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spk01: Ladies and gentlemen, thank you for standing by, and welcome to the Great Lakes Second Quarter Earnings Call. 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 the session, you will need to press star 1 on your telephone. Please be advised that today's call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Tina Baginskis. Please go ahead.
spk02: Thank you. Good morning, and welcome to our quarterly conference call. Joining me on the call this morning is our President and Chief Executive Officer, Lassa Pedersen, and our Chief Financial Officer, Mark Marinko. Lassa will provide an update on the events of the quarter, then Mark will continue with an update on our financial results of the quarter. Lassa will conclude with an update on the outlook for the business and markets. 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 in our business are set forth in 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 Lasso.
spk00: Thank you, Gina. In the first half of 2021, our operations saw substantial impact as a result of the COVID-19 pandemic. As the third wave of the pandemic spread through our population, we started to see significant additional direct cost and operational interruptions in the first quarter of 2021. Several of our vessel crews were infected despite extensive testing and isolation protocols. In order to mitigate continued outbreaks, in the second quarter, we initiated an extensive vaccination effort of our crews and staff as vaccines became available and set an ambitious target to have a majority of our employees vaccinated by the end of the quarter. Thus far, we have been successful, and our company-wide vaccination currently stands at 71% of our staff being fully vaccinated or partially vaccinated. We are now implementing new protocols, including requiring all new projects to have 100% vaccination prior to startup, and all vessels coming back into operations from dry docks to have 100% vaccinated crews. Additionally, we require proof of vaccination to access any of our main offices. Unfortunately, vaccines were not readily available until later in Q2. Hence, we continue to incur COVID-related costs and experienced increased operational challenges on several projects during the second quarter of this year. The direct COVID cost of at-home and on-site testing, disinfecting our vessels, and the cost of quarantining infected crew and bringing replacement crews were $4.3 million in the first quarter, with an additional $3 million incurred in the second quarter. Direct costs can be easily tracked, but the impact on projects and operational performance related to COVID were not as easily quantified, but could be seen in lower than expected margins on several jobs. The majority of the projects worst affected have now been completed, which included an international project, two coastal beach projects in the southeast, one beach project in the northeast, and one capital project in the Gulf of Mexico. We expect to see positive effects of a vaccination initiative with reduced COVID impacts on our operation in the remainder of the year. We ended the quarter with adjusted EBITDA of $20.2 million. and net income of 2.1 million. Our first half of 2021 results did not meet expectations due to the COVID impacts and related project performance mentioned. Given project activity we are currently engaged in, coupled with backlog, new projects awards, and fewer vessel dry docks for the remainder of the year, we expect the third and fourth quarter of 2021 to be stronger outperforming the third and fourth quarter of 2020. However, we do not expect the stronger second half to fully allow us to achieve our original expectations for 2021. I will now turn the call over to Mark to further discuss the results of the quarter and for an update on backlog development.
spk06: Okay, great. Thank you, Lhasa. I will start with the quarterly results and then discuss some specifics related to our dredging business. For the second quarter of 2021, revenues were $169.9 million, net income was $2.1 million, and adjusted EBITDA was $20.2 million. Total company revenues for the second quarter of 2021 represented a $2 million or 1.2% increase compared to the second quarter of 2021. The increase was caused by higher domestic capital and rivers and lakes revenue, offset partially by lower maintenance, coastal protection, and foreign revenue. Gross profit was $22.9 million compared to $33 million in the second quarter of 2020. Gross profit margin was 13.5% compared to 19.7% in the prior year quarter. Direct COVID-19 costs had an unfavorable impact of $3 million on gross profit during the second quarter and related productivity impacts and delays affected several projects. As stated previously, the majority of those projects affected have now completed. During the second quarter of 2021, we had the New York, Alaska, Texas, Liberty, and Terrapin in dry dock. All vessels except the Terrapin are returning to work in the third quarter. Total company operating income was $8.8 million, which is a decrease of $9.5 million over the prior year quarter. The decrease is a direct result of lower gross margin. General administrative expenses were slightly lower than the prior year by $0.6 million. Net income for the second quarter of 2021 was $2.1 million compared to $9 million in the prior year quarter. The current quarter income includes net interest expense of 6.7 million and income tax expense of 0.8 million. Income for the second quarter of 2020 included 6.7 million in net interest expense and 3.1 million income tax expense. Approximately $1 million of extinguishment of sub-debt is included in the interest expense for the current quarter which is related to the refinancing of our senior notes. Adjusted EBITDA for the second quarter of 2021 was 20.2 million compared to adjusted EBITDA of 28.1 million in the second quarter of 2020. Next, we turn to our balance sheet, where at June 30th, 2021, we had 180.8 million in cash. During the second quarter of 2021, We continued to maintain a zero-cash balance arm revolver. Our capital expenditure for the second quarter of 2021 were $27.5 million, which included $8.1 million related to the construction of the new midsize hopper dredge and $5.4 million for the build of the new multi-cap vessels and $0.6 million related to the design of the rock installation vessels. In May 2021, we sold $325 million of unsecured 5.25% senior notes with a term of eight years pursuant to a private offering. The 2029 notes were priced to investors at par and mature on June 1st of 2029. The company used the net proceeds from the offering together with cash on hand to redeem all $325 million aggregate principal amount of its outstanding 8% senior notes that were due in 2022. These new, more favorable terms give the company a stable debt structure for a longer term and result in approximately $9 million in interest expense savings on an annual basis. With that, I will turn the call back over to Lhasa for his remarks on the outlook moving forward.
spk00: Thank you, Mark. As we and our country are still facing the continued challenges and impacts of COVID-19, the dredging industry, deemed as an essential service, has continued to execute critical and needed infrastructure projects. The US Army Corps of Engineers has continued to follow their bid schedule and prioritize all types of dredging, including port deepenings, port maintenance, and expansion and coastal protection and restoration projects. In 2020, the domestic market reached $1.8 billion in project bid, and we are confident that the 2021 domestic market will remain as strong as 2020, driven by work that will include large-scale port deepening projects along the east and the Gulf Coast. We expect that 2021 will see bids for multiple project phases for port deepening projects in Corpus Christi, Norfolk, Freeport, and in the Houston Ship Channel that will continue for the next several years. In addition, our nation's coasts are subject to climate change, increasing severe weather events and sea level rise, which results in an increase in beach erosion and other damage that add to the recurring nature of our business and the need for more frequent coastal protection and port maintenance projects. In the second quarter, Great Lakes announced awards of $112.8 million of new work that adds to our 2021 backlog, resulting in a 34.5 market share for the first half of 2021. Backlog at June 30, 2021, was $454.4 million, versus $423.4 million in June of last year. After the second quarter end, we were awarded the Cape May Beach Renourishment Project for $12.1 million, and we were low bidder on the Timber Shoals Deepening and Renourishment Project for $39.5 million. On July 30th, Great Lakes were the successful low bidder on the Corpus Christi Phase III deepening project at $152 million, which will commence in late Q4 of this year. Our confidence in the market is reinforced by the support that we have seen for the dredging industry in the U.S. Army Corps of Engineers' 2021 budget that was approved at another record-high level In July of this year, the House of Representatives approved the course 2022 proposed budget that is slated to be 8.66 million, which is an 11% increase over this year's levels. In this bill, the harbor maintenance run would receive 2.05 billion, which is 370 million over the 2021 budget appropriations. This record funding is in addition to the annual cap being lifted on the Harbor Maintenance Trust Funds in 2020, and the 2020 Water Resource Development Act, which included some additional reforms to the Harbor Maintenance Trust Fund that will allow Congress to draw down on the $9.3 billion surplus in the fund. To support the domestic market demand in 2020, Great Lakes announced the execution of a contract with the Conrad Shipyard in Louisiana to build a new mid-size hopper dredge with expected delivery in the first quarter of 2023. The new hopper dredge build remains on budget and on schedule. In addition to the new build, we continue to upgrade our existing U.S. domestic fleet with new equipment and technology to increase productivity and relieve our fleet is well-equipped to meet current and future growth in the market. As I've talked about on previous earnings calls, offshore wind power generation represents an exciting new opportunity for Great Lakes. We see strong support for offshore wind power generation from the Biden administration, and in March, the White House announced new initiatives that will advance the administration's goal to expand the nation's offshore wind energy capacity in the coming decade by opening new areas for development, improving environmental permitting, and increasing public financing for projects. The administration committed to approving 16 offshore wind projects by 2025 and stated it would direct $230 million in federal transportation dollars to fund port infrastructure and earmark $3 billion in loan guarantees from the Department of Energy. and the White House set an ambitious target of having 30 gigawatts of offshore generating power in place by 2030. This all confirms our plans to enter this new market by building the first U.S.