Q1 2021 Great Lakes Dredge & Dock Corp Earnings Call
Ladies and gentlemen, please standby your Q1, and 2021 and Great Lakes Dredge and Dock Corp Earnings Conference call will begin momentarily. Thank you for your patience and please standby.
[music].
Ladies and gentlemen, and thank you for standing by and welcome to the Q1 2021, Great Lakes Dredge and Dock Corp Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session. That's great question. During this session you will need to press star one on your telephone please be advised that today's.
Conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your speaker today Tina.
And then just director of Investor Relations. Please go ahead.
Thank you good morning, and welcome to our quarterly conference call.
And you're on the call this morning, and our President and Chief Executive Officer lots of Patterson, and our Chief Financial Officer, Mark for income loss.
And we'll provide an update on the events of the quarter then Mark will continue with an update on our financial results for the corner.
Russell will conclude with an update on the outlook for the business and the market.
Following their comments there will be an opportunity for questions. During this call. We will 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.
And our business are set forth and our earnings release and in filings with the SEC, including our 2020 form 10-K and subsequent filings.
During this call. We also refer to certain non-GAAP financial measures, including adjusted EBITDA from continuing operations, which are explained in the net income to adjusted EBITDA from continuing operations reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.
With that I will turn the call over to Lisa.
Thank you Tina.
During 2020 and that's it.
COVID-19 pandemic on nation, Great Lakes, dredge and dock was able to adjust and navigate the difficulties and challenges for pandemic post to our operations.
However, as a third wave all depend debt make spread through a population we started to see significant additional direct cost and operational interruptions and the first quarter of 2021.
Several other vessel crews are infected despite our extensive testing and isolation protocols.
Vessels for required to go to shore for crew changes and the vessel size to be disinfected before returning to work.
The direct COVID-19 cost on.
At home and on site testing disinfecting other vessels and quarantining of crew were $4 3 million and the quarter.
More importantly, the crew changes and taking the vessels offline for disinfection impacted the vessel scheduling and availability.
In addition, it severely impacted the productivity on several projects and led to delays and.
And it also pushed revenue from the first quarter into the remaining quarters of 2021.
Today, the projects and vessels the way impacted are back in operation and with a solid backlog vaccinations, increasing and stronger performance expectations and the third and fourth quarter, we do not see adjusting our full year expectation at this time.
And that's vaccinations and now have become available to old age groups, we have initiatives and initiated and extensive that photo of communication and education, and our crews and stuff.
We encourage them to get vaccinated as early as possible to keep themselves and the workers family and friends safe and be part of the effort to stop the pandemic and hinder new strains on the buyers developing and spreading.
On our Boston project, which is starting up soon and 100% of the project team has been vaccinated and company wide, we have approximate 20% of all stuff and crew either fully vaccinated partially vaccinated.
Our ambition is to have the majority of all staff and crew vaccinated in the second quarter of 2021, which would greatly reduce or potentially eliminate for other impacts on our operations.
The company ended the quarter with net income of $8 8 million and adjusted EBITDA of $26 8 billion or 15% compared to the first quarter of 2020 that ended with 34 million low and net income and $61 4 million or <unk> 28.
And in adjusted EBITDA.
The first quarter of 2020 was a record breaking quarter for great lakes, driven by robust performance on several projects no vessels in dry dock and no COVID-19.
Therefore comparison to this quarter was expected to be difficult.
In addition to the COVID-19 related impacts and the first quarter of 2021, we experienced and extended dry dock period on two O dredge as and some on equipment repairs, which impacted project schedules.
We expect the domestic bid market to be just as strong this year as 2020, and the first quarter and Great Lakes announced awards of the Boston and three deepening project.
And the Panama City Beach, nourishment totaling $19 3 million.
We are also the low bidder on a more mobile and deepening project phase III that was pending award for $53 9 million at the end of the first quarter, but have since been awarded and in addition in April.
This year, we were awarded the Golden Triangle Marsh creation project, and Louisiana put $32 4 million and we were the low bidder on the Captiva Island project for $15 6 million.
To support the strong domestic market demand and 2020, Great Lakes announced the execution of a contract with Conrad shipyards, and Louisiana to build a new midsized hopper dredge with expected delivery and the first quarter of 2023 day.
