Attached files
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| 8-K - FORM 8-K DATED FEBRUARY 25, 2010 - Aegion Corp | form8k02252010.htm |
| EX-99.1 - EARNINGS RELEASE DATED FEBRUARY 25, 2010 - Aegion Corp | ex99102252010.htm |
Exhibit
99.2
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INSITUFORM
TECHNOLOGIES
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Moderator:
Joe Burgess
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February
26, 2010
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8:30
am CT
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Operator:
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Good
day and welcome to the Insituform Technologies fourth quarter and year-end
results earning call. Today's call is being recorded.
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Any
financial or statistical information presented during this call including
any non-GAAP measures, the most directly comparable GAAP measures and
reconciliation to GAAP results will be available on our Web site,
Insituform.com.
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During
this conference call, we'll make forward-looking statements which are
inherently subject to risks and uncertainties. Our results could differ
materially from those currently anticipated due to a number of factors
described in our SEC filings and throughout this conference
call.
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We
do not assume the duty to update forward-looking statements. Please use
caution and do not rely on such statements.
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Now
I'll turn the conference over to Insituform's President and CEO, Joe
Burgess.
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Joe
Burgess:
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Good
morning and thank you for participating on Insituform's call for fourth
quarter and full year 2009 results.
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Joining
me on today's call are David Martin, Senior Vice President and Chief
Financial Officer; David Morris, Senior Vice President and General
Counsel; Chuck Voltz, Senior Vice President, North American Rehabilitation
and Dorwin Hawn, Senior Vice President, Energy &
Mining.
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As
has been our practice, I will make a few remarks discussing both the
fourth quarter and the full year along with updates on market factors and
other key factors impacting our performance as we go
forward. Then we'll spend the balance of the time available
responding to your questions.
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For
Insituform overall, for the quarter income from continuing operations,
excluding restructuring and acquisition-related charges, was $15.8
million. This represents a 53% increase from the fourth quarter of
2008.
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Earnings
per fully diluted share of 41 cents were 10% better than 2008. For the
full year, income from continuing operations reached $38.9 million or
$1.04 per diluted share compared to 72 cents in 2008 when we adjust out
the positive impact of some settled litigation that we had in the fourth
quarter of 2008.
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This
represents a 44% improvement in earnings from continued operations and
reflects the increased earnings capability across the broader Insituform
business platform.
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As
we will discuss later, we believe this platform is well positioned to take
advantage of recovering economies, increased infrastructure spending and
higher capital spending in our energy and mining
segments.
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Turning
to the business units, North American Sewer Rehabilitation continued to
build on its momentum with a very strong fourth quarter. Fourth quarter
operating income of $12.5 million represents a 265% improvement over last
year. Full year operating income of $38.4 million was 150% better than
2008.
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While
revenues grew 15% in the fourth quarter, full year revenue growth was a
modest 4.1% indicating that the profit improvement continues to be driven
by operational efficiencies across our manufacturing, logistics and
execution platform.
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Gross
margins for NAR approached 28% for the quarter and were at 25.8% for the
year, a 17% improvement over 2008. With the fourth quarter revenue pickup,
operating margins improved to 13.1%. With revenue growth expected in 2010,
we're hopeful that we can sustain this operating margin
performance.
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The
$23 million improvement at the operating income level was generated by
contributions from all facets of NAR operations. Revenue growth
contributed $3.1 million, increased manufacturing profits contributed $3.7
million, lower operating costs contributed $7.1 million, reducing cost of
quality and execution errors contributed another $2.2 million and lower
fuel and resin costs contributed $6.9 million.
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I'll
just stop here and give a tip of the hat to Chuck Voltz and his team for
really keeping their eye on the ball throughout the year. The business
unit did an excellent job of building backlog, controlling costs while we
persevered through work release delays earlier in the year and finally
quickly ramping up down the stretch to begin monetizing the backlog
position, a very solid year for NAR.
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As
we continue to focus on improving our business processes and our people,
we believe we can continue to make incremental gains in this
business.
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Just
to check in on the stimulus which we've talked about over the past few
quarters, at year end we've seen around $190 million of stimulus projects,
67% of which is new work. This is up from $153 million at the end of
Q3.
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Insituform
ended the year with $86 million of acquisitions of stimulus-related work,
up from $50 million at the end of Q3. Recall that most of the earlier work
was not incremental to the market so we believe that we're just now seeing
the growth aspects of the stimulus.
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Our
analysis also suggests that almost 50% of the funds appropriated for the
Clean Water State Revolving Funds have gone to contract. If that proves
accurate, we could anticipate a 2010 stimulus impact similar to
2009.
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Backlog
for NAR remains high at $181 million. This represents a 20% increase over
year end 2008 and is reflective of our strength at the bid
table.
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While
municipal budgets will continue to be stressed, we believe that the
combination of stimulus spending and modest economic recovery will push
NAR revenue higher by 8 to 10% in 2010.
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Our
European Sewer Rehabilitation segment had its best quarter in terms of
revenue and profitability excluding the restructuring charge. As we
announced in December of 2009, we've enacted measures to put our European
business on a track to achieve stronger financial returns
immediately.
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We
head into 2010 with strong backlog and our prospects for growth and our
realigned operating geographies, coupled with a focused strategy to sell
tube to third parties throughout Europe are very
robust.
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In
Asia, we continue to see strong revenue growth as we execute on our
backlog in India and Hong Kong and begin work on contracts in Sydney,
Australia and in Singapore.
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In
India, we continued work on our large awards around Delhi and we're
waiting on the final Federal funding commitment to begin our project in
Uttar Pradesh.
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We
did take a significant hit on our backlog position in India with a
decision by the Delhi Jal Board to rebid the AWARTAC project which was
valued at $18 million in our backlog. This is a project that was
originally awarded to Insituform last spring and is now scheduled to be
rebid in the spring of 2010.
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We're
also seeing bid preparation activity in a number of cities where we
expected to bid in 2009. With Federal contributions, we believe, returning
to 2008 levels, we're confident of our ability to rebuild our backlog
position in India.
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Margins
in India were lower in the quarter due to work release delays and extended
pipe cleaning activities on the jobs around Delhi.