-flagged Jones Act-compliant inclined fault pipe vessel for subsea rock installation for wind turbine foundations. This vessel will represent a significant critical advancement in building the US logistics infrastructure to support the future of the new US offshore wind industry. We anticipate making an investment decision in Q3 of this year and expect delivery of the vessel in the first half of 2024. Additionally, we are evaluating further steps to participate in this growing market and have re-engaged with the Boston Consulting Group, this time to assist us in further defining and confirming our growth strategies with a special focus on the opportunities in the offshore wind market. In conclusion, we remain confident in our operational initiatives to see us through the short-term COVID challenges of this year. And as we have our team members fully vaccinated, See the remainder of the year through with the operational performance Great Lakes Dredge and Dock is known for. And we are optimistic that the market developments in the U.S. offshore wind power generation will provide an avenue for revenue growth for our company. And with that, I'll turn the call over for questions.
spk01: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone or To withdraw your question, press the pound key. Please stand by while we compile the roster. Your first question comes from the line of Adam Dieheimer with Thompson Davis.
spk03: Hey, good morning, guys. Morning, Adam. Can you give us any sense for, I'm new, so sorry if you don't want to kind of directly answer this question, but any kind of sense for when you say Q3 and Q4 up year over year, any kind of sense for magnitude?
spk06: Yeah, sure. So as we look going forward, first of all, when we file the queue later this week or this week, first of all, you'll see that for our backlog, if we look at the revenue first, about 93% of our backlog at June will be recognized as revenue for the rest of this year. So that's over $400 million of revenue. We expect the gross profit margin percentage for Q3 and Q4 to be similar to what full year 2020 was. And the reason for that is, as Lassa earlier mentioned, a lot fewer vessels are in dry dock in Q3 and Q4 versus Q1 and Q2. We do expect GNA to be a little higher in the second half due to more activity and the back half of the year plus is lots of just mentioned some money related to BCG. Um, when I specifically talking about the dry dock days, um, we expect Q3 dry dock days to be, you know, less than half of what we had in Q2 and then almost down to zero in Q4. So we expect Q4 to be a little stronger than Q3.
spk03: Okay. That's great color actually. And then, um, The four boats that you have returning in the back half, can you give us a sense of where, just because I'm trying to get to the revenue segments, can you give us a sense of what kind of projects those boats are returning to?
spk06: That one I'll have to – that's a little bit more detailed than I have in front of me here. But we do have a number – we do have our – Port deepening is continuing to go on. It's really across the board. You know, it's going to be nothing on the international side, obviously, but on the domestic side. Continued port deepenings, beach jobs in Q3. So it's really across board and maintenance.
spk03: Okay. And then the last one for me, is it too early to say that the core bidding will be up in 2022? No.
spk06: So the core bidding at this point, we expect it to be close to where it has been the last couple of years, with the exception of, I would add, with this infrastructure bill, that could increase it from this kind of $1.8 billion that we've seen for the last three or four years. So that would be the piece that could increase. But it's too early to tell when those types of infrastructure bills build projects for our industry, you know, the timing of those, it's too early.
spk03: Okay. Thanks for the time.
spk06: Sure.
spk01: Your next question comes from the line of Jonathan Winting with CJS Securities.
spk05: Hi. Good morning, guys. I was wondering if you could give us any insight as to how much lingering COVID impact and expense there might be in Q3 if you're seeing that extending into July 2021. especially with these rates going up across the country.
spk06: Yeah, in terms of, you know, what we expected, you know, kind of, I'd say slightly before this Delta variant, you know, we were expecting, we had 4 million in the first quarter, 3 million in the second quarter. We're expecting about 2 million in the third quarter. You know, we'll kind of see how this new Delta variant impacts us. It's, you know, it's moving up a little bit, but right now, Our expectation is 2 million. Obviously, we're in the mix, the mix of this one, so we'll kind of see how it goes.
