Orion Group Holdings Inc (ORN) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third quarter 2012 Orion Marine Group, Incorporated earnings conference call. My name is Bryn. I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session toward the end of the conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would like to now turn the conference over to your host for today, Mr. Chris DeAlmeida, Vice President of Finance and Accounting. Please proceed, sir.

Good morning, and welcome to the Orion Marine Group third quarter 2012 earnings conference call. Joining me today are Mike Pearson, Orion Marine Group's President and Chief Executive Officer, and Mark Stauffer, our Executive Vice President and Chief Financial Officer.

Regarding the format of the call, we've allocated about 15 minutes for prepared remarks, in which Mike and Mark will highlight our results for the quarter and our update and outlook for 2012 and 2013. We will then open up the call for sales side analyst questions for the remainder of the time. We would ask that you limit your questions to one question and one follow up before getting back in the queue.

During the course of this conference call, we may make projections or other forward-looking statements regarding, among other things, our end markets, revenues, gross profit, gross margins, EBITDA, EBITDA margin, backlog, projects in negotiation and pending awards, as well as our estimates and assumptions regarding our future growth, EBITDA, EBITDA margin, gross margin, administrative expenses and capital expenditures.

These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K for 2011 that may cause actual results to differ from those statements. Moreover, past performance is not necessarily an indicator of future results. By providing this information, we undertake no obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise.

Also, please note that EBITDA and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including Regulation G. Please refer to the reconciliation accompanying this earnings call, available on our website at www.orionmarinegroup.com for comments on the use of non-GAAP financial measures as well as applicable reconciliations to the most comparable GAAP measures.

Also, please refer to our earnings release issued this morning, November 1, 2012, and our quarterly and annual filings with the SEC, which are available on our website, for additional discussions of risk factors that could cause actual results to differ materially from our current expectations.

With that, I'll turn the call over to Mike Pearson, President and CEO. Mike?

Thank you, Chris, and thanks for joining us this morning. Before I begin, I'd like to take a moment to thank our nearly 1,200 coworkers for all that they do. It's because of their hard work and dedication that we're able to achieve positive gross margin and positive EBITDA for the quarter. There's no doubt our people remain our most valuable asset. We have a good team, and it's because of their efforts that we continue to move in the right direction.

Also, we'd like to extend our sympathy and concern for all of our investors, coworkers and friends who've been affected by the Hurricane Sandy devastation that occurred earlier this week. Devastation from hurricanes is something Orion is all too familiar with, and our thoughts are with you as you move through the recovery stage.

Now, turning to our results and market outlook, the plan that we laid out last year is working, and our results continue to show improvement as we move through 2012. The improvement in our results for the third quarter included a sequential increase in revenue, positive gross margins, positive EBITDA, and improving bottom-line results.

The large projects booked at the beginning of 2012 have begun to materially contribute to our improved performance as we drive a larger volume of work to offset lower job margins. As we've said before, we believe we can achieve positive bottom-line results with the current job margin levels by increasing our volume of work. As we've shown through the results this year, we are headed in the right direction.

Still, the ultimate timing of our return to profitability will be influenced by the timing and type of work and its impact on our overall fleet utilization. We're working hard to return to profitability as soon as possible. To do this, we've continued our strategy of maintaining a high level of backlog and bidding effectively and focusing on opportunities which best suit our specialized marine assets.

During the quarter, we achieved a solid 20% win rate, adding approximately $100 million of new awards to our backlog, and this has led to our highest backlog level in two years.

During the quarter, we continued to see steady bid margins, albeit at lower levels than we saw a couple of years ago, and we continue to see limited irrational bidding.

As we look beyond this year, we continue to see solid long-term end market drivers, and we remain positive about our future. Clearly, we still have some challenges to overcome, but we believe we've made the necessarily changes to control our costs and move our results in the right direction.

Now, let's look at some specifics about our markets. We're continuing to monitor pricing conditions after the two-year transportation bill was recently signed into law. As we've said before, this piece of legislation could provide a return to more normal bid margins on projects involving marine construction services, as nontraditional contractors would return to their normal markets.

