Q3 2023 Great Lakes Dredge & Dock Corp Earnings Call
Speaker 1: Good day and thank you for standing by. Welcome to the Q3 2023 Great Lakes Dredge and Dot Corp earnings conference.
Good day, and thank you for standing by and welcome to the Q3 2023, Great Lakes Dredge and Dock Corp earnings Conference call.
Speaker 1: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1-1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1.
At this time all participants are in a listen only mode.
This presentation, there will be a question and answer session to ask a question during that session.
You will need to press star one on your phone you will then hear an automated message advising you had just raised to withdraw your question. Please press star one again.
Speaker 1: Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Matina Bagintes, Director of Investor Relations. Please go ahead. Thank you.
Please be advised that today's conference is being recorded and I would now like to hand, the conference over to your speak today 18 up but get a kiss director of Investor Relations. Please go ahead. Thank you.
Speaker 2: Good morning and welcome to our third quarter 2023 conference call. Joining me on the call this morning is our president and chief executive officer, Lhasa Petterson, and our chief financial officer, Scott Kornblau. Lhasa will provide an update on the events of the quarter, then Scott will continue with an update on our financial results for the quarter. Lhasa will conclude with an update on the outlook for the business and the market. Following their comments, there will be an opportunity
Good morning, and welcome to our third quarter 2023 conference call. Joining me on the call. This morning is our president and Chief Executive Officer lots of Patterson, and our Chief Financial Officer, Scott Kornblau.
Mark will provide an update on the events of the quarter.
That will continue with an update on our financial results for the quarter SASSA will conclude with an update on the outlook for the business and the market.
Following their comments there will be an opportunity for question Gerry.
Speaker 2: During this call, we will make certain forward-looking statements to help you understand our business.
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.
Speaker 2: These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.
Speaker 2: Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2022 form 10K and subsequent filings.
Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2020 to Form 10-K and subsequent filings.
Speaker 2: During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the Net Income to Adjusted EBITDA Reconciliation Attached to Our Earnings release and posted on our Investor Relations website, along with certain other operating data. With that, I will turn the call over to Lassa.
During this call. We also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the net income to adjusted EBITDA reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.
With that I will turn the call over to LASA.
Thank you Tina.
Speaker 3: The third quarter, as expected, was a challenging quarter due to vessel dry docks and idle equipment due to the market delays from 2022 and the first half of 2023.
The third quarter as expected was a challenging quarter due to vessel dry docks and idled equipment due to the market delays from 2022 and the first half of 2023.
Despite the challenges.
Speaker 3: We were successful in building a solid backlog for the fourth quarter and for 2024 and onward.
We were successful in building a solid backlog for the fourth quarter and for 2024 and onwards.
Speaker 3: We continue to see positive developments with both a larger number of capital projects and a better mix of projects coming to the market, which provides us with confidence that we are on a path to return to normal operations going into 2024.
We continue to see positive developments with both a larger number of capital projects and a better mix of projects coming to the market, which provides us with confidence that we're on a path to return to normal operations going into 2024.
Speaker 3: Great Lakes ended the quarter with a record-trejging backlog of 1.03 billion, which does not include approximately 50 million in performance obligations related to offshore wind contracts, and 225 million in low-bids and options pending awards.
Great Lakes ended the quarter with a record dredging backlog.
1.03 billion, which does not include approximately $50 million and performance obligations related to offshore wind contracts and $225 million and low bids and options pending award.
Speaker 3: At the end of the third quarter, 71% of Great Lakes' backlog consisted of capital projects.
At the end of the third quarter, 71%. So great. Thanks backlog consisted of capital projects.
Speaker 3: In the third quarter, we added $519 million in capital projects, which includes two LNG projects, the Brownsville Ship Channel project for Next Decade Corporation's Rio Grande LNG project and the Port Arthur LNG phase 1 project.
Yes, the third quarter, we added $519 million in capital projects, which includes two LNG projects. The Bronx will ship channel project for next decade, Cooperations, Rio Grande LNG project and the Port Arthur LNG Phase one project.
Speaker 3: The Rio Grande Brownsville LNG project is the largest project undertaken in Great Lakes history.
The Rio Grande in Brownsville, LNG project is the largest projects undertaken in great Lakes history.
Speaker 3: Subcontract work on this project is anticipated to start later this year, with a major dredging effort starting in Q2 of 2024 and lasting for approximately two and a half years.
Subcontract work on this project.
The pace of the stock later this year.
Major dredging effort, starting in Q2 of 2024 and lasting for approximately two and a half years.
Speaker 3: A proven performance and safety culture allows us to win and execute these projects and support the growth of LNG exports in the US.
Our proven performance and safety culture allows us to win and execute these projects and support the growth of LNG exports in the U S.
Speaker 3: In addition to these two capital projects, Great Lakes added $235 million in maintenance and coastal protection projects to a dredging backlog in the third quarter.
In addition to these two capital projects, Great Lakes added $235 million in maintenance and coastal protection projects two of dredging backlog in the third quarter.
Speaker 3: As we have navigated the challenges from 2022 and have seen the ramp up in bidding in 2023, we continue to be proactive on cost reductions and fleet adjustments and we have reduced a general administrative and overhead headcount by more than 50% during the year.
As we have navigated the challenges from 2022 and have seen the ramp up in bidding in 2023, we continue to be proactive on cost reductions and fleet adjustments and we have reduced our general administrative and overhead head count by more than 50% during the year.
Speaker 3: As we have stated previously, we temporarily cold-stack vessels to reduce costs, and these vessels can easily be reactivated as the market improves, as we did for one of our recent new projects.
As we have stated previously with temporarily cold stacked vessels to reduce cost and these vessels can easily be reactivated.
As the market improves as we did for one of our recent new projects.
Speaker 3: Our newest hop-adredge, the Gravesden Island, is expected to be operational later in the fourth quarter. And our sister ship, the Amelia Island, is expected to be delivered in 2025.
Our newest Hopper dredge the Galveston Island is expected to be operational later in the fourth quarter and our sister ship. The Amelia Island is expected to be delivered in 2025.
Speaker 3: In the quarter, we took delivery of our two multi-cads, the Cape Hatteras and the Cape Canaveral, which support our pipeline operations with a stable work platform for making pipeline connections safely and quickly in most weather conditions, in line with a strong safety call.
In the quarter, we took delivery of about two multi cats.
Hatteras under Cape Canaveral, which support our pipeline operations with a stable work platform for making pipeline connections safely and quickly.
Most weather condition in line with a strong safety culture.
Speaker 3: We are executing on our strategy to enter the U.S. offshore windmark.
We all conducted we are executing on our strategy to enter the U S offshore wind market.
Speaker 3: In July , 2020, we were honored to have President Biden attend the steel cutting ceremony for Great Lakes offshore wind rock installation vessel, the Arcadia, which marks another step forward that construction begins with expected delivery in 2025.