Key laying ceremony has been held in April and the new Hopper dredge build remains on budget and on schedule.
And in addition to the Newbuild, we continue to upgrade our existing U S domestic fleet with new equipment and technology to increase productivity.
Investing in our fleet is paramount to maintaining strong product performance and our ability to effectively compete complete our projects and with this strategic build and ongoing productivity upgrades to existing dredges. We believe our fleet is well equipped to meet current demands and future growth and the mark.
And I'll turn the call over to Mark to further discuss the results for the quarter and for an update on back on developments.
Great. Thank you lost so I.
I will start with our quarterly results and then discuss some specifics related to our dredging business for the first quarter of 2021 revenues were 177.6 million net income was $8 8 million and adjusted EBITDA was $26 8 million.
Total company revenue for the first quarter of 2021 result represented a $41 million decrease or 18, 4% compared to the first quarter of 2021.
Lower revenue and the first quarter of 2021 was due to low lower coastal protection and capital dredging revenue on.
Offset by an increase in revenue for maintenance dredging projects.
The decrease in revenue compared to the first quarter of 2021 is mainly attributed to the fact that and last year's first quarter. There were no vessels and Drydock, which allows for more revenue generation and we had exceptional performance on several projects.
Gross profit was $33 1 million compared to $68 5 million and the first quarter of 2020.
Gross profit margin was 18, 6% compared to 31, 5% and the prior year quarter.
Direct COVID-19 costs had an unfavorable impact of $4 3 million and gross profit during the first quarter and related productivity impacts and delays affected several projects.
Approximately 23 revenue days were lost due to COVID-19 delays.
Downtime for the vessels that were impacted directly by COVID-19 delays equated to three 9 million net revenue and $1 2 million of gross margin and we.
Back to recoup later this year.
Also both the dredge 55, and the Carolina remained and drive equity and quite entire quarter on are expected to return to work and the second quarter of 2021.
Total company operating income was $16 6 million, which is a decrease of $36 4 million over the prior year quarter.
The decrease is a direct result of lower gross margin.
General and administration general and administrative expenses were slightly higher than the prior year quarter $5.7 million.
The increase and general and administrative expenses for the quarter was due to higher relocation expense and the current year related to regional office and headquarter relocation.
Actually offset by a decrease in incentive pay.
Net income for the first quarter of 2021 was $8 8 million compared to 34 million and the prior year quarter.
The current quarter income includes net interest expense of $6 6 million and and income tax expense of $1 4 million.
Income for the first quarter of 2021 included $6 6 million of net interest expense and $11 3 million income tax expense.
Adjusted EBITDA for the first quarter was $26 8 million compared to adjusted EBITDA of 61, 4 million and the first quarter of 2020.
Next we turn to our balance sheet.
At March 31, and 2021, we had $177 7 million and cash.
During the first quarter of 2021 and we continue to maintain a zero cash balance on our revolver.
Our capital expenditures for the first quarter of 2021 were $16 5 million, which included $5 $4 million related to the construction of the new midsized Hopper dredge.
1 million related to the design of the Iraq installation vessel and one point for millions for the new multi cast muscles.
Also today, we to date, we repurchased three $9 million on great Lakes common stock related to our previously announced repurchase program.
There were no stock repurchases made in the first quarter of 2021.
Contracted backlog at March 31, 2021 totaled 486 million compared to a backlog of $474 9 million at March 31 of 2020.
I also wanted to briefly talk about our senior notes and.
And May 2017, and the company issued $325 million of 8% Senior notes due may 15, 2022 with interest paid semi annually.
The 8% notes can be refinanced at par.
In May of 2021, we have been monitoring and assessing the market for this debt and are currently preparing to take advantage of the opportunity to refinance this debt shouldn't exist.
With that I'll turn the call back over to Lhasa for his remarks on the outlook moving forward.
Yeah, that's a country and they're still facing the challenges of COVID-19, the dredging industry deemed us and essential service continued to operate and work on critical and needed infrastructure projects.
The U S Army Corps of engineers oversee the majority of these infrastructure projects and this capacity has continued to follow the bid schedule and prioritize all types of dredging, including for deepening port maintenance and expansion coastal protection on a restoration projects.
And that unnecessary to avoid potential storm damage during the coastal and hurricane season.