spk05: Got it. And were there any delays or stoppages or interruptions as a result in the last month?
spk06: In the last month, we haven't had any vessels stopped or, you know, taken in because of this variant yet.
spk05: Got it. Okay, great, great news. I was just wondering, as you looked at the first half of your wind rate on the Denmark, and I recognize it was smaller than usual, both from a total, you know, bid market perspective and also just the 35% versus your normal 40% win rate. I'm just thinking, I'm wondering what your thoughts are for the rest of the year in terms of your win rate and the bids that are out there and kind of the projects that you're best suited for.
spk06: Yeah, sure, John. That's a great question we looked at. So the good news is, you know, post June 30th, you know, as Lasse was mentioning, you know, we – We're low bidder on Thimble Shoals. We were just, you know, we're low bidder on Corpus, which just happened on July 30th. That was a big $152 million. And we were low bidder on Freeport Deepening, which is about $72 million, but we're over the government estimate. So we'll see how that kind of shakes out. But, you know, those three bids are, $264 million that would be added to our backlog if awarded to us. So that's a big number. We talk about the back half of the year. But with $700 million bidding in the first half of the year, we expect about $1.1 billion to bid in the second half of the year to get us to this kind of another $1.8 billion market. So we do have to win... a little bit higher than, I would say, let's say around 45% to get the backlog to where it would be at the end of this year as similar to the end of 2020. But we're off to a great start with these three bids, and the projects that are coming up here are well-suited for us. So it's been a great start to this back half of the year right out of the gate.
spk05: Got it. Thanks for that color. And then just any update on the LNG project that you've been awarded but aren't in backlog yet? Are they moving forward? How should we think of those in terms of impact of this year and next year and if there's been any progress?
spk06: Yeah, the one, the smaller of the two that we did expect at the beginning of this year to possibly start this year isn't going to start this year, but that is still moving along. They have purchased some land to relocate roads to, you know, where that, so that they can work on the land there. They've, and I just heard yesterday that they are beginning to sign some revenue contracts. So that looks like that could be a notice to proceed in 2022. But, you know, there's still a few more final hurdles to get to, but there's some positive movement there. The larger one is still further out, still there, but the smaller one that we signed earlier is, you know, hopefully getting closer.
spk00: Yeah, just to add to that, Mark, the client is now saying that they have sold the – got off-deck contracts for the two first trains on that LNG facility, which means that they can then get Vectel to – start construction early next year. That's what the clients are estimating. Got it.
spk05: Thanks for that, Collar. And just quickly on the BCG engagement that you were talking about, what's the additional cost from that, number one? And what really is the opportunities for expanding the business beyond the one or two, I guess, foundation vessels you're thinking about?
spk00: Yeah, I'll start out with that, and Mark can fill in. We We looked at the offshore wind market now for the last two years, and as the opportunities in the market are being crystallized and we start bidding work, we wanted to have an independent and joint with us review of the opportunities in the offshore wind market and what that represents to us. So we have gone through an extensive analysis of the opportunity that is there for the rock placement for the foundations and also other related activities that are close to our competencies and ability to perform. As you know, we had BCG engaged some four years ago to do the restructuring that we did, and they helped us out very successfully, and we decided to re-engage with them to do this analysis. I must say that I'm very optimistic about the opportunities that this, let's say, industry is presenting to us going forward. Mark?
spk06: Yep. So just on the specifics related to the cost, it's less than $2 million. As I mentioned earlier, that's going to push our G&A up in the second half a little bit versus the first half. But, yeah, very excited about, as they confirm what we're looking at in offshore wind, is also – kind of reaffirming and relooking at our other investments we're making, you know, in the dredging business, um, as we look forward, you know, on a longer term basis.
spk05: Got it. Thank you.
spk01: Your next question comes from the line of the forest Hinman with wall Halston and company.
spk04: Hey, thank you. Uh, just clarity further on the outlook for offshore wind is, um, Are we looking at other vessels, cranes, service vessels, or this is more along the lines of just confirming thoughts around potentially doing another rock vessel?