In July 22023, we were honored to have precedent biden attend the steel cutting ceremony for great Lakes offshore wind rock installation vessel, the Acadia, which marks another step forward as construction begins with expected delivery in 2025.
Speaker 3: In addition, we signed the first ever subcontract for procurement of US Rock with carbon sand and gravel, a US quarry in the state of New York.
In addition, we.
We signed the first ever sub contract.
Procurement of U S rock with carb on sand and gravel.
<unk> core in the state of New York.
Speaker 3: Both milestones solidify our entry into the offshore wind market and we support great lakes awarded rock installation contracts for the Empire Wind 1 and 2 projects with estimated installation windows in 2025 and 2020.
Both milestones solidify our entry into the offshore wind market and we support great. Thanks awarded rock installation contracts for the Empire wind, one and two projects with estimated installation windows in 2025 and 2026.
Speaker 3: We continue to monitor developments on related offshore wind power purchase agreements after the refusal by the New York State Energy Research and Development Authority to renegotiate the agreements for Equinoir and BP Empire wind projects and Earth State Sunrights projects.
We continue to monitor developments unrelated offshore wind power purchase agreements after the refusal by the New York State Energy Research and development authority to renegotiate the agreements with <unk> Empire wind projects and <unk> Sunrise projects.
Speaker 3: We expect updates from Equinor in the first quarter on potential impacts to the development plans for the Empire Wind Project.
We expect updates from Ecuador in the first quarter on potential impacts to the development plans for the Empire wind projects.
Speaker 3: The US offshore wind market has seen other projects delayed or cancelled due to higher interest rates and inflation.
The U S offshore wind market has seen other projects delayed or canceled due to higher interest rates and inflation.
Speaker 3: However, on October the 24th this year, the third round of PPAs for the state of New York saw four gigawatts of new PPAs awarded to three operators and we continue to bid on projects with scheduled offshore installation windows in 2026 and on.
However on October 24th this year, the third round of Ppas for the state of New York. So four gigawatts of new Ppas awarded to three operators and we continue to bid on projects with scheduled offshore installation windows in 2026 and onwards.
Speaker 3: We now turn the call over to Scott to further discuss the results with a quarter and then I'll provide further commentary around the bucket and my business. Thank you, Lawton.
I will now turn the call over to Scott to further discuss the results for the quarter and then I'll provide further commentary around the market and our business.
Thank you <unk> and good morning, everyone.
Speaker 4: For the third quarter of 2023, revenues were $117.2 million. Net loss was $6.2 million, and adjusted EBITDA was $5.3 million.
The third quarter of 2023 revenues were $117 $2 million net loss was $6 $2 million and adjusted EBITDA was $5 $3 million.
Speaker 4: Revenue of $117.2 million in the third quarter of 2023 decreased $41.1 million from the prior year third quarter.
Revenue of $117 $2 million in the third quarter of 2023 decreased $41 $1 million from the prior year third quarter.
Speaker 4: The quarter over quarter decrease in revenue was primarily due to lower utilization for the hydraulic fleet and that segment of the market has remained soft. However, we do expect hydraulic utilization to improve during the fourth quarter.
The quarter over quarter decrease in revenue was primarily due to lower utilization for the hydraulic fleet as that segment of the market has remained soft. However, we do expect hydraulic utilization to improve during the fourth quarter.
Speaker 4: Despite the lower quarter-over-quarter revenue, including $36 million less capital revenue, current quarter-grows profit and growth profit margin increased to $9 million and 7.7% respectively, compared to $3.8 million and 2.4% respectively in the third quarter of 2022.
Despite the lower quarter over quarter revenue, including $36 million less capital revenue current quarter gross profit and gross profit margin increased to $9 million and seven 7%, respectively compared to $3 $8 million at two 4% respectively in the third.
<unk> 2022.
Speaker 4: The increase in gross margin is primarily due to improve project performance and lower operating costs due to our continued focus on cost reduction.
The increase in gross margin is primarily due to improved project performance and lower operating costs due to our continued focus on cost reductions.
Speaker 4: Third quarter, 2023, GNA of $14.2 million is $900,000 higher than the same quarter last year, primarily due to higher incentive pay, profit sharing, and severance pay in the current year quarter, partially offset by lower costs due to our continued cost cutting initiatives. Current quarters operating well.
Third quarter 2023, G&A of $14 $2 million is $900000 higher than the same quarter last year, primarily due to higher incentive pay profit sharing and severance pay in the current year quarter, partially offset by lower costs due to our continued cost cutting initiatives.
Current quarter's operating loss.
Speaker 4: of $5.1 million improved $4.4 million from the prior year's quarter net loss of $9.5 million driven by the improved gross profit.
Five $1 million improved $4 $4 million from the prior year's quarter net loss of $9 $5 million driven by the improved gross profit.
Speaker 4: net interest expense of $2.8 million for the third quarter 2023 with down from $3.6 million.
Net interest expense of $2 $8 million for the third quarter 2023 was down from $3 $6 million.
Speaker 4: In the third quarter of 2022, primarily due to an increase in capitalized interest related to our new build program, partially offset by current quarter revolver interest expense.
In the third quarter of 2022, primarily due to an increase in capitalized interest related to our Newbuild program, partially offset by current quarter revolver interest expense.
Speaker 4: Third quarter, 2023, net income tax benefit of $1.8 million compared to $3.3 million of net income tax benefit in the same quarter of 2022 due to the higher current quarter income. Rounding out the P&L, net loss for the third quarter, 2023 was $6.2 million in improvement from a $9.9 million net loss in the prior year quarter.
Third quarter 2023, net income tax benefit of $1 8 million compared to $3 $3 million of net income tax benefit in the same quarter of 2022 2022 due to the higher current quarter income.
Rounding out the P&L net loss for the third quarter 2023 was $6 2 million an improvement from a $9 $9 million net loss in the prior year quarter.
Speaker 4: Turning to our balance sheet, we ended the third quarter of 2023 with $14.1 million in cash and $55 million drawn on our $300 million revolver, which doesn't mature until the third quarter of 2027.
Turning to our balance sheet, we ended the third quarter of 2023 with $14 $1 million in cash and $55 million drawn on our $300 million revolver, which doesn't mature until the third quarter of 2027 total.
Speaker 4: Total capital expenditures for the third quarter of 2023 or $46.6 million, which includes $28.4 million for the construction of the Subsea Rock installation vessel, the Acadia, $10.1 million for the Galveston Island, and $2.2 million for the recently delivered multi-cats.
Total capital expenditures for the third quarter of 2023 or $46 $6 million, which includes $28 $4 million for the construction of the subsea rock installation vessel, the Acadia $10 $1 million for the Galveston Island, and $2 $2 million for the recently did.