At the end of the first quarter, Great Lakes projects awarded totaled $93 million, resulting in a 42% bid market share.
For 2020, the domestic market reached one 8 billion and project bids.
We continue to be optimistic and be confident that for 2021 domestic market will remain strong driven by work that will include large scale port deepening projects, along the east and Gulf Coast, several large large marsh creation projects in Louisiana.
And coastal protection projects, including the Renourishment Oh coastal beaches.
We expect the 2021.
We'd see bids for multiple project basis for.
For deepening and Corpus Christi, Norfolk, and in Houston for the Houston ship Channel expansion and these projects will continue for the next several years.
Additionally, a strong hurricane or storm season last year has resulted in an increase and the erosion and other damage, which adds to the recurring nature of low business and the need for more frequent and coastal protection and maintenance projects.
Our confidence and the market is reinforced by the support we have seen for the dredging industry and in the U S Army Corps of engineers budget.
Budget for 2021 that was approved at a record high of seven 3 billion.
In addition, the 2020 water resource development.
Water was signed into law and included several additional reforms for the Harbor maintenance Trust fund.
These reforms will allow congress to for the first time draw on the $9 3 billion surplus and the Harbor maintenance Trust fund.
This is in addition to having the annual cap lifted from the Harbor maintenance Trust fund earlier in the year and the Coronavirus aid relief and economic Security Act.
Water also include significant language encouraging more beneficial use of dredging materials and naturally infrastructure, both of which are important for environmental issues.
I've talked about on previous earnings calls offshore wind that for a percent and exciting new opportunity for great Lakes.
And that vitamin administration us getting strong support to and Boise and ambition to accelerate wind and other <unk> developments in the US and the administration has set targets to installed 30 gigawatts of offshore wind energy by 'twenty Authority and.
And increase of 200% from earlier targets.
Which confirms our plans and determination to participate in this market.
The administration and committed to approving 16 offshore wind projects by 2025 and has stated it would direct $230 million and federal transportation dollars to fund port infrastructure and Air Mark 3 billion and loan guarantees from the department until balance sheet.
To support our go.
And to enter this market, great Lakes, and Great Lakes, dredge dredge and dock announced in November last year, the design and development of the first U S. Flagged Jones Act compliant low emission inclined.
For pipe vessel for subsea rock installation for the wind turbine foundations.
In March we awarded US the integration and engineering and detailed design package Duals day.
Our leading offshore vessel design company.
This vessel will be designed to the strict emission criteria and will represent a significant critical advancement and building the U S logistics infrastructure to support the future of the new U S offshore wind industry.
Expected delivery is late 2023, and good time for the 2020 for offshore construction campaign.
And with that I'll turn the call over for questions.
As a reminder, that's great question, you'll need for press star one on your telephone to it.
And through all your questions Crystal balance sheet. Please standby, while we compile the Q&A roster.
Our first question comes from John and Tim.
Tim on thing with CJS Securities You May proceed with your question.
Good morning, gentlemen, thank you for taking my questions Mark.
First one is mark could you quantify the mechanical on dry docking and delays in the quarter and how much that impacts us compared to what you were thinking going in.
Yeah. So.
There is a we had some drydocks extended.
Equipment repairs, we needed to do and you know.
From an EBIT dock perspective and.
There's a little bit of.
Change related to what we originally expected from a few months ago. It was probably in the neighborhood of about $6 million to $8 million.
Okay got it and does that pull forward and the expenses for future quarters at all or debt that was all just emergency.
Could you say that again John sorry.
I'm, sorry did that pull forward and he works from future quarters or was that all due to unexpected on.
Yes.
No we didnt pull forward anything from Q2 and the first quarter.
Okay got it.
Okay, and then just looking for the year and lastly, you mentioned you didn't have any change to your full year expectation.
Just to clarify I think last quarter, you had said you're expecting revenue growth.
For the year is that what youre, referring to and what was there and earnings expectations.
Our expectation and attached to that as well.
No and we and it goes to our expectations for earnings. So we are we do see and this quarter us exceptional and we were heavily impacted.
From COVID-19 and the infections and the off hire of the vessels and the scheduled impacts and you know.
When you have these delays the direct cost is something that you can estimate but there is.
Productivity impacts and and the other.