Also, it's been reported that BP and the federal government are progressing towards a settlement on the 2010 oil spill. Reaching a settlement between the two parties is the first step in executing the Restore Act, which dedicates about 80% of the fines collected from BP towards coastal restoration in five Gulf Coast states, and we're optimistic that this is going to lead to increased opportunities for us in the Gulf Coast market.

We're also encouraged by the continued strong demand in the private sector. During the quarter, we were successful in winning several private jobs, including an approximately $10 million bulkhead construction contract, which we announced in August.

One of the strongest headwinds that we face today is the fact that our dredge utilization continues to be affected by inconsistent Corps lettings. As we've mentioned before, this is an issue that we've dealt with now for several quarters.

As you're all aware, the Corps has funding under a continuing resolution through March of 2013. While the length of this continuing resolution is more palatable than the series of short-term resolutions that we saw last year, it still doesn't provide the clarity of a full-year budget. Therefore, we remain in uncertain times surrounding the pace of Corps lettings as we enter into the new fiscal year.

Still, we continue to believe there's a building, pent up demand for projects that involve dredging services and ongoing demand for marine construction projects, and this was before anyone heard of Hurricane Sandy. As we've said before, getting our large dredges back to historic utilization levels is the quickest way for us to return to higher profit margins.

According to the most recent data from the US Census Bureau, the United States continues to see increases in exports and imports. The first eight months of 2012 saw exports increase by 5.6%, and imports increased by 4.3% as compared to the same period a year ago.

In addition to domestic levels of waterborne commerce increasing, tonnage levels transiting through the Panama Canal have also set a new record. Nearly 332 million Panama Canal tons transited through the locks during the Canal's fiscal 2012, which ended on September 30th. Now, this breaks the previous record that was set in 2007 of nearly 313 million tons. The increase in the level of exports and imports highlights the need for continued investment in the maintenance and expansion of our vital marine infrastructure.

The importance of our nation's ports and waterways was recently highlighted in a report by the American Society of Civil Engineers, of which I'm a member, and the report predicted that ports and waterways will require approximately $30 billion in investment by 2020 -- $30 billion in investment by 2010 -- to accommodate the anticipated growth in trade and waterborne traffic.

Today, we're tracking $6.5 billion worth of bid opportunities over the next few years, and of this, 11% are federal projects, 28% are state, 19% are local, and 42% is in the private sector. This high level of activity in our tracking database gives us optimism about the overall market demand. However, close attention must be paid to our pricing and funding to see how these opportunities ultimately play out.

As we announced this morning in our earnings release yesterday, we acquired substantially all the assets and ongoing projects of West Construction Company, which is located in Anchorage, Alaska, for $9 million. The acquisition of the assets and the backlog of West Construction is another exciting development in the continued growth of Orion. These assets are going to allow us to further expand our capabilities in the Alaska and Pacific Northwest markets, as well as provides us with the opportunity to expand our international presence.

We believe this acquisition positions us to take advantage of significant long-term bid opportunities in both the private and public markets throughout the Alaska region. This acquisition will add to our backlog and market tracking database.

We're excited to have the West Construction team as part of Orion Marine Group, and we share a similar philosophy in project management; we have similar capabilities in meeting the challenges of working in remote operations.

In closing, our confidence in the long-term strength of our business remains strong, and the plan that we put in place has us moving in the right direction. We remain focused on returning to profitability while protecting the intrinsic value of the Company and returning value to our shareholders.

While we face some challenges as we wrap up 2012 and move into 2013, we believe Orion Marine Group has a strong and bright future. We're working hard to maintain our backlog, maintain a very strong balance sheet, increase our margins, explore complementary but diversified service offerings.

And with that, I'll turn the call over to Mark Stauffer to discuss our financial results in more detail. Mark?

Thanks, Mike, and thank you for joining us. For the third quarter 2012, we reported a net loss of $1.6 million, or $0.06 per diluted share, which compares with a net loss of $6.2 million, or $0.23 per diluted share, in the prior-year period. Third quarter contract revenues increased 38.1% year over year to $75.4 million, of which 48% was generated from federal, state and local government agencies and 52% from the private sector, which compares to 85% from federal, state and local government agencies and 15% from the private sector in the prior-year period.