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In
Australia, we have begun work on our Sydney contract, are in the process
of adding our fourth crew. Our current backlog position will allow us to
grow this business to $15 million in 2010. Additionally there is a very
strong bid table in Australia as infrastructure spending continues to
receive increased Federal contributions.
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Our
Hong Kong business performed well in the quarter and we're comfortable for
the year. Achieving lower cost due to the exit of our JV relationship was
a key contributor to the profitability gains.
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We
recently announced our first major awards in Singapore. As previously
discussed, we have approached this market as a large diameter installer
and a small diameter tube provider. We've achieved success on both fronts
with these types of awards.
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Obviously
we feel very confident that we continue to grow rapidly and profitably in
Asia during 2010.
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Our
efforts in the drinking water segment continue to focus on the
commercialization of our InsituMain™ product. We have completed multiple
pilots during the fourth quarter and have confirmed the capabilities of
the product up to 36 inches and 150 PSI. We are achieving our first
backlog now and are targeting $30 million of global Blue revenue in 2010,
majority of that being InsituMain™ sales.
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Our
Energy and Mining segment performed better in the fourth quarter as we saw
the best results of the year from UPS and Corrpro and improved results
from Bayou, although we had lower than anticipated production rates on the
ILVA Steel order which negatively impacted the Bayou margins. UPS and
Corrpro margins remain strong.
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We're
also very pleased with our backlog position in this segment. In my third
quarter remarks, I suggested that UPS could finish the year at around $40
million however key wins in Australia and in South America have pushed
that year end figure to $57 million for UPS backlog.
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As
a frame of reference in 2008 when UPS achieved a high point of $61 million
in revenue, the business entered the year with $26 million in backlog.
Clearly we believe this business is poised for a strong recovery in
2010.
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Bayou
and Corrpro backlog remains steady at $123 million and both companies are
seeing greatly increased bid activity. In fact Bayou has already received
a significant coatings order for its Baton Rouge joint venture and
concrete orders for New Iberia in February.
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With
stabilizing oil, gas and metal pricing we expect solid growth for both of
these business units. We have essentially completed our back room
integration activities achieving greater than $6 million in annualized run
rate savings across the Energy and Mining platform.
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Additionally
we've consolidated our structure on our leadership with Dorwin Hawn.
Dorwin's 35 plus years of experience in the Energy and Mining segment will
allow us to accelerate the integration of the sales side and achieve
additional revenue upside taking advantage of our broader service offering
and improving market conditions.
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So
overall a solid quarter for our business which allowed us to achieve our
earnings targets for 2009. We're confident that our strengthening and
operating capability, strong backlog position, modestly improving economic
conditions and continual - and continued Federal spending in key markets
both here and abroad will drive continued improvements in our financial
performance.
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As
stated in our press release, we anticipate that we will be able to deliver
between $1.45 and $1.55 in earnings per diluted share for the full year of
2010.
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Thank
you for your time this morning and your continued interest in Insituform.
And now we'd be happy to entertain questions.
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Operator:
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Thank
you. And ladies and gentlemen, if you do have a question at this time,
please press star 1 on your telephone keypad. If you are using a
speakerphone, please make sure your mute function is turned off to allow
your signal to reach our equipment. Once again, that is star 1 at this
time for any questions.
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Once
again, that is star 1 at this time for any questions. We'll take our first
question from Jonathan Ellis with Merrill Lynch.
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Jonathan
Ellis:
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Thank
you and good morning guys.
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Joe
Burgess:
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Good
morning Jonathan.
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Jonathan
Ellis:
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Wanted
to first ask about the Asian business. You mentioned the one contract in
India is equated to $18 million that is being rebid. I think you had said
last quarter though that you're anticipating backlog in Asia to be $100
million by the end of the year. And it looks like you fell about $40
million short of that.
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So
even accounting for that Indian project, it looks like there's about $20
million in shortfall. Can you just help us understand where the backlog
stands, if there's any timing issues with other
projects?
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Joe
Burgess:
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There's
been a - the Indian Federal contribution to the local municipalities which
is driving most of the spending there has been diverted to a lot of
projects around the Delhi area not related to sewer in association with
their preparations for the Goodwill Games that they are hosting there
later in 2010.
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I'll
have - and that delayed projects that we anticipated being bid in the
fall. But they just didn't materialize on the pipeline rehabilitation side
of the coin.
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We
are starting to see that. We are starting to see that return not so much
in Delhi again because they're the host city for those games, but
certainly in Mumbai and Jaipur and Hyderabad. And of course we think we're
close to locking down the funding for the project that we were awarded in
Uttar Pradesh.
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So
we were a little frustrated with the delays at the bid table down the
stretch in India. And of course we tend to bid larger projects there.
Recall that the jobs that we're working on around Delhi were really
consist of a couple of $20 million plus awards, so the projects are larger
in scope.
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So
if a few of them drop off the table, which they did in the late third
early fourth quarter, it just meant that we didn't have the opportunity to
drive that backlog position.
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Jonathan
Ellis:
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Okay
great. Just staying on backlog but turning our attention to the domestic
business, can you talk a little bit about the just generally but more
specific to the stimulus related projects in your backlog, what the margin
mix is, have you seen more competitive pricing on those projects
now?
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Joe
Burgess:
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I
think, you know, it looks about the same to us. As always with our
business Jonathan it's very regional and then can become very local to
individual municipalities. You know, so we've seen, I mean we've had an
award in Pell City, Alabama that was a, you know, a pretty complex bundled
project. That got pretty competitive with some of the Southeast regional
players that we participate with.
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There's
been some other bids as you go up through the Carolinas that we really
haven't seen much pressure on those jobs. I don't know, Chuck, if you have
any further comment on that, but it's really been very regionally
based.
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Chuck
Voltz:
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Right.
It's regionally based and like you said, Joe, there's no difference
between that and the other funded projects that we've been
seeing.
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Joe
Burgess:
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Yes,
and of course, as we've said before, we're trying to pick our spots there.