Other effects of these delays, which is difficult to estimate so it was a tough quarter with.
With the vaccinations now going on at full speed we have.
Vaccination crews going to our projects and Vaccinating the ones, who are positive to receive the vaccination and I think by the end of second quarter, we'll be at a stage, where we have this vaccination and up to the majority of our personnel, which then should for the remainder.
All of the year eliminate that type of impact and we have a strong backlog and I am confident and our ability to to perform the work that was being delayed from first quarter and also to outperformance in days and remain a quarter. So deep.
Got it and then just one question on the wind energy opportunity and actually it's a two part question. One can you talk about the discussion with your potential customers and how that's going how receptive they are to having a new vessels that U S flag on what work.
And for that number one and number two and interest.
Given that theres been a lot of inflation, both and scale and construction costs and I'm wondering if your estimates for how much that one constant change and that changes and Richmond profile at all.
I assume the latter question really relates to two offshore wind.
Yes.
Yes, we.
Since we announced the construction on the of the U S. Flagged Jones Act compliant to full price vessel. We have received a lot of interest from both developers and also from the first year installation contractors.
And we are looking at participating and bidding for the upcoming wind develop and setup now happening in 'twenty or the construction phase and 'twenty four 'twenty five 'twenty six.
And with.
With the strong commitment from the administration and also.
The strong commitment from the industry.
And I'm very optimistic for this this market.
As you remember we made a decision to go ahead with the design and the development of this vessel when the ambitions for 2030 was a 10 gigawatts and.
And now the ambitions are increased by 200%.
And hopefully the majority of that is coming to fruition. So there should be a very strong market here for us services.
Our and dialogue with both the developers and also with the first here and installation contractors for US services. So it's developing very nicely.
Got it and just on the ship construction costs and the potential return on the vessel.
Well, we haven't changed our expectation for the return on on the vessel.
As you know us steel prices had gone up somewhat here as all.
The commodity price it has over the last six months.
But so we haven't adjusted the estimate for the construction cost on the vessel.
Today.
Okay got it thank you I'll jump back in queue.
Thank you. Our next question comes from Poe <unk> with noble capital markets and proceed with your question.
Great Good morning.
And Mark.
Just to clarify mark on the $6 million to $8 million.
Cost impact from the dry dock and equipment failure.
On the Drydocks I think were somewhat expected.
But.
We've got $6 million to $8 million unexpected costs or is there.
And with lesser part that was unexpected.
No there was let.
Let me I Hope I answer your question, but the six to 8 million and I'm talking about was.
Some of the dry docks were longer than we expected so that delayed our opportunity to earn money as long as the cost debt on top of the costs that were in there.
So this would all be money that we expect.
Absent the extended Drydocks and absent the.
Unplanned downtime.
And then would you highlight any downtime that you might have on your fleets for the rest of the year.
Yeah sure so.
The number of dry dock days that we had and the first quarter.
And you had some regulatory as well as on plan. This.
Second quarter is actually fairly similar to those number of days.
And then you see a dramatic reduction in the back half of the year the third quarter.
And about half of what the first and second quarter average would be and then very minimal on the fourth quarter. So are.
We expect a lot stronger second half of the year than the first half of the year because of that.
And on top of how other things that other projects are scheduled.
Okay, and then if we could just clarify on.
The expectation that you're going to.
Recoup for recover.
And that you're not changing your full year expectations, My my recollection and state and <unk> full year expectations from an EBITDA standpoint, we're in the $115 million range is that.
And my recalling correctly I didn't give a number but.
We came into this year.
<unk> talked about that we expected revenues to be higher than 2021.
We expected the gross profit margin percentage to be a little bit lower than 2020 due to the really.
Extraordinary performance, we had and the first quarter of 2020 and that G&A would be about $3 million higher and.
And we are still at this point and time under those same expectations.
Okay and then.
Thanks for highlighting this.
Great.
Amount that you spend on and the Hopper dredge and also to the rock dumping barge for dredge.
And then also the multi cats can you do that for the full year as far as what your expectations for Capex are and then including the.
The money they expect to spend on.
The Hopper dredge and also the rock cut in March.
Yeah sure. So we are.
And again, it's the same that we talked about last quarter.
And $35 million of.
Call it regular capex for the existing fleet.