Levered multi cap.
Speaker 4: So far in the fourth quarter, we have paid an additional $42 million for new build payments and currently have $85 million drawn on the revolver.
So far in the fourth quarter, we have paid an additional $42 million for Newbuild payments and currently have $85 million drawn on the revolver.
Speaker 4: Full year CAPEX guidance of approximately $145 million is down $30 million from previous guidance due to the timing of milestone payments on the Acadia, which we expect to take delivery in the first half of 2025.
Full year Capex guidance of approximately $145 million is down $30 million from previous guidance due to the timing of milestone payments on the Acadia, which we expect to take delivery in the first half of 2025.
Speaker 4: As previously discussed, in January of this year, we applied with the Maritime Administration for Mirad, which is a unit of the Department of Transportation for Title 11 financing on our new wind vessel, which typically comes with very attractive terms.
As previously discussed in January of this year, we applied with the Maritime administration are mere AD, which is a unit of the department of transportation for title 11 financing on our new wind vessel, which typically comes with very attractive terms.
Speaker 4: The review was ongoing, and a few weeks ago, we hit a key milestone with the commencement of an independent financial assessment, which is the next step in the process. But in parallel, we continue to explore other sources of capital. Post-quarter end, we close on a sale lease back of various support equipment, bringing in approximately $29 million of cash.
The review is ongoing and a few weeks ago, we hit a key milestone with the commencement of an independent financial assessment, which is the next step in the process, but in parallel we continue to explore other sources of capital.
Post quarter end, we closed on a sale leaseback of various support equipment, bringing in approximately $29 million of cash.
Speaker 4: Looking towards the fourth quarter, we expect utilization to greatly increase from the third quarter as most of the non-cold stack vessels are scheduled to work and there are no planned dry docking.
Looking towards the fourth quarter, we expect utilization to greatly increase from the third quarter as most of the non cold stacked vessels are scheduled to work and there are no planned dry dockings we.
Speaker 3: We should also see a larger amount of revenue coming from capital and beach projects, which typically come with higher margin than maintenance projects. With that, I'll turn the call back over to Lossa for his remarks on the outlook moving forward. Thank you, Scott. For the nine months ending September 30, the bid market, not including energy and offshore wind projects, was 1.8 billion, more to 120? have könnte implement in Silicon Valley and Green Arch.
We should also see a larger amount of revenue coming from capital and Beach project, which typically come with higher margin than maintenance projects with that ill turn the call back over to <unk> for his remarks on the outlook moving forward. Thank you Scott.
For the nine months ending September 30, the mid market, not including LNG and offshore wind projects was $1 8 billion.
Of which great lakes won 31%.
Speaker 3: The increase in the bid market was driven by a strong market for capital projects, which has already seen seven bids for poor improvement projects, including ports such as Freeport, San Juan and North.
The increase in the mid market was driven by a strong market for capital projects, which has already seen seven bids purport improvement projects, including ports, such as Shreveport, San Juan and Norfolk.
Speaker 3: The total capital bid market purport improvement projects through the third quarter total 459 million, of which 39% of the market yet to date was won by Grace Lake.
The total capital bid market purport improvement projects through the third quarter totaled $459 million.
39% of the market.
Yes to date was won by Great Lakes.
Speaker 3: We expect the budgeted appropriations to support the funding of several previously delayed caproport improvement projects that are still expected to bid before the end of the year, including Sabine, Houston and Mubia.
We expect the budgeted appropriations to support the funding of several previously delayed capital report improvement projects that are still expected to bid before the end of the year, including Sabine Houston and mobile.
Speaker 3: We continue to see strong support from the Biden administration and Congress for the dreading industry. In March this year, President Biden released the President's fiscal year 2024 executive budget. The proposed amount for the core target for $7.4 billion, which is a record amount for a president's budget.
We continue to see strong support from the binding administration and Congress for the dredging industry and.
In March this year precedent <unk> released the President's fiscal year 2024 executive budget. The proposed amount for the core targets of $7 4 billion, which is a record amount for our president's budgets.
Speaker 3: In June this year, the House proposed an increased 2024 budget of 9.6 billion for the Corps, which is 910 million above the fiscal year 2023 and includes 2.8 billion of the Habermain and Trust Fund and the 1.5 billion for flood and storm damage reduction.
In June this year. The house proposed an increased 224 budget of $9 6 billion for the core which is $910 million above the fiscal year 2023 and includes $2 8 billion of the Harbor maintenance Trust fund and the $1 5 billion for flood and storm damaged radar.
Sure.
Speaker 3: In July , the Senate Committee for Appropriations passed a budget which targets 8.9 billion for the coup.
In July the Senate Committee for Appropriations passed the budget, which targets $8 9 billion for the quarter.
Speaker 3: This will move to the Senate floor for further deliberations and consideration.
This will move to the Senate floor for further deliberations and considerations.
Speaker 3: This proposed budget is expected to provide a strong 2024 bid market if passed by Congress over the next few months.
This proposed budget is expected to provide a strong 2020 for bid market if passed by Congress over the next few months.
Speaker 3: Currently, the government is operating under a continued resolution until the budget is approved.
Currently the government is operating under a continuing resolution until the budget is approved.
Okay.
Speaker 3: Offshore wind has been recognized around the world as a reliable source of renewable energy.
Offshore wind has been recognized around the world as a reliable source of renewable energy.
Speaker 3: Globally installed offshore wind power generation capacity is targeted to reach about 260 gigawatt by 2030 up from 40 gigawatts in place in 2020.
Globally installed offshore wind power generation capacity is targeted to reach about 260 gigawatt by 2030 from 40 Gigawatts in place in 2020.
Speaker 3: In 2021, the Biden administration announced the ambitious goal of 30 gigawatts in the United States offshore wind by 2030 and provided 3 billion in federal loan guarantees for offshore wind projects.
In 2021, the Biden administration announced the ambitious goal of 30 Gigawatts in the United States offshore wind by 2030 and provided $3 billion in federal loan guarantees for offshore wind projects.
Speaker 3: The administration support for offshore wind culminated in the inflation reduction act, the largest climate mitigation act ever passed by Kong.
Okay administration support for offshore wind culminated in the inflation reduction Act the largest climate mitigation Act passed by Congress.
Speaker 3: A state of previously great lakes was awarded the Rock installation contract for Equinor and BP's Empire Wind 1 and 2 projects with estimated distillation windows in 2025 and 2026.
As I stated previously Great Lakes was awarded the rock installation contract for Ecuador, Mbp's Empire wind, one and two projects with estimated installation windows in 2025 and 2026.
Speaker 3: The developer requested adjustments to the power purchase agreements for these two projects, which New York rejected in October . And we are waiting updates in the fourth quarter for potential impacts on the project schedule.