We really want to be participating in the stimulus activities where we
think that the stimulus will actually promote longer term continued
investment in sewer rehab in a particular area so that we're not
capitalizing crew assets for what is essentially a one off related to the
stimulus.
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Jonathan
Ellis:
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Right.
I think you mentioned that you expected a similar contribution from
stimulus projects in 2010 as in 2009 if I'm not
mistaken?
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Joe
Burgess:
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Yes,
that's correct.
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Jonathan
Ellis:
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Okay.
And maybe I missed this, but I didn't hear a total dollar value for the
contribution of stimulus projects in '09.
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Joe
Burgess:
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We
have $86 million worth of acquisitions in 2009. I don't have in front of
me how much we actually executed of those acquisitions although we can
certainly get back to you on that.
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Jonathan
Ellis:
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Okay.
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Joe
Burgess:
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But
all that means is we - the numbers I gave in my remarks are we saw at the
bid table about $190 million worth of projects and we acquired $86 million
worth of projects.
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Jonathan
Ellis:
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Um-hmm.
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Joe
Burgess:
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We
believe, based on what we contract through the state level reports that
about 50% of the dollars that have - that were assigned to the Clean Water
State Revolving Funds look to us to be close to or under contract. So
that's why I made the statement our anticipation for 2010 is - should look
kind of like 2009 with the difference being that the work coming out now
is in the main new projects or accelerations of projects. So it's some of
the 2009 stimulus work was really backstopping what otherwise would have
been shrinkage in the market.
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Jonathan
Ellis:
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Right.
Okay. Understood. Just to further round out the point about the stimulus
related impact, I think last quarter you talked about a total potential
opportunity of $300 to $350 million. And I think that was extending out to
2011. Does your long term view change in terms of the potential
contribution from stimulus? Could it more be back end loaded than you
originally thought or just update us there?
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Joe
Burgess:
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Well
it looks to us like the total contribution is probably going to be around
$380 to $400 if you take the $190 and kind of assume a doubling of that.
Could be a little more. It's hard until the projects actually come out at
the state level it's difficult to tell the mix between what's going to be
actually underline - underground pipeline rehab and what's going to be
surface treatment plants or other types of projects.
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We've
also began tracking some projects on the drinking water side so we do see
some additional project uptick there. So when I say it's going to be the
same as 2009, that just assumes that our win rate stays about the same and
the relationship between underground and above ground projects that are
funded by the Clean Water Revolving Funds remains the
same.
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There
could be some minor tweaks in those relationships but probably not. That's
why we think it's generally - generally looks to us like 2010 will be the
same as 2009 or close.
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Jonathan
Ellis:
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Okay.
And then just my final question, and you talk about margins in North
America and I think you mentioned you expect margin improvement in 2010
versus 2009. Did I catch that correctly?
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Joe
Burgess:
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Yes
we, I mean I've said this before. We, I mean long ago when I first got
here, we back at the envelope felt like this could be north of a 25%
margin business on the gross margin line which would take it to around 10%
on the operating margin line and then of course allow us to get
incremental margin growth if we could get some revenue growth through a
variety of factors.
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And
that continues to be what we think. Again Chuck and his team have done a
great job getting us to the gross margin improvement probably a little
faster than we thought. And we've obviously benefitted from some reduced
resin and fuel pricing that we've been able to preserve in our own pricing
structure. Doesn't really matter if we get reduced cost if we just have to
pass it through so I think we've done some good work
there.
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When
I start to think we have incremental improvement, it's mainly based on the
fact that I think we are continuing to improve our project management
capability. You know, Chuck has certainly upgraded the commercial managers
that run the regions that are within NAR.
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I
think we continue to improve through hiring higher quality people and
training the people that we have in terms of project management. I think
we've become much more efficient in manufacturing. Our incremental margins
and our manufacturing operation, some of it because of increased volume,
topped 40% in the fourth quarter.
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So
we think as we start to see some modest amounts of revenue growth in the
North American business and we continue to become a much more capable
execution and operating organization and then we combine that with what's
become a very efficient manufacturing and logistics and distribution
organization that we can see incremental margin gains.
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Jonathan
Ellis:
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Okay.
Just my final question on that point though, in terms of where resin and
fuel prices stand today, do you expect on an aggregate basis of 2010 that
those would be margin headwinds or continued margin
benefit?
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Joe
Burgess:
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Our
plan calls for resin and fuel to go up by 5% I want to
say.
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David
Martin
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Yes.
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Joe
Burgess:
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So,
you know, kind of a little bit on top of inflation.
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Jonathan
Ellis:
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Okay.
Great. Thanks guys.
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Joe
Burgess:
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Thank
you.
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Operator:
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Next
we'll go to Eric Stine with Northland Securities.
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Eric
Stine:
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Good
morning everyone. Congrats on the quarter.
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Joe
Burgess:
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Thank
you.
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Eric
Stine:
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I
was hoping we could just start in North American sewer and just talk about
your plan for crews. Been some indication of hiring activity by you and
wondering if that adding crews faster or is that the case of filing in
crews in specific areas of the country.
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Joe
Burgess:
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I
think it's a mix of both. As I said in the remarks, I think Chuck and his
team did a nice job this year because we built a lot of backlog early in
the year. And then we're frankly kind of frustrated in the second quarter
over some work release delays - I think we did a good job managing our
costs during that period.
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And
then in the back half of the year, we basically have seen backlog in some
areas of the country go from four or five months of backlog which is kind
of a comfortable level for NAR to 9, 10 sometimes 11 months. So in those
particular regions, particularly where through accommodations and where
communities are on, you know, managing their capital spend against consent
decrees or whatever else is driving the investment, we've added crews. I
think we ended the year with how many crews Chuck?
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Chuck
Voltz:
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68.
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Joe
Burgess:
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68
and we started the year with 59 or 60?
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Chuck
Voltz:
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Yes.
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Joe
Burgess:
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So
we added eight crews during the year. Probably the North American market
could support a few additional crew additions in some regions. But again
we're very, you know, we think we're doing a better job than we have in
the past and in relationship between crew additions and backlog. Obviously
you want to monetize your backlog as quickly as you can just to capture
profits in the cash.