spk00: Well, I think we can say that on the crane side, we're not going to get into the installation vessel business. But there are a lot of opportunities for rock installation. We made our investment decision for the first vessel or the decision to go ahead with the design and pursue that business on the basis of 10 gigawatts installed power generating capacity by 2030 last year. And now the Biden administration has tripled that target. There will be supply chain issues, which is impacting how we reach that target, but there is definitely good opportunities for more than one offshore rock installation vessel. So we're looking at that. In addition, there are additional services which is performed under and underwater, which is close to our competencies in the company. that presents an opportunity for us to further invest into this new market segment. But I just want to repeat that to build an offshore lifting installation vessel is a very large investment, which we are not considering.
spk04: Okay. And then can you give us an update? A lot of discussion on the Army Corps big market, but are there any – private market bids, projects that we're working on that we should be aware of?
spk00: Well, the private market bids that we do have in the low bid, not awarded category is for LNG developments. So those projects are significant, and based upon the final investment decisions by the clients, these projects could come to fruition in 2022 and 2023. Mark, I don't think we have other projects that are currently slated in that category.
spk06: That's correct. It's really just those two on the private side. Those two are in low bid pending award at this point, not in our backlog. That's correct.
spk04: Okay, very helpful. And I've been asking this forever. I can't talk about it anymore, but you've got the debt refinanced. Can you just give us a refresh in terms of capital allocation priorities? I know we're spending a lot of money on new vessels and potentially more money on new vessels. Can you give us a rundown there? You know, where does that pay down fall in from a priority perspective, dividends and potentially stock repurchases?
spk06: Yeah, I'll take that one, Lassa. Yeah, nothing's changed too much, so let me just refresh it at this point. So, you know, we're in the middle of building the hopper dredge, the mid-sized hopper dredge. So, you know, that's $35 million this year. It'll be $45 next year and then another, I think, five in the last year, you know, in 2023. We're building these two multi-cats, the smaller vessels to – help with working on our pipelines more efficiently and safely. That's a total of about $26 million. It'll be $18 million this year. Obviously, the priority then after that, since those are already in flight being constructed now, is this offshore wind vessel. That vessel, we still don't have final confirmed pricing yet, but that's going to be somewhere between $175 to $200 million. It's a large vessel, you know, as big as Ellis Island. And on the, you know, so those are kind of the things we've talked about that haven't changed, kind of confirmed. But, you know, as we look forward longer term, these are some of the things we're talking about with BCG. For example, on the dredging side, we have that option for the carbon copy of the hopper dredge, but do we look at that versus a cutter dredge? So we'll look at that moving forward. Too early to tell you the outcome of that. We've got another year. We have to make a decision on that second operative until next summer. And then we'll look at the other, whether the offshore wind market, do we want to invest more there in a second offshore wind vessel or something else. So don't have an update yet on that. Those are in the middle where we are analyzing currently. In terms of the share repurchase, just like last year, LASA and the board are very supportive of if we believe the stock to be undervalued, we would put in a share repurchase program like we did last year. So that's still out there to do. So we'll keep an eye on that and be ready to do that if the opportunity presents itself.
spk04: And the last part of the question was a dividend.
spk06: Yeah, so I would say of all those priorities, dividend is, you know, probably the last of those priorities related to what we do have to do to obviously focus on growing the business. And then the share repurchase was, you know, fairly effective last year. And so I would say it's of the priorities. It's definitely something we consider. Just in the priority list, I'd probably tell you it's at the latter of all those other priorities.
spk04: Okay, very helpful. And just clarity on that option on the hopper dredge. If we exercise that option, is that a fixed price option, or does that price reflect the current environment as it relates to steel, which has gone up quite a bit?
spk06: Yeah, so when we do these options, you get a lower price. It was about $4 million lower than the current one we're building. But, right, there is a range of steel prices. So if steel prices are higher than the range that's in that contract, then it could be a little bit more. But at this point, you know, steel prices have kind of leveled off. So we have to see how the market is, you know, let's say next summer and how that impact is. But I don't see it to be, you know, enormously material to us yet. based on where we are today.
spk04: Okay, perfect. And then last question, just help us understand the decision on the rock dumping vessel as it relates to this financing that's out there. You did reference it in your press release, but just being very specific on this, would we be willing to make an investment decision on the rock vessel without potential problems favorable financing through the DOE? Or is it possible that that financing could come into play after we make an investment decision? Kind of a weird question, but can you just help us understand that?