The developer a risk requested adjustments to the power purchase agreements for these two projects, which New York rejected in October and we are waiting updates in the fourth quarter and full potential impacts on the project schedules.
Speaker 3: New York continues to take steps forward in meeting their renewable energy goals with an announcement in October of the 24th, 2023, of three new projects awarded with a capacity of approximately four gigawatts of offshore wind energy. And a new accelerated fourth bid round for additional PPAs that was announced in for early 2024.
New York continues to take step forward in meeting their renewable energy goals within announcement in October 24th 2023 of three new projects awarded with a capacity of approximately four gigawatts of offshore wind energy and a new accelerated fourth bid round for additional ppas.
That was announced.
Early 2024.
Speaker 3: Although the market is facing some short-term challenges, the long-term outlook for sure win in the US is optimistic. Based on strong fundamentals and commitments by the US, it's immediate energy independence and decolonization target.
Although the market is facing some short term challenges the long term outlook for offshore wind in the U S. This optimistic based on strong fundamentals and commitments by the U S to meet its energy independence and decarbonization targets.
Speaker 3: Great Lakes has established a unique business position in the United States offshore wind market. And we continue to tender bid on multiple offshore wind projects for their academia, a sub-fee rock installation that's all current being constructed.
Great Lakes has established a unique business position in the United States offshore wind market and we continue to tender bids on multiple offshore wind projects for Acadia.
Subsidy rock installation vessels currently being constructed.
Speaker 3: In conclusion, a main focus for the year has been been to keep managing through the various challenges that the 2022 delayed market presented us with, with a goal of delivering improved year over year results.
In conclusion.
Our main focus for the year has been to keep managing through the various challenges that the 2022 delayed markets presented us with with a goal of delivering improved year over year results.
Speaker 3: As expected, so far these year we have seen strong overall bid market, including a number of large capital projects that finally got bid, leading us to a record backlog of over one billion dollars.
As expected so far this year, we haven't seen strong overall bid market, including a number of large capital projects that finally got bid leading us to a record backlog of over $1 billion.
Speaker 3: This combined with the fleet adjustments and the cost reductions and production initiatives we have in place will continue to provide improved results in becoming years. And with that, I turn the call over for questions.
This combined with a fleet adjustments and the cost reductions and production production initiatives. We have in place will continue to provide improved results in the coming years and with that I'll turn the call over for questions.
Thank you.
Speaker 1: As a reminder to ask a question, please press star 1-1 on your phone and wait for your name to be announced.
As a reminder to ask a question. Please press star one one on your phone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker 1: Please draw your question. Please press star 11 again. Then buy as the compile the Q&A roster.
And by as we compile the Q&A roster.
Hi.
One moment for our first question.
Speaker 5: First question will come from Joe Gomez of noble capital markets. Your line is open. Good morning. Thanks for taking my questions.
Our first question will come from Joe Gomes.
Noble capital markets. Your line is open.
Good morning, Thanks for taking my questions.
Hey, good morning, Joe.
So I wanted to start off on the.
Revenues I mean, we'll look back.
Speaker 5: So look back at the second quarter of your commentary there. And you...
Second quarter your commentary there and you talked about the delayed bid market was coming to an end.
Speaker 5: The late bid market was coming to an end.
But the number of dredges were completely blocked and very very few had availability for the rest of the year.
Speaker 5: and very very few had a valibility for the rest of the year.
Speaker 5: But then, you know, you came in at a review number, which is the lowest quarterly revenue number at least five years, and just trying to...
But then when you came in at a revenue number which is the lowest quarterly revenue number at least five years.
And just trying to square that comment with the.
Speaker 5: the number that actually was generated in a quarter and wanted to give us a little more color.
The number that actually was generated in the quarter I Wonder if you can give us a little more color on that.
Speaker 4: Yeah, Joe, what I had said, and we said that at the beginning of the year and the commentary did not change throughout, was that even though we were continuing to see an improving bid market and we were winning our fair share of those, we really didn't expect to see that turn into revenue until the fourth quarter and then going into next year. We always said the first three quarters would be somewhat muted.
Yeah Joe.
What I have said and we said that at the beginning of the year and the commentary did not changed throughout was that even though we were continuing to see an improving bid market and we were winning our fair share of those we really didn't expect to see that turn into revenue until the fourth quarter and then going in.
Into next year, we'd always said the first three quarters would be somewhat muted.
Speaker 4: In addition, I'd also talked about last quarter, we had three dry docks scheduled for the third quarter.
In addition, I'd also talked about last quarter, we had three drydocks scheduled for the third quarter as well and we had talked about all year that the hydraulic market was still somewhat challenged and we're starting to see that recover now with the LNG. So.
Speaker 4: as well and we had talked about all year that the hydraulic market was still somewhat challenged and we're starting to see that recovered now with the LNG. So, you know, I think I'd laid all the pieces out that we thought, you know, revenue would be down in Q3 utilization would be down in Q3. And yeah, Joe, you're right, this is the lowest revenue we've had in a very, very long time.
I think I've laid all the pieces out that we thought revenue would be down in Q3 utilization would be down in Q3, and yes. You are right. This is the lowest.
Revenue, we've had in a very very long time.
Speaker 4: and still outperformed, you know, prior year quarter, you know, with 40 million more revenues. So I think this is proving out the things that we can control on the cost reduction, is on production, we are. The revenue is about to come forward, you know, with supported by a billion dollars worth of backlog.
And still outperformed prior year quarter with $40 million more revenue. So I think this is proving out the things that we can control on the cost reduction is on production. We are the revenue is about to come forward with supported by $1 billion.
Worth of backlog.
Speaker 5: So on that, I understand the backlog, and it's a great guy's done a great job at the backlog, but we do have that continuing resolution there. How comfortable are you in the revenue actually coming in to the fourth quarter if that continuing resolution goes on further than I think it's supposed to be next month?
So on that.
Understand the backlog and it's great you guys have done a great job in the backlog, but we do have that continuing resolution there.
Comfortable are you in the revenue actually coming in the fourth quarter, if that continuing resolution.
It goes on further then I think it's supposed to be next Monday or Tuesday of next week.
Speaker 3: Yeah, I think you're asking how that will impact our revenues going forward. The good news is that it will not impact the revenue from the LNG projects that starts up in Q2 with the dredging.
Yes, I think youre, asking how that will impact our revenues going forward.
The good news is that.
It will not impact the revenue from the LNG projects that starts up in Q2 with the dredging.
<unk>.
Speaker 3: And also the capital project that has already been awarded that is in a backlog will continue to perform.
And also the capital project that has already been awarded that is in our.
Backlog will continue to.
Speaker 3: So the short-term impact of a continued resolution that lasts for a long time, as it did in 2022, is not really there. It will impact the ability for the Corps to issue new contracts on new projects, and that will have an impact towards the end of 2024 and not the first.