$35 million on the Hopper dredge.
One and a half million dollars on the design.
Rockfall pipe vessel.
And one 8 million on the.
Multi cats.
Sorry, $18 million at one point.
For 18 million and salary that was and this $90 million range I do want to add and the first quarter. We did do on $11 million lease buyout of an existing vessel the tariffs and so as we're looking at the cash usage and first quarter.
And that's an important number.
Yes.
And preempted My next question, which is if you could do a cash walk it looks like cash debt didn't change for cash and about $39 million.
Capex was roughly in line with women on getting for operating cash flow. So before working capital could you highlight the other changes you said $11 million on lease buyouts, but yeah any other.
Yeah sure so there.
16 million and Capex, plus the $11 million and the lease buyout.
And then you had on the working capital side.
$32 million.
And then if so if you add back to net income and depreciation and that gives you about $40 million right. There within the working capital we had a $26 million increase and accounts receivable.
Usually this first quarter goes up so there is seasonality, but there was one $4 million payment. We are expecting that ended up coming in early April, but there was $26 million and $11 million deal.
Decrease in accounts payable and accrued expenses, which again, you generally see and the first quarter as we make on.
Our annual incentive pay payment so that should give you the reconciliation.
To get to that our main drivers on the cash change in the quarter.
Okay, and then you talked about preparing to refinance can you give us an idea of whether you're going to refinance the entire amount or maybe do a two part or just sort of what your current thinking on refinancing now and then also on the cost and also in the context Mark.
But of.
Would you consider changing the metrics or the matrix and place for the sales.
And I'd back program too.
Yeah. So.
On the senior notes, we at this point, we expect to just refinanced $325 million.
The market is still favorable.
We do it.
If we were to go today, we expect it to be below 6%.
See how the market is and.
And as we get closer to the launch here.
And we can.
Refinance and you said on May 15th So it's just.
10, and 11 days away.
And on your second question on the stock buyback, yes. It will so that that's stock buyback is just actually expired.
So we will again look at.
Any opportunity, where we think the.
Stock is undervalued.
And we will make the appropriate moves as we did last August.
Great and then.
And lastly, you highlighted there.
And there are a couple of big projects coming up.
Whether it's corpus or Houston or boss.
Or no folks.
Can you quantify those and then also and maybe.
Quantify some of the other state level projects that you might be competing on over the next couple of quarters like Lake for gold and silver.
And.
Yeah, when we look at our.
Let's say crystal ball here for for projects.
And we're looking at the core of engineers.
Bid lists.
And if we pick the largest projects, let's say the 12 14 largest projects on that list.
The bid market that we see for the next three quarters is somewhere between 650 million and $1 2 billion.
And.
Clearly there are some large.
Bids for the Mos creation.
Which is fading here and in the second quarter.
Corpus Christi, we're expecting that that's the phase III of that project to bid and the second quarter.
There are some work up on the East Coast, and New Jersey, which also did second quarter and then we have quite a lot on bid activity and the third quarter with shorelines stabilization projects and and some deepening projects.
Okay, if I could just squeeze one last one and it's.
You have for awards right now they're running for the quarter.
96, 3 million for Golden Triangle, and then also mobile Youre low bidder on Captiva Island.
You have a low bid pending award number that you could share with us.
And do you have that.
Yeah. So.
Let's see low bid pending award at the end of.
At the end of the year. If you remember was 488 million at the end of 2020.
And then we had some.
Options on top of debt of about $30 million. So.
If you add.
If you add this.
And I am trying what date you on as of today, because some bumps have been awarded right. So what are your win this one.
For $500 million.
And yes. It was just trying to put it in the context of what might be awarded.
Currently low bid pending award that might be awarded this quarter I guess the markets trying to get a playbook for that yeah. So you know.
The wins that we're posts.
We've got the Memphis.
Rental and Caf T that you mentioned.
For the two wins that were post March 31, and.
Then we had about $90 million of awards.
And that were low bid before March 31 that were awarded post $3 31.
And so between the two that were wins that was Memphis and kept for you, but the total thats about 39 million almost $40 million.
Okay great.
Thank you so much.
Sure.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Deforest Hinman with Paul Hudson You May proceed with your question.
Okay.
Hi, Thanks for taking my question and would also move and answered.