spk06: So we have the ability, looking at the capital allocation, looking at the cash flow that we've been able to generate, that we can do... These items I've talked about, including the offshore wind vessel, you know, off our current balance sheet, I don't necessarily need to take on new debt. If we did add additional items, then I would or could. So at this point, I don't have to if we stuck to kind of what we're committed to. I don't take any more debt. But, yeah, like I said earlier in the last call, we've had conversation with the Department of Energy. And if that's attractive financing, you know, and it looks like it could be, we would take advantage of that.
spk04: Do we have any understanding of what you can share in terms of what potentially that cost of that would be?
spk06: The cost of the vessel?
spk04: The debt.
spk06: Yeah, so it's a floating rate. It's based on your credit rating. You know, it's essentially LIBOR plus a number. and based on your credit rating, but it would be in the kind of in the 3% range today.
spk04: Okay. Thank you for taking my questions.
spk06: Sure.
spk01: Your next question comes from the line of Paul Fratt with Noble Capital Markets.
spk06: Good morning, Lassa. Good morning, Mark. First thing is, Mark, you had mentioned the Freeport It sounds like you're a low-bid penny award on Freeport, but you're above the Corps' estimate. Can you give us some color on that? I think you said it might be $50 million if you look at sort of the awards that you're included in the press release. Freeport was about $73 million, actually. But, again, we're above the government estimate, so, you know, we're – presently working with them to see if we can make that awardable. How much above the estimate were you? Oh, I'm going to say about, I want to say 15 million, but that number, I don't recall, something like that. Okay, like 25% above their estimate, roughly? Yeah. And then typically you give the low bid pending award number. You referred to it a couple times, but I didn't hear an actual number. Oh, sure. It's low bid pending award at 630 was $447 million. Okay. And then... Just to confirm, it sounds like you're not seeing any indication that the U.S. Army Corps of Engineers is pulling forward any projects based on, you know, increased funding? I'm sorry, can you repeat that, Paul? Sorry. Are you seeing any indication that, you know, with the Corps' budget, potentially going up, that they're preparing to pull forward any projects, you know, and put them out to bid sooner than what you have anticipated? Oh, no, I wouldn't say there's anything earlier yet. You know, we're coming into the really busy season of bidding, obviously, for Q3 and Q4 here, and those bids have been kind of set for a while, right? So, Nothing yet. You know, that would be something we'd have to see, you know, probably more impact earlier 2022. But, yeah, at this point, this kind of bid market is now set for fiscal year. You know, remember their fiscal year ends end of September, so that's all kind of fixed for this year. It would push late. That would happen later, you know, but haven't seen that yet. Yeah, I mean, I guess my point would be, I mean, or my view has always been that, you know, the Corps' budget has not been the issue. It's been more the pipeline and, you know, their ability to handle it and schedule and queue projects. And so, you know, it maybe extends the fairway a lot longer, but it doesn't really impact the bid market year to year that materially. Yeah, I mean, we haven't seen the Army Corps bids, you know, really slow down. It's all been pretty much on a pretty much what we've expected. And so, but I hear you that, yeah, I think it's all a positive for us. Obviously it's just a little too early to tell, you know, this bill's got to get passed and completed, but would that potentially, I think what you're asking is, you know, would it potentially overload the Army Corps a little bit? I don't think so. I mean, they've been able to handle everything up till now and, Those are important projects that they want to get done, right? So I think it's a positive. Yep. And Houston's been out on the horizon as far as a pretty significant project. Can you give us an update on any timing that you're seeing from the standpoint of the Houston project, the shift channel? Yeah, I can take that last. So we have the first bidding of that's coming up in August, potentially in the range of $100 million. Okay, great. And then, Mark, you highlighted that $175 to $200 million for the cost of the rock dumping barge. Would that be mainly 2022 and 23 CapEx, or would you see, you know, as you hit that investment decision, more in 21? Yeah. There is a potential that we could, you know, looking at the market and when it will kind of tie to time it with the market, right? When do we think these projects will commence and when will that vessel have to be ready. So there is a potential that we could have the first payment this year if we make the decision to do the investment and you know that be kind of near the end of this year based on you know being ready in 2024. So that just have to continue to gauge the market of when they're going to need that ready to do the you know the construction.