So the short term impact of the continued resolution that last for a long time as it did in 2022.
Is not really there.
It will impact the ability for the core two issued new contracts on new projects and that will have an impact towards the end of 2024.
Not to first half.
Speaker 3: But we will just have to monitor what goes on in Congress and be optimistic about getting the continued resolution being short, as it normally is. It lasts two, three, four months, and that's normal. But in 2022, we had eight months of continued resolution that created a problem.
But we will just have to monitor what goes on in Congress and be optimistic about getting the continued resolution.
Being short.
As it normally is.
Last 234 months and Thats normal.
In 2022, we had eight months so continued resolution that created a problem.
Thank you for that.
Speaker 5: And I'm the wind segment, you know, unfortunate that, you know, there seems to be these delays.
And on the wind segment.
Unfortunate that they're seeing.
These delays.
Going on.
Speaker 5: What would be the plan for the Acadia if Empire I and II?
What would be the plan for the Acadia.
Empire, one and two.
Speaker 5: We're not to go move forward anymore. I mean, do you have some comfort level in some of the bids with some of the other projects out there that you'd be able to move the Acadio?
Were not to go move forward any more I mean, do you have some comfort level and some of the beds with some of the other projects out there that you'd be able to move the acadia over to those projects.
Speaker 3: Yes. The short answer is yes. We have seen someone's certainty in the market, particularly with Oyersted who cancelled their ocean win 1 and 2 for New Jersey. The article was citing cost and inflation and also shortage of installation vessel capacity.
Yes.
The short answer is yes.
We have seen some uncertainty in the market, particularly with <unk>, who canceled our ocean wind one and two for New Jersey.
The article was citing cost and inflation and also shortage of installation vessel capacity for the project, which tells me that once the carriers out there that will be good demand for it.
Speaker 3: which tells me that once the cadias out there, there will be a good demand for it. And also the new rounds for the PPA bidding that happened in October , sets up the installation windows in 2028 and onwards.
And also the new.
Rounds for the PPA bidding that happened in October sets.
Sets up.
Installation windows in 2028 and onwards.
Speaker 3: And some of the projects that was slated for 24, 25 installation is slipping into 25, 26. It's a bit of a fluid situation at this point in time, but I'm optimistic that we have a backlog to execute on when Akkadio comes out of a construction.
And some of the projects.
Was slated for 2425 installation is slipping into 'twenty five 'twenty six.
It's a bit of a fluid situation at this point in time, but.
Im optimistic that we have a backlog to execute on when a carrier comes out.
Our construction.
<unk>.
Speaker 3: There is also an international market that we can address and as you have seen, the European market is very strong for offshore wind installations going towards 2030 and it far outpaces what we do here in the U.S.
There is also in international markets that we can address and ask.
You have seen the European market is very strong for offshore wind.
Installations.
Going towards 2030, and as far out paces, what we do here in the U S.
Okay. Thank you for that one more if I may another way Scott.
Speaker 5: Scott, you get this question every quarter. So, you know, last year we had the site condition, you would talk about your thought you one of those.
Scott you get this.
This question every quarter so.
Last year, we had the site conditions you had talked about your thought you want to.
Speaker 5: Issues would be resolved in the third quarter, one in the fourth quarter, just maybe give us an update on where those stand today.
The.
Issues would be resolved in the third quarter, one in the fourth quarter.
Just maybe give us some update on where those stand today.
Speaker 4: Yeah, so I actually get to give you a different answer than I have for the last four quarters. We have settled two of those during the quarter.
Yes, so I actually get to give you a different answer than I have for the last four quarters. We have settled two of those during the quarter.
Speaker 4: And it was, if you remember, we had kind of a small, a medium, and a large. And it was the medium and the large that got settled.
And it was if you remember we had kind of a small medium and large and it was it was the medium and the large that got settled.
Speaker 4: The smaller of the two that we settled did get fully booked in the quarter, and it is now resolved. The larger one now fully resolved and settled. Just the way the accounting worked, about half of that has been booked, and the other half will mostly be Q4 and maybe a little stub piece into Q1.
The smaller of the two that we settled did get fully booked in the quarter and is now resolved.
The larger one now fully resolved and settled just the way the accounting work about half of that has been booked and the other half will mostly be Q4, and maybe a little stub piece into Q1, so for this quarter.
Speaker 6: So, for this quarter, we were able to book about mid single digit millions of revenue and the total settlement came in as we've kind of previously guided due to the low double digits. Okay, great.
We were able to book about mid single digit millions of revenue and the total settlement came in as we've kind of previously guided due to that low double digits.
Okay, great. Thanks, I'll get back in queue.
Thank you.
And one moment please for our next question.
Speaker 1: Our next question will come from Adam Tauheimer of Thompson Davis. Your line is open. Hey, good morning, guys.
Our next question will come from Adam.
<unk> of Thompson Davis your line is open.
Hey, good morning, guys congrats on the record backlog.
Speaker 7: Scott, can you comment on kind of how we should be thinking about Q4 sales? I'm just curious if you see the potential for growth Europe .
Thank you.
Scott can you comment on kind of how we should be thinking about Q4 sales I'm. Just curious if you see the potential for growth year over year.
Speaker 4: Yeah, Q4 is now we're gonna start seeing the fruits of some of the backlog that we had one earlier this year. I mentioned in my prepared remarks that most of the non-cold stack vessels are fully utilized for the quarter and expect the hydraulics, which I mentioned were definitely stretched in the Q3. Those are not completely booked, like a lot more fold than they were in the third quarter and the rep the fleet should be pretty busy during the quarter.
Yes.
Q4.
It is now we are going to start seeing the fruits of some of the backlog that we had won earlier.
This year I mentioned in my prepared remarks that.
Most of the non cold stacked vessels are fully utilized for the quarter.
And in fact, the hydraulics, which I've mentioned, we're definitely stretched into Q3.
Those are not completely booked.
A lot more full than they were in the third quarter and the rest.
The fleet is.
It should be pretty busy.
During the quarter and we will now start I think seeing the shift of having more capital projects in revenue than we had for the first nine nine months of the year, So im expecting.
Speaker 4: And we will now start, I think, seeing the shift of having, you know, more capital projects in revenue than we had for the first nine months of the year. So, yeah, I am expecting, you know, very similar to how we laid out at the beginning of the year, we'll start seeing, you know, the fruits of this fantastic bid market starting to come to bear. Okay, great. And then, Lassa, I'm trying to...
Similar to how we laid out at the beginning of the year, we'll start seeing the fruits of this fantastic bid market starting to come to bear.
Okay, Great and then lastly, I'm trying to let's see you talked about.
Yeah.