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But
we also have to be very wary about the capital cost of putting a crew in
the field and making sure that we have long term work to support that
capital investment.
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Eric
Stine:
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Okay
and just a follow up in North American sewer. Can you speak to, you know,
how we used to think about the linearity of revenues, in fiscal year '10
it was pretty noteworthy that in the fourth quarter here you were flat
sequentially in a typically, you know, a down seasonal quarter. You know,
is the stimulus helping and maybe the first quarter is not down as much as
it typically is?
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Joe
Burgess:
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Just
for NAR, I think it'll be down probably not as much as it has been
traditionally although, that can be greatly impacted by weather,
particularly in the upper Midwest and the Northeast.
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But
I think that we certainly enter 2010 with a much stronger backlog position
than we did last year. And so dependent on weather, I think it'll be a
stronger quarter for NAR than 2009 was.
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Eric
Stine:
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Okay
that's helpful. And then I'll just quick move to energy and mining. Can
you just talk a little bit about what's going on in Bayou just to continue
pipe coding delays?
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Joe
Burgess:
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Well
in the fourth quarter it wasn't so much delays. We had some production run
rate issues with a pipe that we were processing a large order from ILVA
Steel, which we talked about on our third quarter
results.
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And
I don't want to belabor the point but, you know, there was a combination
of issues with the pipe, which was modestly bent and that makes it more
difficult to get a smooth coat of the epoxy on it and it also makes it
more difficult to weld as you start to take the small pieces and turn them
into larger pieces.
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And
that just slowed us down. And once you get into one of these - once you
get into the production on one of these coating jobs, time is of the
essence as it is with most things. And that kind of lowered - that lowered
our margin profile out of Bayou on that particular job.
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But
we think that was - we believe that's really related to the - some of the
technical issues related to that job and, you know, kind of not reflective
of the historical margin profile that Bayou's been able to
achieve.
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Eric
Stine:
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Okay.
But fair to say as far as your outlook for fiscal year '10, that Corrpro
and Tite Liner®, I mean you're looking for pretty - a pretty nice - nice
results there in that Bayou may be a partial recovery?
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Joe
Burgess:
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I
don't think Bayou will recover back to its pre-acquisition 2008 level but
we do think - but we do see the backlog strengthening. I mean as I - I
think as we've discussed before, you know, if you really break - if we
really get into the Bayou business, the coatings business certainly had
some issue in 2009 but also had, you know, decent backlog and decent
productions rates.
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Where
the profitability of Bayou fell off was in the joint venture coating
operation in Baton Rouge where we had very little volume either out of the
stuff mill where it's located or additional projects that we bring in
there. And then some of the ancillary businesses, the field coating
business, CCSI was down about 40% and of course the welding operations
were down even greater than 40%.
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I
think the good news is that all of those businesses really have picked up
significant backlog. Over towards the end of the year we started to see a
great increase in inquiries and into the first quarter of this year some
very strong acquisitions pace.
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So
we don't think it'll get back to 2008 but it'll probably get about
two-thirds of the way there which will be a significant increase in
profitability over 2009 for - from an Insituform ownership profile
certainly.
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Eric
Stine:
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Okay.
I appreciate the color. Thanks a lot.
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Joe
Burgess:
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You're
welcome.
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Operator:
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Next
we'll go to John Quealy at CanAccord Adams.
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Chip
Moore:
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Good
morning thanks. Chip Moore for John. So wondering if we could talk about
expenses. You've done a good job SG&A essentially flat sequentially.
What are you thinking about looking at 2010? What are your
expectations?
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Joe
Burgess:
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I'll
kick it over to David. He's got the data in front of
him.
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David
Martin:
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Well
2009, you know, we made significant improvements overall in the North
American Rehab profile of operating expenses. Obviously in 2010 you will
have the full year impact of the acquisitions. That wasn't present first
quarter of last year.
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But
outside of that, you know, we expect a little bit of growth related to our
Asian operations because we'll have the full Australian and Hong Kong
operations and a little bit in India as well as we've - we continue to
grow.
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Joe
Burgess:
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But
with the percent of revenue it'll be down.
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David
Martin:
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But
yes, that was my next point. We're going - we actually see that
our overall op expense profile will go down as we do expect growth in
revenue this year. And overall Europe's going to be down and North America
will be modestly up, so.
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Chip
Moore:
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Okay.
That's helpful.
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David
Martin:
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Hope
that helps you.
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Chip
Moore:
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Yes
and back to margins, obviously great job this quarter. If you look back to
the past, you've been over 30%. Obviously the mix of the business is
different now, but can you just talk to longer term where you think
margins - consolidated margins can get to?
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Joe
Burgess:
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You
know, well, I mean I think as we said in the past, our goal for the
business is to, you know, is to create a north of 15% operating margin
business. We started less than five in 2008. I think we've kind of clawed
our way up around close to double digits, you know, for this, you know,
for this year.
|
|
And
we think we'll be north of 10% on a consolidated - on a consolidated basis
in 2010. But our overall goal is to drive that north of 15%. And we think
we'll make a lot of progress this year as we expect to get revenue growth
to spread over, you know, kind of our OPEX space which David was just
discussing.
|
|
|
And
we think we're doing a pretty good job of growing that only where, you
know, where we're targeting some OPEX investment that will help grow the
business or accelerate the growth of the business.
|
|
|
It
can be a little harder on the gross margin line just because of, you know,
some of the things we talked about with NAR. I mean we had an outstanding
- obviously we had an outstanding fourth quarter, but you can have timing
issues related to what work you're actually executing in your backlog, you
know, diameter mix.
|
|
|
I
mean we actually had some things. So it can be difficult to predict but
I'll stick with what we said. We felt like in the middle of 2008 that
certainly NAR was underperforming as was Europe underperforming at the
gross margin line. And that we could drive those businesses north of 25%
and then hopefully when we got to a position where we could grow the top
line that would give us even larger incremental gains on the operating
margin line.
|
|
|
Chip
Moore:
|
Sure.
No that's fair. And then just lastly looking at Q4, the projects that took
place were there any favorable closeouts or just kind of a - can you
characterize kind of end the year or end or project closeouts in
Q4?
|
|
Joe
Burgess:
|
No.