spk00: Mark, the projects that we are bidding today are having offshore construction season starting in 2024. And in order to meet those deliveries, we will have to make our investment decision as early as Q3 this year.
spk06: Okay. And maybe I should have asked – Could you give us a 2021 full year CapEx number? You know, hopper dredges, the first hopper barge is 35, the multicats 18. Can you round out the CapEx numbers for 21? Yeah, sure, sure. So exactly 35 million on the new hopper, 18 on the multicats, 2 million on the design of the offshore wind vessel. about 35 million in regular CapEx, you know, what keeps our fleet going. And, um, we did separately from, uh, we, you know, we've done a couple of lease buyouts that, you know, fall into capital expenditures. Uh, when you look at the cashflow statement, when you see the, the cues and those are, uh, you know, for the right now through the first half, you're sure about 16 million. So, um, you know, that total there is, you know, in the neighborhood of $100 million, and that does not include what Lassa just mentioned, if we made the call to do the, you know, to start the construction on the offshore wind hustle. And would a reasonable estimate be at 10%, you know, of the project cost as far as a deposit moving forward, or would it be higher than that? No, I don't think it would be higher than that. You know, it could be You know, if you think about as we looked at kind of the one where, you know, like the Hopper Dredge we're building, it was about 10%. So, yeah, I don't think it would be higher. I think it would be around 10% or maybe a little less. Okay, great. And then just a couple last ones. Just from the standpoint of I heard you let them clear as far as the stock buyback hasn't been revisited yet, but maybe either you could, you know, illuminate where the last, stock buyback matrix was as far as where you thought the stock was undervalued? Or maybe sort of give us a little color on where you're thinking potentially stock buyback might kick in. I'm not sure, you know, any color would be helpful. Yeah, I mean, it was a different, we're in a little different situation back in, you know, September of last year. where the stock was, I believe, at $8.63 when we made the call with the board at that point in time. So we're not anywhere near that number. But, yeah, it's a little – I don't have a preliminary number, but at this point in time it would be a higher – obviously a higher, but we'll – yeah, I can't give you a number yet on where that would be, but I just want to be clear that We, the board has been very supportive. Lots are very supportive of doing, you know, reinstating a new one if we needed to, uh, based on, uh, you know, just being undervalued. So, um, and that'll be based on what's our forward looking, um, what we think that the forward looking market is and, um, you know, our performance and, um, uh, where the stock price sits. Great. And Lasse, if you could address the plea agreement that was completed in June and just sort of how you went through that exercise of assessing the risk as a government contractor versus agreeing to that plea agreement.
spk00: Yes. As you know, this is a very old case. It's some Six years ago, we had an incident where a subcontractor punched a hole in a pipeline that caused a spill. And we have been through a lot of discussions here with the client and also with the authorities on who's responsible and so forth. We believe that we were not directly responsible for this bill. It was caused by a subcontractor. However, this case was being drawn out. We spent a lot of resources and management time on pursuing and discussing this case. This year we decided that it was probably better for us as a company to plea to a misdemeanor and then get on with our business. So we agreed to pay a fine in the amount of $1 million that came with that guilty plea. And then we have set aside $2 million, which is determined then by the conclusion of the civil trial that we are involved in on this matter. And if we are successful in our claims of not being responsible for this bill at that time, the $2 million would not be an expense for us.
spk06: Great. And Mark, has any of that been recognized You know, was it was defined, recognized in the second quarter? And yeah, I guess. Just simple question with recognizing perfect second quarter. Yeah, we've already. We already actually recognize that in the first quarter, so there wasn't a P&L impact that $2,000,000 that's essentially set aside is called restricted cash that has not hit the P&L at this point in time and. And we also believe that or expect insurance to cover that if that was restitution was awarded to the plaintiffs. Perfect. Thanks for your time. Sure. Thanks.
spk01: There are no further questions. I would now like to hand the call over to Tina Baginskis.
spk02: 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 discussion. Thank you.
spk01: Ladies and gentlemen, this does conclude today's conference call. You may now disconnect at this time.
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