During the third quarter, we bid on approximately $500 million worth of opportunities and were successful on approximately $100 million. The 20% win rate achieved during the third quarter is the result of the continued success of our bidding strategy to secure a greater volume of work to offset the impact of lower job margins. This success level resulted in a book-to-bill ratio of 1.3 times for the third quarter. While our book-to-bill ratio can fluctuate from quarter to quarter depending on several factors, it is important that we maintain a book-to-bill above 1 times, which indicates we are maintaining backlog as we execute on work.

As of September 30, 2012, we had a backlog of work under contract of $217.1 million, of which 25% is for federal government projects, 18% is for state projects, 16% is for local projects, and 41% is in the private sector.

Subsequent to the end of the third quarter, we have been successful in continuing to obtain additional awards for new work. The backlog as of September 30, 2012, is at its highest reported level in two years.

As we look at the next 12 to 18 months, we are pleased with the backlog we have begun to build for 2013 and beyond. However, bid margins remain lower than we experienced several years ago. Still, as Mike mentioned, we believe we can return to profitability at today's job margin levels through an increase in the level of work we execute. If you look at our results this year, our plan is working and we are headed in the right direction.

It is important to note that in certain selective cases, bid margins are beginning to show signs of improvement, which should be beneficial to late 2013 and beyond if we see this trend continue. However, we're not completely out of the woods just yet. On projects involving dredging services, we are monitoring Corps lettings in our operating regions closely for signs of improvements through a steadier pace of lettings in the Corps' fiscal year 2013.

Turning to the balance sheet, during the third quarter we billed cash as a result of income tax refunds and positive free cash flow for the quarter. Additionally, we paid down the outstanding balance on our revolver of $2.1 million. As a reminder, we still have $10.5 million outstanding on our term loan. Our ending cash balance as of September 30, 2012, was $50.2 million. Overall, we are pleased with our balance sheet and remain focused on maintaining a strong balance sheet.

We continue to see signs of improvement in our marketplace and remain pleased with the amount of bid opportunities we see in front of us. We still face uncertainty as to the pace of Corps lettings as we enter fiscal year 2013 and the potential impact on the utilization of our dredging assets.

Still, we continue to believe the obstacles and challenges we are currently facing are not insurmountable. The plan we've put in place to manage through this downturn and position ourselves to take advantage of a return to more normal market conditions is working, and we remain excited about the future bid prospects and long-term strengths of our end markets. There are positive long-term momentum drivers occurring that give us optimism about the future. We believe our specialized fleet, workforce and support facilities position us to be a leader in the marketplace.

The maintenance and improvement of our waterways infrastructure is far too important to the health of our economy to be neglected. We believe that pent-up demand for our services exist in all of our operating regions, and we are well positioned to take advantage of this.

With that, I'll turn the call back to Chris to begin the Q&A portion of the call.

Thank you, Mark and Mike. We would now like to open up the call to questions. Bryn, would you please review the procedures for placing a question.

(Operator Instructions) Please stand by for your first question. Your first question comes from the line of Rich Wesolowski from Sidoti. Please proceed.

Thanks. Good morning.

Morning, Rich.

Morning, Rich.

So now that the Corps' fiscal '12 is over, presumably all the projects with last year's money have been let. I'm wondering if you've done some dissection of that. Did the Corps use all their money? And, if so, does the utilization of Orion's fleet reflect missing jobs that were up your alley or money that was allocated to your geographies but not suited to your equipment or maybe money that went to other areas of the country?

I think it's a mix of all of the above. We had a pretty good third quarter, picking up some projects that were awarded to us. Here in the last month, we weren't quite as successful. The results are public. But I think the Corps has been struggling with trying to prioritize, and they've got some upper Mississippi River issues with no funding and traffic running aground. And how that's going to be addressed, we are about to find out. They're trying to put together some packages up there, but funding on that is not clear to me.