I guess I don't understand the question though.
|
|
David
Martin:
|
You
were talking about project closeouts in which sector?
|
|
Chip
Moore:
|
Anywhere.
Just if you saw that at all - that helped in the
quarter.
|
|
David
Martin:
|
Nothing
notable.
|
|
Joe
Burgess:
|
No
very - just very, very standard, standard steady as she
goes.
|
|
Chip
Moore:
|
Okay
great. Congrats.
|
|
Joe
Burgess:
|
Thank
you.
|
|
Operator:
|
Next
we'll hear from Debra Coy with Janney.
|
|
Debra
Coy:
|
Thanks.
Good morning guys.
|
|
Joe
Burgess:
|
Good
morning.
|
|
Debra
Coy:
|
Just
a couple of follow ups. Joe, thinking through the margin issue again
further particularly for NAR, it sounds like what you're saying that you
can get to some realm in the 12% range this year. You have outlined 25%
gross margins and 10% operating margins. You're clearly north of that over
the last couple of quarters. So assuming that you can hold onto the gains
on the gross margin side, would you say that we are at a run rate that's
more in the 12% than the 10% range in that business
now?
|
|
Joe
Burgess:
|
It
would be difficult for me to deny it.
|
|
Debra
Coy:
|
And
it seems that that is partly the types of jobs that you're bidding on. Is
- can you note - can you point to the mix having notably changed to larger
diameter work? Is that part of it as well or would you lay it more still
at the feet of...
|
|
Joe
Burgess:
|
A
little bit.
|
|
Debra
Coy:
|
.
. . execution.
|
|
Joe
Burgess:
|
Yes.
We did see in this helped on the manufacturing side as well. We saw a - in
the back half we did see some - a modest growth in the large and medium
diameter mix. Help me Chuck I'm thinking San Diego in the US and a couple
number of other projects. Then also-
|
|
Chuck
Voltz:
|
Vancouver,
we had a couple projects up in Canada.
|
|
Joe
Burgess:
|
So,
I mean not a seismic shift. I mean, you know, the market's kind of been
locked in small diameter in the high 70s and 80s so, you know, we're
talking about a couple of percentage points. I think the other thing that
helped NAR though is a lot of our Asian business of course which started
to kick in in the second half is almost all large diameter. And of course
Batesville supplies that too.
|
|
We
actually in the second half of the year got to a point where we were -
while overall our manufacturing facilities are probably at about 65%
capacity utilization at Batesville we had really the last four months of
the year where we were at capacity on our large diameter lines which - so
we had to kind of ration production between the needs of Asia-Pacific and
some of our execution commitments in the United States.
|
|
|
So
that certainly to the extent that it's higher margin stuff drove increased
manufacturing profits which we talked a little bit about in my remarks,
and obviously filtered through to the NAR margin.
|
|
|
Debra
Coy:
|
And
I guess our - that raises the question of - I don't think I saw the number
of what the total third party tube sales were for 2009 and how we should
think about that for 2010. And then I guess more broadly how you're
feeling about your current capacity situation, whether there would be room
to expand that or whether that's something you don't need to think about
yet.
|
|
Joe
Burgess:
|
No
well like I said, the market's predominantly small diameter. And on those
capabilities we're at about two-thirds of our capacity utilization. Small
diameter you're running what Chuck a shift and a half? Is it two full
shifts down there in Batesville?
|
|
Chuck
Voltz:
|
We
have three shifts.
|
|
Joe
Burgess:
|
As
-- yes. I don't think we're in a position where we need to expand there
unless we see something in terms of large diameter production staying
where it's at. We might - you might see us do something there to make sure
that we have that agility. Of course you'll probably see us invest in a
large diameter sewing line in the Asian market...
|
|
Debra
Coy:
|
Right.
|
|
Joe
Burgess:
|
. .
. to take some of the stress off of - and in fact we've already made the
decision. I don't, you know, so that'll take some of the stress off of
Batesville so that it can handle the US market. And it also of course will
save us significantly by - in terms of shipping costs and scheduled
delivery issues as well converting a significant piece of the US dollar
cost to local currency which is important to do as
well.
|
|
So
in terms of the - in terms of your question on MTC, what is the total
revenue that we got to there?
|
|
|
David
Martin:
|
About
$11.5 million for 2009.
|
|
Joe
Burgess:
|
Great.
11.9 million. That's only a modest increase really over 2008 about 3%. Now
the profitability increased again, a little bit of a shift from small
diameter to medium diameter, much better cost efficiency out of Batesville
as the capacity utilization continues to increase
there.
|
|
The
MTC business is going to - it's going to be difficult for them. They can
grow. I don't think we're going to see the explosive growth in the US
because we're really - we've really captured what we can capture of kind
of small independent contractors. And the next step would be to convert
some of these buy boards that service some of the larger regional
competitors.
|
|
|
And
candidly there's just - there's some emotional resistance to buying tube
from Insituform at that level.
|
|
|
David
Martin
|
Yes.
|
|
Joe
Burgess:
|
But
we continue to bid that and we feel like over the course of time our
superior cost structure will win the day. But it's going to be something
that takes some time I think.
|
|
The
growth area for third party tube sales I think will be both Europe and
what we're already starting to see in Asia. We had pretty significant
sales increases into Japan this year through licensees. We had - and we
did over $500,000 worth of sales into Korea this year and hit a very high
margin.
|
|
|
We
announced recently, you know, cumulatively about $4 million worth of tube
sales into the program which become even higher margin when we start
manufacturing that tube.
|
|
|
And
of course one of the reasons we - one of the benefits of kind of resolving
even further some of our issues with Per Aarsleff, our German partner, was
our being able to acquire their minority interest in our linings facility
in the UK and so...
|
|
|
Debra
Coy:
|
Right.
|
|
Joe
Burgess:
|
. .