Can you give us a little flavor as it relates to the debt refinancing in terms of what youre seeing on the covenant side.
And then any.
Features that might be attractive to us secured unsecured.
Early call provisions.
If we made a decision to pay that all for early.
Yes, any color there would be helpful. Yeah. Good good question to force.
For the.
From where are we when we.
Last launch these in 2017.
Obviously, our credit ratings.
Improved and Natura and then and we are seeing and the covenants.
Much more favorable terms there.
Other it's and permitted indebtedness restricted payments.
On any of those covenants are much more favorable than they were before.
In terms of the call provision.
What we are looking at today is our it's an eight year tenor so.
For a longer liquidity than the old one and five years with no call three.
Okay. That's helpful and I know, we've started building some of the vessels and.
We're working on.
Polls will for the rocket dumping vessel and spent some time talking about.
The by the administration and they're trying to support offshore wind is there anything out there in terms of special financing that could be provided by the government to fund the construction of our Jones both vessel.
And yes, we have been investigating that and maybe.
Mark can give an update on that.
By us.
We've had a even.
Well for the.
Recent.
News that the Baidu and administration and talked about that last one mentioned, we did have conversation with the department of energy and they have.
Loan programs related to new innovation and items that support renewable energy and.
We had some favorable.
Early conversations with and this was a few months back and yes, you it looks like we could get.
More favorable financing that made you can see and the general commercial markets.
Maintain and spend on that and any way is that would that be a very long term financing coupled with an attractive interest rate and how would that work.
I'd say you actually can do it and they are pretty open to multiple ways of doing it but.
Yes, it could be and.
Term type of loans for a number of years you can pick a time and then the rate.
Is a floating rate.
Based on your credit rating.
And a LIBOR plus a number based on your credit rating, but looking at where our credit us today, it would be more favorable than.
We've seen in the past and the commercial markets.
Okay, and then separately on Paul's question on the.
Backlog with teens.
Sizable.
Low bids pending awards.
Some of those for LNG project related what what sort of thing needs to happen for some of those larger projects.
Projects to actually become backlog.
That will be able to disclose.
And our filings.
Yeah, and what needs to happen is that the developer on the LNG facilities goes to debt.
<unk>. So the final investment decision, we have been picked us their partners to execute the work when they go for RFID. So the contracts are negotiated and and they are ready to go but we are waiting for that.
Final.
And.
And.
And there.
I think the.
Thing that needs to happen is there'll be some stabilization and the oil and gas market and so on and stable LNG prices, which we do see these days.
And and.
Based upon us.
Some more stability and higher LNG prices and there will be a possibility of them for the developer to enter into longer term delivery contracts.
And when that is in place for the financing then the egos ahead.
Okay. That's helpful and then the last question on the <unk>.
I don't think it was touched on but the foreign market.
Can you just give us a update there in terms of what you are seeing any thoughts on repositioning any of the vessels and the for dredging markets.
And we have done a restructuring and of our foreign market exposure.
And we have sold off some older vessels and the middle East and.
We have repositioned.
And two dredges back to the us market, which is very active.
International market is still depressed and but as oil prices are starting to come back and there'll be some more stability and the middle East you could see.
That market improving.
But we do need to see these large land reclamation.
For a major infrastructure projects internationally go go ahead in order to get the international market back to where it was before 2014 and the oil price and Paul.
So we are concentrating today on the U S domestic market.
And also looking at the very promising.
Show wind market coming to us shores.
If the international market.
It gets back to its earliest strength, it's a very attractive market.
When the activity is high and we know how to operate it and the market. We've been doing this now for the last 25 years.
And then we could go back to that market and participate.
At this point and time it looks us started some years out.
And maybe just simplistically, how many vessels are expire.
Basically in those international Jack.
<unk> currently.
Currently we currently we do not have been and vessels in the middle East.
Okay. Thank you.
Thank you and our next question comes from Jon <unk> with CJS Securities. You May proceed with your question.
Hi, Mark I was just wondering if you could give a number for backlog scheduled for liquidate in the quarter and.
Q2 number one and then to US if there are any further COVID-19 impacts that you saw us so far and into April and May.
Yes, so far yes.
Good news is is that wave kind of slowed down and the third way that we saw and kind of January February we're actually following the kind of national trends and no things have stabilized.