But I think it's just been very choppy lettings, which has led to some choppy pricing, quite frankly. It's just a very uncertain situation with just a six-month look ahead, and we've only got, what, five months left.

Right. Secondly, Mike, you mentioned that the Company can make money in today's environment of construction pricing and Army Corps dredge activity. With that said, there has to be some general limit out there as to how far this improvement for Orion can stretch in the absence of some end market improvement in either construction or dredging or both. Do you have any general thoughts as to what that limit is?

Well, first of all, I just want to say we tried very hard to get our cost containment program down as quickly as we could, not knowing how long this difficult period is going to last. And I'm sure after the elections, we'll get some more clarity as to what Congress is going to do on funding waterways programs, and that may take some part of next year to get sorted out. So we decided that if we have to stick with these kinds of margins for the time being in the short term, let's do that and get our costs down. And I think it's really more a factor of if we get our utilization up on our dredging plate, we'll kick in to a profitable run rate. That's really the most important issue for us.

Yes, Rich, and I would just follow up on that. We are pleased with the uptick in private sector opportunities. I think as we talked about in our remarks, I mean, we've seen a pretty significant increase in year-over-year percentage of revenue in the private sector versus where we were a year ago. So to your point, we -- on projects that involve primarily construction services, there does seem to be an adequate volume of work out there. Our utilization, as we talked about earlier in the year, as these projects that we announced in the first half of the year are getting kicked in, I mean, we're starting to see those results come through.

And then the other thing I would say too is that as we've -- as Mike said, with the Corps lettings it's been a little bit choppy for our dredges and the work that our dredges go after. And as Mike said as well, that's led to choppy pricing as well in that regard. But we do have private sector opportunities that we've got some of the dredging assets working on, so that takes up some of the slack there.

And as we move into next year, we still feel confident that we're headed in the right direction. We've got utilization of the construction assets has definitely increased. Again, we'll just have to see how the Corps piece fits into it all, but definitely think it's moving in the right direction.

I would agree. Hope to see more of the same. Thank you for your time.

Thanks, Rich.

Your next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed.

Hi, guys. Good morning, and nice quarter.

Good morning.

Thanks, Jon.

So it's nice to hear that there's some improvement in the bid margins in construction. What's really driving that? Are opportunities popping up more than capacity, or are the land-based guys finally starting to pull away? And do you expect that improvement to continue or be sustainable?

Well, I don't know that it'll improve in the short term, but it is beginning to show signs of improving. We're kind of setting ourselves up to continue with more of the same as far as uncertainty with Corps funding. But what we've been able to do is fill some of the void with private sector work, both marine construction and dredging, and we're very pleased with the amount of activity in the private sector. It's been very good. Most of our divisions are very well utilized on the marine construction side. It's just the underutilization of our dredging plate that's been hampering our profitable run rate.

And, Jon, I would just say as far as type, we're in the private sector along the Gulf Coast. We've seen a lot of activity in the oil-and-gas sector throughout the region in terms of terminal activity, storage activity, pipeline work. There's a lot of pipeline work that we've been seeing bid opportunities on.

Coal exports.

Just, again, a lot of that's been driving that, and we're optimistic about the bid opportunities we see going forward. Clearly, we'll have to see how GDP growth goes in the next couple of years, but we're kind of seeing a lot of activity sort of across the board in terms of marine construction opportunities. But as we talked about in the remarks, and I think we mentioned this last call, pricing has not deteriorated any further. It's stabilized. We're seeing a minimal amount, and I would kind of call it the normal amount, of irrational bidding. So those are very positive things.

And in some of the market areas, in selected and certain cases, we're seeing improved pricing. But it's not across the board just yet, and we'll just have to keep monitoring that, as we do on a daily, weekly basis, to see where that takes us in 2013.

Okay, got it. And then any impact from the storm on the East Coast or actually with Isaac in the past quarter? Are you guys exposed to any of that? Are there any new opportunities for reconstruction as it occurs?

Well, we did have some dredging assets up in the Chesapeake Bay area, James River, which was not damaged, thank goodness, and we hope to get back to work there pretty quick. But other than that, no substantial damage. We did shut down our operations on the East Coast, in the Florida area on up to Norfolk, just as a precaution. And we're back to work in most of those locations now, so just a short-term defensive posture is what we went through.

