fourth quarter, back into the fourth quarter, we could be seeing some utilization problems as well.

Got you. Okay. And then the Seawell, what are the factors playing into your decision there on the Seawell, and the project, the life enhancement project?

I'll take that, Cliff. We have three light intervention vessels working in the North Sea right now. Demand is strong. We need three. The Seawell is now getting fairly old, but she has a fantastic track record. She was purpose-built for intervention, and she works exceedingly well. So the decision tree was do we -- what do we do? Do we replace her or do we refurbish her? And at the end of the day through a lot of considerations, I would think a life extension is what makes the most market, as well as commercial sense for us to do.

Some of that's driven by the fact that it's -- of the three vessels we have there, two of them have man diving on board, and the Seawell is one of them. And to get a new vessel with man diving on it is somewhat expensive and problematic as well. And this one, as Owen mentioned, has a fantastic reputation and a great hole. So right now we're looking at the extension versus a new build.

And can you quantify that at all, what time out that might require for the Seawell?

Did you say what time out? Is that what you said?

Yes, what time in the shipyard, how long out will we be missing?

We're estimating right now about 90 days. We're not sure. As we said we're not sure; we're 100% sure we're going to go ahead with it. But at the moment, if we had to say what we're going to do, we'd put it in December, be in December, January, and February.

Our next question comes from the line of Michael Nole from Key Group Holdings.

This is Brian Finkelstein for Michael. Just had a quick question, on the well construction, did it contribute any margins to the quarter?

You mean on subsea construction?

Yes, sorry I meant subsea construction.

Very, very little.

It had [$4 million] in revenue, but I don't think there was any contribution --

Negligible.

Okay. And then on the Skandi, did you guys capitalize any costs when it was in the shipyard?

No, not for the vessel itself. The only capitalized costs are we built an intervention system that went on board. That's why it was at the dock; it had to be installed on board.

It actually was a drag on Q3 while it was in the shipyard, because we had extra people. And we still had to pay the vessel charter, so it was actually a drag on the quarter until it went to work on September 1.

Okay. Perfect, and then last on the robotics, I know there's been a handful of questions. How should we think about -- I know, you guys -- there's some good progression. And I understand if some of the vessel are spot that you weren't able to get a hold of. How should we think about that segment going forward?

Well, as Tony said earlier we're in the budgeting process right now, and we're in the first stages of that. But -- so I don't know how that's going to pan out exactly, but I would expect that next year will be a better year than what we're having this year from a profit standpoint and probably between -- somewhere between where we are this year and where we were last year.

Mr. Jamerson, there are no further questions at this time. Please continue with your presentation or closing remarks.

Okay. Thank you for joining us today. We very much appreciate your interest and participation and look forward to having you participate on our fourth-quarter 2013 call in February.

Thank you.

Ladies and gentlemen, that does conclude the conference call for today. Have a great day everyone.