. we're very, very quickly have put some development resources into the
gain and are very quickly looking to drive a third party tube sale
business in Europe which we don't think has any natural ceilings the - in
the US. There's a greater level of fragmentation and we would hope - so we
anticipate that that business will over the next few years be as large as
MTC in North America if not larger.
|
|
And
of course our linings facility while not having as much production
capability as Batesville only operates at about 35% capacity utilization
so there's plenty of space there.
|
|
|
Debra
Coy:
|
That's
helpful Joe. Thanks.
|
|
Joe
Burgess:
|
You're
welcome.
|
|
Debra
Coy:
|
Switching
over to Asia, you talked about some of the issues in India and the lower
backlog and you said Asia should still grow this year. You kind of have
put some brackets around some of the expectations for the other segments.
You didn't really do that around Asia on the top line. Can you give us a
little more color on your expectations?
|
|
Joe
Burgess:
|
We
think - what'd we do 10 to 40?
|
|
David
Martin:
|
Yes,
$30,000.
|
|
Joe
Burgess:
|
Yes.
We think we'll get to $70, $75 million in Asia.
|
|
Debra
Coy:
|
Okay.
And then with margin comparable to where they have been
running.
|
|
Joe
Burgess:
|
No
they should be better than this year. We, you know, we had some, you know,
we wrestled as we've talked about. We've wrestled with some delays in
India so, you know, that kind of idled some fixed cost in our
operation.
|
|
And
we're on, you know, we take a - taken a large diameter big project
approach in a lot of these markets because - so it's a little bit unlike
NAR where well NAR's done a tremendous job of bundling and capturing
larger projects and then winning the large projects that are in the
marketplace, if they don't they can regroup and go grab a bunch of
$400,000 jobs that are out there.
|
|
|
We
don't really have that opportunity in India. So project delays are at the
client side cause us a little more pain than they would in our North
American or our European markets because of our
strategy.
|
|
|
The
- I guess the other thing is that we've seen in India is there's an
enormous cleaning step in front of almost all the projects that we do. I
mean in the US market the North American market, you get a jet truck in
there and you wash it out and then you vacuum that water out and then
you're ready to line.
|
|
|
In
India, you might have an 84 inch line with 72 inches of silt in it and so
with a cleaning step. We've had a couple of projects where a cleaning step
that was originally estimated at a month or so has taken three or
four.
|
|
|
And
while we have structured ourselves commercially where all of that is kind
of passed through cost to the communities, it can cause a three or four
month delay in us getting to the higher margin installation
work.
|
|
|
So
there's been those issues. There's been those of types of issues that we
think we understand better and you should - we should see improved margins
in India as we become more efficient in managing those
projects.
|
|
|
Debra
Coy:
|
Okay.
Understood. But it did sound like Asia's given as you say the strategy
there is probably the segment that's with perhaps the exception of Bayou,
the segment that's at risk to be the lumpiest from a quarter to quarter
standpoint.
|
|
Joe
Burgess:
|
Well
no. I guess I, you know, certainly India is always going to be a market I
think with those types of challenges, you know, inconsistency in funding
and then, you know, it can be very competitive. And then, of course, and
then it can be not competitive at all. I mean the reason we ultimately are
going to have to rebid this AWARTAC project is that we were the only
bidder. And the client there is making a choice of - they're making the
choice that they want to get sued for environmental delay versus sued for
procurement issues or what they perceive to be procurement issues in the
market.
|
|
So
it's just - it's a challenging market. I contrast that with our market in
Australia which is very much like working here except on - except they
tend to bundle projects and offer larger project
opportunities.
|
|
|
Singapore
is - I hate to use the term Western style, but it's also much more similar
to the business that we run here in NAR. So, you know, we feel like with
the backlog that we have in Hong Kong and Singapore and Australia, we have
good backlog still in India but we do, you know, we are anxious to see a
reinvigorated bid table.
|
|
|
You
know, we feel like that growth will - we feel like we'll get to $70, $75
million on the top line and then be able to improve the
margins.
|
|
|
Debra
Coy:
|
Okay
that's helpful. And my final question is surrounding the margin in the
energy and mining business that it sounds like, given the backlog growth
that we've seen in UPS that that business should, I presume, go back to
the 20% plus EBIT margins that we were seeing back in the
peak.
|
|
And
then you talked about overall consolidated gross margins targeted
eventually in the 15% or north of that range.
|
|
|
Joe
Burgess:
|
Operating
margins.
|
|
Debra
Coy:
|
Operating
margins, exactly. But obviously Tite Liner® has been higher than that in
the day. And what I'm wondering about is how to think about a combined
margin there leaving aside some of the current issues at Bayou as you take
a combined product offering into some of your clients. How do we think
about, not only in 2010 but going ahead, kind of the combined offering and
margin opportunity in the energy business? Obviously Corrpro and Bayou
were significantly lower than Tite Liner® historically even at their
peak.
|
|
Joe
Burgess:
|
Well
obviously we don't think '09 is a year that we can, you know, say much
about Bayou because of the...
|
|
Debra
Coy:
|
Right.
|
|
Joe
Burgess:
|
. .
. because of the lower volumes. And it's such a - of all of our business,
it's easily the most capital intense. You know, Tite Liner and UPS
generally had a fantastic year for margins. And of course I was going to
say in a down revenue year but Dorwin's on the line and he'd quickly
correct me that this was probably - it's probably the third best year that
UPS has had, third or fourth best year in their
history.
|
|
So,
and they really did a great job grinding through and positioning
themselves well for 2010 and exceeding their - I think at the gross margin
line they ended up well north of 30.
|
|
|
David
Martin:
|
That's
right.
|
|
Joe
Burgess:
|
Right
David?
|
|
David
Martin:
|
Yes.
|
|
Joe
Burgess:
|
Now
they've got a little bit in their backlog that's a little less than that.
You know, we had an opportunity to grab a $12 million project in Australia
so we, you know, so I think we bid that job, you know, in the
$20s.
|
|
And,
you know, but we're seeing good margin work out of our South American
entities. You know, some of the backlog in the larger Mexican awards
include some - us acting as GCs. So you get kind of a blended margin on
those types of projects.
|
|
|
But,
you know, certainly from the Tite Liner® business, we, you know, we don't
see any reason to kind of back off the high margin work that we've - the
high margin performance that we've enjoyed
historically.
|
|
|
You
know, Corrpro's - we think Corrpro's margins will improve. We'll get a few
- a full year of the cost reductions that we took across that business.