But we've got a lot of experience with dealing with hurricane damage. And what we expect is that all the focus right now is on trying to get these cities back with power, transportation, service, basic services so people aren't standing in line trying to get fuel and water. And that'll probably go on for another week here. But construction work and remediation work, unless it's emergency, it takes time for that to materialize. But we've got our feelers out. We've let people know that we're here to help if anybody needs our services, and we'll see how things materialize. But long term, there's going to be a lot of remediation work to be done up and down the coast, and we'll just watch that and see how it develops.

Yes, and definitely we think, in any event, it will -- the long term, again, as Mike said, it takes a little while to get stuff situated in terms of recovery. But it should definitely utilize industry capacity as we move through the next several months and into 2013.

Okay, thank you. And then, finally, just on the Alaska acquisition, any color on that? Are their margins similar to yours? What's the revenue run rate? I'm not sure if I missed that or not.

Yes, very much similar. In fact, one of the things we liked about West Construction is how similar they were to our management philosophies, our project management styles, and not big risk takers. We've been looking for ways to expand our footprint in the region, particularly in the Anchorage area. And they've just got such a long tradition of carrying out projects up there successfully, and we think that'll help us to expand our capabilities in the Pacific Northwest up to Alaska.

And I liked the idea that they have been doing some international work, and that gives us a platform to start looking at how we could build that in the future. And that's something we'll be assessing and determining how we want to go in that direction.

But as you know, I've got a lot of years of my career -- about 18 years of my 43-year career has been spent overseas. So it's a market we've chosen to ignore since I've been onboard in seven years, and I think it's time that we use this platform to begin to study that and see how we can build an international growth model. But it's still in the development stage at this point.

And Jon, as far as run rate, they've historically done kind of in the $20 million to $30 million annual revenue range, and we think probably for next year that we would suspect they'll be at the lower end of that range.

Great. Thank you very much, guys.

You bet.

Your next question comes from the line of John Rogers of D.A. Davidson. Please proceed.

Good morning.

Hey, John.

Hey. Just first, I guess, following up on West, what's the backlog, Mark?

Approximately about $10 million, give or take -- probably a little bit more than $10 million that we'll pick up.

Okay. And Mike, when you reference the international market for that, is that Canada or elsewhere in the Pacific?

Well, it would be -- they've done projects and executed projects in the Middle East. And I think we would look at the Middle East, Pacific Rim, and they have a company in Australia. It's just something that I think it's time for us to begin that process of looking at -- eventually, we were going to be headed this way. This opportunity presented itself, and so we'll go ahead and nurture it and see where it takes us.

And John, just to clarify, the backlog that we picked up is all domestic, and the run rate that I just talked about in answer to the last question from Jon is domestic. So we certainly -- as Mike said, the international is in -- we're kind of looking at that as a development opportunity, and that would just provide upside potential for us.

Well, John, I will tell you this. The Middle East entity is based -- will be based in Dubai. That's a city I lived in 10 years. I know it very well. It's a very stable part of that area. It is a big shipping center, big oil-and-gas construction, and we'll just assess that and see where it takes us.

We're also excited about the potential long term up in Alaska with the oil-and-gas sector. Shell has started working up on the North Slope punching their first few wells this week. And there could be an upsurge of activity in that sector, and we want to be -- everything up there is waterborne supported, either air or waterborne, so we want to be a part of it.

Okay. But the equipment -- is there any equipment overseas, or is it just offices and --

Yes, John, most of -- yes, the overseas work we would anticipate being mostly project management and done with local labor and local equipment.

Or we take otherwise idle resources here and redeploy them.

Okay. Okay, just, yes, I wanted some clarity there. And then the other question, in terms of the market, you referenced a couple of things on what was going on there. But right now the work that you're bidding -- are the margins higher than what you're burning out of backlog?

Overall, no. In selective cases, yes, we are seeing some jobs that specifically we can get a little bit better margins on, but as an overall case, no, it's not getting better. It's not deteriorating either, but we're not seeing a broad pickup yet.