<unk> mentioned early all the vessels are back to work and so at this point it looks more favorable than it did in the first quarter.
So that's kind of the good news.
From a COVID-19 impact, we still will have some costs, but.
If we track as we are now it wouldn't be to the degree that we had and the first quarter.
Got it and the backlog scheduled for liquidity.
So yes, if you look at Q2, we expect revenues to be.
Just talking about sole earlier with the dry docks being similar.
As Q1.
Q2, the revenue then would kind of fall close to the same number.
Q1.
Okay got it.
And I also wanted to clarify a comment you made earlier I think you said you spent $1 5 million on the design of the new wind vessel.
And that it was going to be close to that for the year did I Miss something for the spending on the on the design for the rest of the year or is there something else that's going on.
And then on either downgraded and store.
Yeah, we spent a million and a first quarter with a total of $1 5 million expected for the year on the design.
Okay got it and if you're making the decisions and move forward is there anything else that will fall into this year.
It depends on the timing of the decision if we decide.
Yes.
Depend when we start construction.
So at this point.
And I don't have anything and the expectations at this moment, but that if.
If we meet the philosophy was saying.
Year end 2023 delivery.
We're going to have to start either kind of late this year fourth quarter this year and delayed us first quarter of 2022.
Got it.
So just one question for you on on you said that the scale of the opportunity that that would be increased by quite a bit is one vessel actually and up to support that industry or will people who are building. These things have to rely on non Jones act vessels in order to do that is there an opportunity to build more.
And if it is really that big of and opportunities.
Yes, we are as there is no vessels.
And this market today and we are starting out for this first one which is going to be a state of the art, it's going to be the largest and that market and.
And we we were looking at and starting with one vessel and then expanding to address the full market I do believe if for the Biden administrations and ambitions. So it's going to materialize.
We do need more than one vessel, even probably you would have to have two to address the market.
But it's a ramp up from 2024 and onwards. So I think we have time to address that question.
Got it thank you very much guidance.
Thanks sure.
Thank you and our next question comes from Poe <unk> with Noble capital markets. You May proceed with your question.
Yes, thanks for the follow up on.
Quick question on Mark debt refinancing.
Detailed debt.
Potentially refinancing and the full 325 eight years with three year non call can you just talk about.
That and the context of how much cash you have on the balance sheet and.
Longer term construction.
Graham that's right now based on <unk>.
Going forward on the F D with the.
Offshore wind and our vessels should be and the $200 million range. It seems like youre going to continue to be Overcapitalized can you just talk about that sort of how youre looking at.
The three to five five year timeframe as far as sort of capital allocation.
Yeah. So.
Today, we've got these.
We had $177 million at the end of this quarter.
And you do on obviously have some cash on the balance sheet for short term needs but.
As we talk about this first half for dredge if we.
Have a second hopper dredge option.
Which would be one potential use of cash and that second one as we've mentioned earlier would be.
You know what kind of replacement of two older vessels.
And then we would also look at.
Potential.
Cotter market.
On the road so they are and this will stay.
And with our original strategy that losses played out of our capital allocation first and foremost repricing the fleet.
And.
And then.
But we are also interested and these like the share repurchase program.
If we put another one and place if we thought again are our stock was undervalued we.
Would definitely be open to doing that again as we did last year. So there is plenty of upcoming uses for that cash.
Okay, great. Thank you and then in the context, what's the working and estimate right now for you.
The first offshore wind vessels is that still on the $100 million to $120 million range with sort of the work and estimate.
Yes, I think well.
He said about the cost of the offshore wind and the vessel will be somewhere in the range of 140 200 on 60 in that range are those all day estimate stuff, we have been facing our calculations on and.
That's what we get from the market when we go out to the yards.
Okay, maybe a little bit higher than six months ago Masa.
No it's always been in that range.
<unk>.
At least and my calculations and.
So.
It's always been in that range and this is a larger vessel and.
And then the Hopper dredge up we are building a much larger vessel.
Okay, great. Thank you it's complicated.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to <unk> for any further remarks.
Thank you we appreciate the support of our shareholders employees and business partners and we thank you for joining us and this discussion about the important developments and initiatives on our business. We look forward to speaking with you during our next earnings discussion. Thank you.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Great.