Speaker 7: Some of the larger projects that are currently in backlogs, significant dredging begins in Q2 of 24. Was that just for Rio Grande? Or is that really a comment on the capital backlog?
Some of the larger projects that are currently in backlog significant dredging begins in Q2 of 24 or was that just for Rio Grande or is that really a comment on the capital backlog in general.
Speaker 3: No, it was really a comment on the two LNG projects. As Scott has been saying, the cutter market or the hydraulic market has been challenged over all of 2023. And we are, with the Port Arthur and with the Brownsville project, we are putting those assets back in full operation, which is really generating some good revenues once they are active.
No. It was really a comment on the two LNG projects.
As Scott has been saying that cut off market or the hydraulic market has been challenged.
All of 2023.
We are with the port Arthur and with the Brownfield project, we are putting those assets back in full operation, which is really.
<unk> generated some good revenues once they are they are active.
Okay.
Speaker 7: And then Scott, do you have any sense for a dry docking schedule in 2024?
And then Scott do you have any sense for.
Dry docking schedule in 2024.
Speaker 4: a little early I'll give more color on the next call but I'll tell you it's probably going to be relatively flat this year. I think it's going to be in that three to four range. I will say though Adam that the way we have it
Yes.
Early I'll give I'll give more color on the next call, but I will tell you, it's probably going to be relatively flat to this year.
I think it's going to be in that three to four range I will say, though Adam that the way we have it scheduled out now and again I will give more color on the year end call. It is much more weighted to the beginning of the year than the end.
Speaker 4: Scheduled out now and again, I'll give more color on the year end call. It is much more weighted to the beginning of the year than the end, especially on some of the hydraulics as we get ready to execute this LNG. We'll go ahead and pull those dry dogs to the left so we can get those done and out of the way. So once we get on payroll, we don't have to stop.
Especially on some of the hydraulics as we get ready to execute this LNG will go ahead and pull those dry docks to the left that we can get those done and out of the way. So once we get.
On payroll, we don't don't have to stop.
Speaker 7: And then high level.
Got it and then high level.
Speaker 7: Next year, we still have some vessels in dry dock, and then I'm
For next year, we still have some vessels in dry dock and then.
Speaker 7: I'm curious what the revenue, what is your annual revenue potential at this point given all the moving pieces with the boats. Now that we have a f-
I am curious what the revenue like what is your annual revenue potential at this point given all the moving pieces with the boats.
Now that we have a full backlog I'm just curious.
Speaker 4: yeah i'm not gonna give the full potential because as you know a lot of the pent up mix and when the jobs are starting i will say though you know of our roughly billion dollars of backlog you know with some of these large capital projects they're going well into twenty twenty five and one of the lng projects is going into twenty twenty six
Yes, I'm not going to give the full potential because as you know a lot of it depends on mix and when the jobs are starting I will say, though are roughly $1 billion of backlog with some of these large capital projects that theyre going well into 2025, and one of the LNG projects as going into 2026.
Speaker 4: So, you know, we will earn rough numbers of the backlog probably about half of it next year in 2024. So, you know, there is still some white space for us to fill next year, but we also have a lot more backlog already, you know, into 25 and to 26. And we typically have a couple of years out. Great. Okay. Thanks, guys.
We will earn rough numbers of the backlog probably about half of it next year in 2024.
So there is still some white space for us to fill next year, but we also have a lot more backlog already into 25% to 26, and we typically have a couple of years out.
Great. Okay. Thanks, guys.
Thank you.
One moment. Please for her next question.
Speaker 1: Our next question will come from John of CJS Securities. Your line is open.
Our next question will come from John <unk> Morgan <unk>.
C. J S Securities Your line is open.
Hi, Good morning, Thank you for taking my question.
Speaker 8: My first one just on the wind.
My first one just on the wins.
And market is.
Speaker 8: You expect the Equinoe Project to be pushed out of canceled or some Irene Goshid on your end. And if so, what are your options for?
Do you expect the Ecuador project to be pushed out or canceled or somehow renegotiated on your end.
And if so what are your options for the Acadia.
And the timing of the delivery of the financing construction and if that happens.
Speaker 3: Yeah, we, the only thing that we know is that we have been formed by Ecuador that they are reevaluating the new situation as New York.
Yes.
The only thing that we know is that we have been informed by <unk> that they are re evaluating the new situation as New York.
Speaker 3: were reluctant to or did not renegotiate those PPAs. So we are expecting information from them in port quarter.
We're reluctant to or did not renegotiate.
Renegotiate those ppas.
So we are expecting information from them and in fourth quarter.
Speaker 3: There are a number of other projects that are going forward. And we have bid-ins in most of these projects that have installation windows from the 2026 onwards. It's a bit of a fluid situation, as you can see in the press with the headlines. But the outlook for offshore wind towards the end of this decade is very good.
There are a number of other projects that are going forward.
And we have bid ins in most of these projects have installation windows from 'twenty to 'twenty six and onwards.
It's a bit of a fluid situation.
You can see in the press with the headlines.
The outlook for offshore wind towards the end of it.
This ticket is very good.
Speaker 8: Are those projects that you're still in bidding on, are they under better contract agreements with the states that they're supplying power to?
Okay are those projects that are still you are still in bidding on.
Are they under better contract agreements with the states that theyre supplying power to.
They have not been updated to reflect.
The costs and the interest rates have been coming out.
Speaker 3: Yeah, most of the projects that has now been canceled or delayed had their power purchase agreements from 2018 and 19 before COVID and before the inflationary pressures that we've seen has kicked in since then. That includes Empire, that includes Ocean Wind, that includes the Revolution Wind for Earthed.
Yes, most most of the.
Projects.
<unk> has now been canceled or delayed.
Had that power purchase agreements from 2018, and 19 before Covid and before the inflationary pressures have we seen has kicked in since then.
That includes the Empire that includes Ocean wind that includes the revolution wind for us too.
So.
Speaker 3: Now that we see the new PPA is coming through, there are projects that has been awarded since then, which have the imprint that has adjustments for inflation going forward, and those projects are continuing.
Now that we see the new PPA is coming through there are projects that has been.
Awarded since then which have been that has adjustments for inflation.
Going forward and those projects are continuing and the new new PPA.
Speaker 3: And the new PPAs that has just been bid for New York had inflation adjustments included. RWE, CIP, Total Energies were successful in winning those projects, and we are currently in discussion to tender those projects for them. Okay. So it's fair to say that the project...
Just been bid for New York had inflation adjustments included <unk>.
<unk> E. CIP total lng's were successful in winning those projects.
We are currently in discussion to tender those projects with them.
Okay. So it's fair to say that the projects that are scheduled for 2016 and on.
Pretty much have the risk priced in and don't have as much Patel.
Potential for cancellation of pushing out as we've seen in and the ones that have made the news recently.