Most of the integration savings from the platform of course were at
Corrpro, probably a little more to go there as we fuss around with
accounting and procurement systems etcetera.
|
|
|
But
we would think that those margins can certainly improve. I think we got
them planned at 10 to 15% improvement over what we saw this year. You
know, and then of course Bayou is, you know, Bayou is we think is going to
get better as they build backlog in the joint venture in Baton Rouge which
certainly drops equity earnings and drives their overall margin
performance.
|
|
|
As
I said earlier, we got really no contribution out of the welding and
especially fabrication businesses this year. Those businesses have both
built really in the first quarter north of $15 million in backlog which we
think will drive margin improvement.
|
|
|
And
then the main coating facilities we think will perform better particularly
once we clean out this current order which has some production issues
related to the quality of the pipe that we're dealing
with.
|
|
|
Debra
Coy:
|
Oh
I add that up and it sounds to me like we should be able to get to an
operating margin combined in that segment in the 10% plus range for
2010.
|
|
Joe
Burgess:
|
Yes
certainly. But that's, I mean our goal obviously is to do better than - is
to do much better than that over time.
|
|
Debra
Coy:
|
Okay.
Thanks Joe.
|
|
Joe
Burgess:
|
And
over time being the back half of 2010 and 2011. I don't mean ten years
from now.
|
|
Debra
Coy:
|
Yes.
We'll give you 18 months. Thanks.
|
|
Joe
Burgess:
|
Thank
you.
|
|
Operator:
|
Our
next question comes from Arnie Ursaner with CJS
Securities.
|
|
Arnie
Ursaner:
|
Hi
good morning. Your gross margins in Q4 in North American Rehab benefitted
from a million and a half due to a favorable casualty self insurance
accrual. I guess the first - obviously a factual piece of information, I
guess your margin would've been closer to 26 X that item. And how should
that impact or will it impact your margin expectation for the upcoming
year?
|
|
Joe
Burgess:
|
It
doesn't. I mean as I've said, we've seen the margins at and around 25 or -
and north of there really for the last few quarters. You know, we think we
can squeeze incremental margin at the gross margin level but again as
Chuck and his team, you know, continue to just drive on quality issues, I
mean we achieved the margins we achieved in the fourth quarter, but we
also had some performance issues on projects certainly in the west region
Chuck that cost us a few hundred thousand dollars.
|
|
I
mean so it's not, you know, the business is performing well but it's in
our view by no means hitting on all cylinders or whatever phrase you want
to use for that. So we think we'll be able to squeeze incremental margin
from here.
|
|
|
And
then of course what we're excited about is seeing some finally some, you
know, more than half a percent, 1% or no revenue growth in the US market
which we think will of course really accelerate our operating margin
percentages.
|
|
|
Arnie
Ursaner:
|
Leads
right into my next question. How much of your expectation for the upcoming
year - obviously there's a lot of stimulus money built into your growth
view. How much of that is in the RFP stage at this
point?
|
|
Joe
Burgess:
|
Well
as we said earlier, you know, we think about half of the money is in RFP
or actually even moving to contract which would leave another half. And if
the relationships hold, that would leave us at around $200 million of
stimulus funding that will be devoted to underground pipeline rehab type
activities.
|
|
And
then from there it's just a function of whether we want to pursue the work
and what our capture rate would be.
|
|
|
Arnie
Ursaner:
|
On
water rehab you mentioned you expect to make meaningful progress in 2010
in revenues declined in 2009 and the segment lost $2.6 million. Can you
quantify what you mean by meaningful progress in both revenue and profits
for 2010?
|
|
Joe
Burgess:
|
We're
expecting to go from whatever we did this year, $11 or $12 million to $30.
And we're expecting most of that to be in North America on the basis of
we've been driving through pretty aggressive piloting and demonstration.
We've spent a fair - we spent a fair amount of money earlier in the year
both on accelerating the R&D, the internal testing. We've done some
free piloting. We've been fortunate to get also some paid
pilots.
|
|
We've
acquired our first real commercial backlog in Insituform in bidding
against dig and replace options and winning them on cost. Those projects
will start to get executed in the second quarter. Since it's a new product
and it's on the drinking water side, we're - we have to go through some
state level regulatory approvals to get those projects kicked off but we
see tremendous enthusiasm in the marketplace and think this is a product
that's going to allow us to offer the range of performance across the
range of diameters and pressures and combine that with some much more
effective re-tapping productivity that's going to allow us to finally get
some traction in the market.
|
|
|
Now
we still have our other products, but at the end of the day we drew the
conclusion that they were really niche products that weren't going to
allow us to accelerate our growth in the segment. So I don't know if you
want to color that at all Chuck or - but we think we're going to, you
know, we're targeting to get to $30 million this year and it'll be
disappointing if we don't.
|
|
|
Arnie
Ursaner:
|
Joe
I have to...
|
|
Chuck
Voltz:
|
You
know, we have to...
|
|
Arnie
Ursaner:
|
I'm
sorry. And profitability?
|
|
Joe
Burgess:
|
I'm
sorry?
|
|
Arnie
Ursaner:
|
Profitability
of water rehab?
|
|
Joe
Burgess:
|
Should
be - it should be - the other advantage of InsituMain™ is it's very, in
terms of its installation obviously we make the product so we'll be
capturing the manufacturing products - profits just as we do on the sewer
side.
|
|
And
it's also installed very similarly in terms of just install techniques as
our core CIPP projects. So, that's also going to lower the operating costs
and the long term CAPEX that was built out of that business. So we think
that the business will be profitable in 2010 at that $30 million level.