Okay. And when I look at the bid market information that you've given us, it looks like it's down from where we were a year ago, but I don't know, when you talk about the bid market, is that just public work, or does that include the private work?

It does, and, John, another thing too is that like in the private sector, a lot of private sector opportunities we do, particularly in the Gulf Coast, never really hits backlog. It's booked and burned. It's revenue type stuff. But I think the -- again, the bidding activity fluctuates from period to period in terms of timing of bids and whether things are bid in the third quarter or fourth quarter, if there's any slippage, whatever. But it's a -- certainly with the federal government, I mean, there's their kind of cycle and fiscal year, but in the private sector, it kind of runs on a little bit different track.

I think we're very pleased with the level of activity, and we've bid on more work in the third quarter than we did the second quarter.

And keep in mind, John, our overall tracking database has grown. A year ago, it was about $6 billion. Today, it's over $6.5 billion.

Okay. Okay, I just, yes, wanted to understand that a little better. And then in terms of the CapEx, if you exclude the purchases, are we looking at -- I mean, is it looking fairly stable at this point now?

Yes. I mean, with no change from what we talked about last, we think, for 2012, kind of low to mid-teens, and that's kind of about -- last year, we were right at about $15 million, so we expect to be right around that for 2012.

Okay, and that looks -- I mean, I know you haven't given a forecast yet, but that looks sort of a sustainable run rate over 2013 and until the market recovers.

Yes, barring some change in '13 that would warrant something, particularly project related, if we picked up a project that required something. But I think your assessment of -- is accurate.

Okay, perfect. I'm sorry, and I know, Mark, you've said this and I missed it, all the numbers when you went through them. The revenue by customer, could you give that to us again?

Yes, for the quarter, 48% was government sector and 52% was private sector, and that compared year -- last year through Q3 was 85% government sector and 15% private sector.

Okay, perfect. Thanks a lot, guys.

You bet.

Your next question comes from the line of Jack Kasprzak with BB&T. Please proceed.

Thanks. Good morning, guys.

Morning, Jack.

Your incremental margins in the quarter were very good, 60% or so on a 40% sales gain year over year. Is that something that at this level of sales, quarterly sales, we should continue to see? I mean, is that the kind of leverage that would be fairly typical now that we've kind of pushed up to a higher level of quarterly sales?

Well, I mean, certainly with the activity we have going on right now, I mean, a lot of that is driven by a pickup in utilization, particularly with the construction of the barges and cranes and things of that nature. But again, it'll depend on the mix and type of work that we're executing on in any particular quarter. But certainly this is kind of the trend we want to be moving towards. And as we've said, our goal is to -- in this pricing environment, until it improves, I mean, we'll drive the volume, try to get the utilization up, control costs, and keep moving in the right direction here.

Certainly, we're pleased with the quarter. We've still got work to do. And again, I think as Chris mentioned a minute ago, we're looking for the opportunities to improve bid margins, and in some cases, we're kind of seeing that. Again, I don't think it's a broad trend just yet, but it's certainly encouraging, and it feels like -- I think as we've talked about before, we've sort of -- it hasn't deteriorated. It's stabilized, and it looks like we're seeing signs of possible improvement as we look into 2013 and beyond.

Okay. I mean, your comment about select bid margins improving, bid margins improving on select projects, that's -- correct me if I'm wrong, that's new for at least the past few quarters. I mean, does it feel like something that could build in coming quarters? I realize it's early and we want to be cautious, but things seem to be pointed in a lot better direction here with backlog building and 40% sales growth. The trajectory seems pretty positive.

Yes, I think we're pretty pleased that we have a number of clients that have been coming to us, particularly in the private sector, and we've been able to build on that. And we've got turnkey capability. That helps our situation when we can get opportunities that have those larger turnkey jobs. And that's beginning to gain momentum.

I think what we're trying to convey, though, is that we're posturing ourself for continued margin pressure. And we're just demonstrating that if we get our utilization up, we can still have a profitable bottom line if we reach that higher utilization than what we're having now.