Speaker 3: I think we have seen the bad headlines, both from Earthsted, from D.P., from Ecuador. And the others are proceeding forward. So particular for the PPAs that had the inflation adjustments in them, they are continuing as we ask.
I think we have seen the bad headlines.
Both from our stead from BP.
From Ecuador, and the others are proceeding forward.
So, particularly for the Ppas that had the inflation adjustments in them.
They are continuing as planned.
Got it okay.
Speaker 8: It's got a question for you just on the utilization. You mentioned the hydraulics wouldn't be you until Q2 I think.
Scott a question for you just on the utilization you mentioned the hydraulics wouldn't be you. So Q2 I think.
So what's your expected utilization for Q4 and Q1 just on the number of vessels you expect to have out there.
Speaker 4: Yeah, and we mentioned Q2 because that's when the LNG works. And that's going to keep a number of the hydraulics busy for a period of time. We still have utilization and work for those in Q4. And the first half of Q1 right now, it continued a bit more. So Q4 utilization just on the hydraulics.
Yes, and we mentioned Q2, because that's when the LNG works and Thats going to keep a number of the hydraulics busy for a period of time, we still have utilization and work for those in Q4 and the first half of Q1 right now continue to bid more so Q4.
<unk> utilization just on the hydraulics will be more than double what we saw in Q3. So again they are.
Speaker 4: will be more than double what we saw in Q3. So again, they are starting to get busy. As I mentioned, Q1 is starting to shape up. Then Q2 and beyond, we have a number of those that will be tied up on the two LNG projects. Understood. Thank you. And then just.
Starting to get busy.
As I mentioned Q1 is starting to shape up than Q2 and beyond we have a number of those that will be tied up on the on the two LNG projects.
Understood. Thank you and then just quickly is there an update on the competitive environment and how people are bidding now that there's more projects and work out there.
Well the.
Speaker 3: competitive environment, the dredging industry in the United States is very competitive and there is a number of new vessels that have been added to the fleet over the last couple of years, both in the Hopper segment and in the Cotta segment. So we have seen some.
The competitive environment.
Dredging industry in the United States is very competitive.
There is a number of new vessels that have been added to the fleet.
Over the last couple of years.
Both into the Hopper segment and in the cargo segment. So we have seen some.
Speaker 3: aggressive bidding on projects and you can see that from the U.S. Army Corps of Engineers records that there is
Aggressive bidding on projects and you can see that from the U S Army Corps of Engineers Records.
There is quite a sum competitive bidding on some of the projects have been awarded recently, but the market is also very good.
Speaker 3: quite a some competitive bidding on some of the project has been awarded recently. But the Mk is also very good. Strong capital projects for announcements from the core.
Strong.
Capital projects announcements from from the core so.
Speaker 6: So I'm optimistic about the market, but I'm just with our current backlog, and also with the number of projects that are now coming to bid as we estimate over the next six months. Thank you.
Optimistic about the market, but just with our current backlog and also with the <unk>.
Number of projects that are now coming to bid as we estimate over the next six months.
Okay, great. Thank you.
Thank you.
And again, one moment our next question.
Our next question will come from William Huang of <unk> Research. Your line is open.
Speaker 4: Good morning, thanks for taking my question. Perhaps it's a gun you can tackle.
Hi, Good morning, Thanks for taking my question, perhaps you can tackle this one.
Speaker 4: I want you guys expect to receive notice of the approval for your Title 11 ep
Guys expect to receive notice of approval for your title 11 application as a company currently seeking any additional sources of financing to fund your capex initiatives.
Speaker 4: As a company currently seeking any additional sources of financing to fund your CAPEX initiatives.
Yeah. So.
Speaker 9: As I mentioned, the prepared remarks, we did hit a key milestone a few weeks ago, which was the next step we've been waiting on. Now that Marat has done their due diligence, they are statutorily required to get a third party review. That is what's ongoing right now. And that process is still ongoing.
As I mentioned in the prepared remarks, we did hit a key milestone a few weeks ago, which was the next step we've been waiting on now that <unk> has done their due diligence. They are statutorily required to get a third party review that is what's ongoing right now.
And that process is still ongoing.
Speaker 9: My guests and again, each one of these projects are different and not have a specific timeline. If I had to guess, I think this is kind of a late Q1, early Q2, just kind of based on the cadence and the pace that this is going.
My My guess and again each one of these projects are different and not have a specific timeline.
If I had to guess I think this is kind of a late Q1 early Q2, just kind of based on the cadence and the pace that this is going.
Speaker 9: And then the second part of your question, yeah, I'm not going to get into all the nitty gritty of what we're looking at But yeah, we're having you know conversations in parallel with Mirad You know with many others to you know get through this new build program
And then the second part of your question, Yes, Im not going to get into all the nitty gritty of what we're looking at but yes, we are having conversations in parallel with myriad.
With many others.
Get through this Newbuild program.
Speaker 10: We still will take delivery of the Galveston later this year, but we still have not only the Acadia, but another hopper, the Amelia Island. So we still have a lot of capex to go. So we're going to continue to look at initiative. I mentioned that we did bring in about $30 million in the last week or so on a sale, lease back, and I'll continue a lot of the conversations that I'm having in parallel with with Mirat. Go ahead, thanks for the call.
Still will take delivery of the Galveston.
Later this year, but we still have not only the acadia, but another hopper the Amelia Island. So we still have a lot of Capex to go. So we're going to continue to look at initiatives I mentioned that we did bring it about $30 million in the last week or so on a sale leaseback and I'll continue.
A lot of the conversations that I'm, having in parallel with Marriott.
Alright, thanks for the color very helpful.
Yes, thanks for the call.
Thank you.
One moment please for our next question.
Speaker 1: Our next question will come from Jacob Christensen of X Brook Capital, your line is open.
Our next question will come from Jacob Christiansen of ex Brook capital. Your line is open.
Speaker 11: Hey guys, thank you very much. Could we talk about the CapEx investment cycle and sort of how much CapEx you expect for rest of the year and give us a way to think about what to expect for 2024?
Hey, guys. Thank you very much could we talk about the capex investment cycle and sort of how much capex you expect for the rest of the year and give us a way to think about what to expect for 'twenty 'twenty four.
Speaker 9: Yeah, so as I mentioned, we'll have full year capex of about $145 million for this year. And we've spent another 40 already in the fourth quarter. So there's very little left to spend for this year. We'll be at the 145. And right now we're in the 135-ish ranger. So we just have the final payments to make on the Galveston Island and just some maintenance capex.
Yes, so as I mentioned, we'll have full year capex of about $145 million for this year and we've spent another 40 already in the fourth quarter. So there is very little left to spend.
For this year will be at the $1 45, and right now we're in the 135 ish range or so which have the final payment to make on the Galveston Island.
Some maintenance Capex as I look forward to next year and I will give more specific guidance on the next call, but right now it's laying out to probably be in the upper 100, So call. It $1 75 to 195, but I'll dial that in a little more on the year end call.
Speaker 9: As I look forward to next year, and I'll give more specific guidance on the next call, but right now it's laying out to probably be in the upper 100s, so call it 175 to 195, but I'll dial that in a little more on the year-end call.
Speaker 11: Got it. Thank you very much. And could you maybe try to parse that 2024?
Got it. Thank you very much and could you maybe try to parse that 'twenty 'twenty four ballpark into maintenance projects.
Speaker 9: Yeah, so our maintenance capsics has decreased over the last couple of years as you bring on new vessels. That's the expectation that your maintenance capsics comes down. So we run about $25 million a year in maintenance capsics and then the rest will be for the wind vessel, the Acadia and the New Hopper Dredge, the Amelia Island.
Yes, so our maintenance capex.
<unk> decreased over the last couple of years as you bring on new vessels as the expectation is that your maintenance Capex comes down so we run about $25 million a year in maintenance Capex and then the rest will be for the wind vessel, the Acadia and the new Hopper dredge the Amelia Island.
Excellent. Thank you very much.
Well.
Thank you.
And one moment please for our next question.
Speaker 12: Next question will come from Gregory Bennett of Cell. Your line is open. Good morning. Thanks for the information. How much of your current back?
Our next question will come from Gregory Bennett of sell your line is open.
Hey, good morning, Thanks for the information.
How much of your current backlog I think you said half of it you expect to monetize over the next 12 months.
Half of that is fixed at costs that are going up in this inflationary environment do you expect do you have the adjustments in these contracts for fuel or personnel or could we be stuck with low margin contracts that were delayed over the last several months. Thank you.
Speaker 12: are going up in the inflationary environment. Do you expect you have adjustments in these contracts for fuel or personnel or could we be?
Speaker 12: low margin contracts that were delayed over the last.
Speaker 9: Yeah, so for the majority of our government contracts, those are six price contracts. However, based on what happened last year, we have changed the way that we bid costs and future inflation into those.
Yes, so for.
For the majority of our government contracts those are fixed fixed price contract. However.
Based on what happened last year, we have changed the way that we've bid costs and future inflation into those.
Speaker 9: We, and we're not going to get burned again like we did last year. So we've taken very aggressive assumptions on what inflation will be. That was built into our bid when we priced it out. Now that we're also starting to win a lot of non-government jobs, those contracts are RFPs and you can negotiate those. And I can't get into specifics of all of those contracts, but they are a lot more favorable than the off-the-shelf government contracts.
No.
And we're not going to get burned again like we did last year. So we've taken some very aggressive assumptions on what inflation will be that was built into our bid when we priced it out.
Now that we're also starting to win a lot of non government job. Those contract. RFP. Then you can negotiate those and I can't get into specifics of all of those contracts, but they are a lot more favorable than the off the shelf government contract.
Okay.
Yes.
Speaker 12: So you're expecting when we hear your next, with your fourth quarter earnings announcement that the expectations you should be profitable and have.
So youre expecting when we hear your next.
Fourth quarter earnings announcement that.
The expectation is you should be profitable in <unk>.
Significant cash flow is that what youre telling us.
Speaker 9: telling you that we're expecting a much higher revenue and much higher margin in the fourth quarter than we have seen in the first three quarters of this year. What other comment too on the...
Telling you that we're expecting a much higher revenue and much higher margin in the fourth quarter than we have seen in the first three quarters of this year.
One other comment too on the.
Speaker 12: on the cost and the inflation. Two of the larger costs that we have, one is labor. We do have a lot of union labor, those agreements are fixed and we just recently signed a three year labor agreement so we know what that is. Another large component is fuel and we hedge our fuel as we win a contract so we mitigate the impact of that as well. On the new vessel that you...
On the cost of the installation of two of the larger cost that we have.
One is labor, we do have a lot of union labor those agreements are fixed and we just recently signed a three year labor agreement. So we know what that is.
Another large component is fuel and we hedge our fuel as we win a contract. So we mitigate the impact of that as well.
On the new vessel that Youre building for offshore wind might.
It might take us a lot of the contracts aren't going to happen.
Why not wait until you have your financing in place stopped construction wait until you have your contract year financing your favorable financing in place and wait until you have contracts definitive contracts take or pay contracts for that vessel and not put us at risk.
Speaker 12: place, stop construction, wait till you have your contract.
Speaker 12: financing your favorable financing in place and wait until you have contracts, definitive contracts, take or pay contracts for that vessel and
Speaker 3: Well, the contract for the vessel in the United States, it takes three to three and a half years to build a vessel. So we entered into this contract, what is it now, a year and a half ago.
Well the contract for the vessel in the United States. It takes three to three and a half years to build a vessel.
So we entered into this contract.
Or is it now a year and a half ago.
Speaker 3: And we have a delivery in 2025 to go to work on the Equinor's Empire 1 contract. That is a firm contract, a firm backlog, which fills up the most of our 2025. And then we have Empire.
And we have a delivery in 2025 to go to work on the.
Ecuador's Empire, one contract that is a.
Term contract the term backlog, which goes up but most of our 2025.
And then we have empire to.
Speaker 3: which comes in 2020-06, where we also have a performance obligation.
Which comes in 2026, well, we also have a performance obligation.
Speaker 3: As you heard earlier on the call, if we don't come back to us in the second quarter, in fourth quarter, with their firm plans for those two projects, and that will be a time to reconsider whatever we have planned. But currently the construction program is going as scheduled, and we are bidding a number of projects for 26 and onwards that will require the vessels to be ready and operational.
As you heard earlier on the call.
We'll come back to us in the second quarter and fourth quarter.
With their firm plans for those two projects.
That will be a time to reconsider and whenever we have a client but currently the construction program is going.
As scheduled and we are bidding a number of projects for 2006 and onwards.
We will require the vessels to be ready and operational.
What happens if they don't happen.
Speaker 3: Well then we have to reconsider, we will come back to that in Fort Gore.
Well then we have to reconsider frequently we will come back to that in the fourth quarter.
Otherwise, it's just speculations.
Okay. Thank you.
Thank you.
And I am seeing no further questions in the queue I would now like to turn the conference back to Tina Mckinsey <unk> for closing remarks. Thank.
Speaker 2: We appreciate the support of our shareholders, employees, and business partners, and we thank you for joining us in this discussion about the important developments and initiatives in our business. We look forward to speaking with you during our next turning discussion. Thank you.
Thank you we appreciate the support of our shareholders employees and business partners and we thank you for joining us in this discussion about the important developments and initiatives in our business. We look forward to speaking with you during our next earnings.
Thank you.
Speaker 1: This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
Okay.
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