Yes. And Jack, also, I mean, some of the things -- we're picking up some opportunities in the Carib. And as you know, historically the remote -- opportunities of remote projects like that tend to have better pricing just in general, no matter what market you're in,. So we're seeing some activity there. So when we say select projects, we're starting to see a little bit of that activity.

So to your point about a trend and things of that -- that's obviously something that we're going to be closely looking for as we continue to bid work throughout the remainder of 2012, but as we get into '13 as well. We'll be looking to test that where we can. Again, I think it's too soon to call it a broad trend, but we're encouraged. And I'd say we're certainly --

Where we can, we're making it happen.

Right. And we're more -- from where we sat 12 months ago, I'd say we're more optimistic than we were then. So I think it's just incrementally been getting better, and I think as you see from our results, our results have improved as we've gone through the year. So, again, we think we're headed in the right direction, but we still have some challenges that, again, we'll overcome.

Okay, fair enough. Thanks a lot, guys. Appreciate it.

Thanks, Jack.

Your next question comes from the line of Alex Rygiel, FBR Capital Markets. Please proceed.

Good morning. This is actually Min Cho for Alex. How are you guys?

Hey, Min.

Hello, Min.

Just a couple of quick questions left here. Can you provide any kind of additional commentary on utilization rates in the quarter? I mean, obviously your construction equipment rates have improved. It sounds like dredging might have improved a little bit on a year-over-year basis, with some increase on the private sector, but any numbers you can put around that or just kind of more year-over-year commentary?

I think really just the commentary we've given, and how you laid it out I think is fairly accurate, but specifically we don't provide that for competitive reasons.

Okay. Also, in your press release you mentioned that you were apparent low bidder on $45 million worth of work. Is there any dredging kind of in those low bids, and can you describe -- are those a couple of large projects or just a lot of smaller projects? Any details?

It's a mix across the board. There is a couple of dredging projects involved with that, but as far as size, it truly is a mix across the board. I think there's a couple of little bit larger ones, and there are some smaller ones as well.

Okay. And then just given your current visibility, do you anticipate bidding on kind of more or less in the $500 million that you've been on this quarter? Is there any reason to believe that your win rate will change?

That's a tough one. I can't really answer what that number will be.

It all depends how it comes out, Min.

That's it. I mean, as far as the win rate, I mean, certainly, as we've said, that's our objective, and I think we've definitely seen our win rate for 2012 has been much better than it was in '10 and early '11. So we're going to continue to strive for that type of win rate, which is more in line with our historical win rate. But as far as the volume, that just depends on so many things that it's hard to gauge that.

Okay. And then just finally -- I'm not sure if I missed this, but the $6.5 billion in tracking projects that you have right now, does that include the West Construction acquisition?

No, it does not.

No, there's not anything in there for that.

Oh, it does not include it. Okay.

No.

All right, great. Thank you.

Thank you.

Your next question comes from the line of Rich Wesolowski with Sidoti. Please proceed.

Thanks.

Hey, Rich.

Your working capital has been a $20 million source of cash in the first nine months. Is that truing up something that had lagged previously, or should we, on the other hand, expect that to swing back the other way in the next couple of quarters?

Well, part of that has to do with income tax refunds, but certainly I do think the last couple of quarters we've had cash generation from operations. And so I think -- but part of that is sort of -- I don't know if I'd call it a true up, but it will impact on income tax.

Okay. Then secondly, I was wondering over what time period the Company would look to renegotiate its credit agreement.

That'll be ongoing over the next several months. As you know, that's --

It's up in (multiple speakers) --

Matures in mid-2013, so we'll be working on that. And of course, we've been -- have a very good relationship with our banks, and so that'll be an ongoing discussion over the next few months here.

Great. I appreciate it. Good luck.

Thanks, Rich.

Thank you.

There are no further questions at this time.

All right. Well, with that, we would like to thank you for joining us this morning, and we look forward to speaking with you in the future. Also, if you have any more follow-up questions, please feel free to give Drew or myself a call. Thanks, and have a great day.

Ladies and gentlemen, that concludes today's conference. You may now disconnect, and have a great day.