And longer term it'd be our expectations that it should see - it should
have a margin profile north of what we see on NAR on the sewer
side.
|
|
|
Arnie
Ursaner:
|
Final
comment Joe for - you've done an extraordinarily good job of leading, you
know, people that have followed your stock for years, you never used to
even provide guidance.
|
|
You
did a terrific job in 2009 meeting your guidance and your initial guidance
for 2010 seems awfully aggressive in terms of rate of growth and
everything else. Can you perhaps give us your thought process on how
you've set the bar for 2010 and where you think the risks are and where
you think the positive surprises could lie?
|
|
|
Joe
Burgess:
|
I
think - well some of the - I'll just talk about how we, I guess how we
constructed that. Of course in the third quarter as Debra was kind enough
to point out, I did make the statement that I thought 2010 would be a
record year. And then of course when I went out to talk to the investment
community, many of them were surprised that I said
that.
|
|
But
I really think if you break down our businesses, it's hard not to get
there just from doing the math. And again I appreciate your comments, but
we - earlier because we are trying to be much more transparent about our
business and what's going on. And we think there's a lot of - there's a
lot of very positive momentum in the business.
|
|
|
So
let's take it one at a time. You know, NAR has certainly seen a tremendous
improvement I think in just - as an operating business in terms of
increasing its gross margins. And I think it's pretty clear that Chuck and
his team will be able, with any type of modest revenue growth, will be
able to translate that into a much - even much larger and much more
exciting incremental gains at the operating margin level if we see that
growth.
|
|
|
And
we will - and we do. We see, as economies recover, as the economy recovers
we see some pent up demand. We also are active in a number of communities
that are coming into larger spend profiles on long standing consent
decrees. And then there's the stimulus.
|
|
|
So
all of that suggests to us that we might see 8 to 10% revenue growth in
NAR and that's obviously going to - that will drop to our bottom line as
we continue to manage the OPEX.
|
|
|
We
think we saw a pretty significant turnaround in Europe in the back half of
the year. Alex Buehler's over there and he's done a great job improving
the performance of the German JV, making some decisions on exiting some
non-performing and loss generating businesses mostly in Eastern
Europe.
|
|
|
And
of course we're getting geared up to grow our third party tube business on
the continent which I think as we're all aware has dropped some pretty
significant dollars to our bottom line in the US and we see those as a
kind of similar market opportunities that'll be captured over - beginning
in 2010 and then going forward.
|
|
|
Asia,
I won't go through all of the different markets, but obviously we went
from $10 million to high $30s. We think we'll get to $70 to $75. We've got
a good mix of businesses over there, a good mix of tube sales and
install.
|
|
|
We're
in Australia, Singapore, Hong Kong and India so, you know, we think we
have a broad opportunity to drive growth there. We talked about water. We
think we'll get to $30 million and that's not tremendous growth but we
certainly don't expect to lose $2.6 million next year. We expect to be
able to get that business to break even.
|
|
|
Energy
and mining, you know, by doing nothing we have another three months at
Corrpro and another two months of Bayou, or is it the other way
around?
|
|
|
David
Martin:
|
You
got it right.
|
|
Joe
Burgess:
|
Right.
Okay. You know, so there's - and of course those businesses particularly
Bayou and their ancillary businesses, you know, had a significant drop off
in 2009 which we think they'll show - they'll make good progress on
recovering most of that.
|
|
Corrpro
is a more consistent business but we think we'll see nice growth out of
them, a full year of the run rate savings. I think this year the run rate
savings on the OPEX piece of the integration was north of $6 million. We
only really captured $2 in 2009. So that's an incremental $4
million.
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|
|
And
of course we talked about UPS which we think has a good shot at returning
to its financial performance of 2008. And that's another $4 million of
incremental operating income.
|
|
|
So
there's just a - there's a lot of positive things going on. And when you
put those together, it ends up with a - we think our guidance is fair for
what the business can achieve, so.
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Arnie
Ursaner:
|
Thanks. That
was terrific rundown. Thank you very much.
|
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Joe
Burgess:
|
Thank
you.
|
|
Operator:
|
Next
we'll go to Glenn Wortman with Sidoti.
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|
Glenn
Wortman:
|
Yes
good morning everyone. Just, you know, given the poor state of city and
state budgets as we move beyond this wave of stimulus spending, I mean how
do you think that market will play out in North America, the
rehab?
|
|
Joe
Burgess:
|
Well
as we've said before Glenn, a lot of our work is tied to long term consent
decrees. The last time we looked at it, it was about 70% of our work is
really focused on - is generated by those types of consent decrees. And
there's really a pre-financed element of that. They look out. They're in a
- they're either in a five year or a ten year plan. And they go float a
bond and they go execute the work.
|
|
There's
only about 30% of the work that's out of current period operating expenses
and that relates to hey there's a sewer main break or somebody just
decides that they want to, you know, take on some additional capital or
maybe they get a rate increase out of their local utility
etcetera.
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|
|
So,
there's a level of near term anyway insulation against what's going on in
municipal budgets. And I guess I would add to that with most of sewer
authorities and waste water systems and drinking water systems are user
fee based. So they're kind of have a separate economic dynamic than kind
of the general fund of the old municipality.
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|
|
So
there's a little bit of insulation. There's a little bit of insulation
there. Our overall view of it as we looked out is, you know, we think the
stimulus will contribute to what we, you know, and potentially even push
NAR into some double digit top line growth which certainly we have not
seen in a while.
|
|
|
Once
the stimulus goes away, it's hard to forecast that that sustains, you
know, given the, you know, given the overall health of the economy and
state and local budgets.
|
|
|
Glenn
Wortman:
|
All
right. And then just secondly, you know, you guys are starting to build
your cash position again. Can you just discuss your priorities for
cash?
|
|
Joe
Burgess:
|
David,
what are our priorities for cash?
|
|
David
Martin:
|
Our...
|
|
Joe
Burgess:
|
Collected
first of all.
|
|
David
Martin:
|
Well
we'll continue to grow it. Obviously our operations are delivering a
tremendous amount of cash but we will continue to look for opportunities
to grow our business. Certainly we'll be spending a little bit more in
2010 with respect to capital expenditures to build the businesses
throughout Asia, a little bit in our water business as well and so we'll
be using a little bit of that.
|
|
But
we will also be paying down debt according to the amortization but look
for opportunities there as well. Beyond that...
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Joe
Burgess:
|
Beyond
that we're not saying.
|
|
Glenn
Wortman:
|
All
right. All right. Thank you very much.
|
|
Joe
Burgess:
|
You're
welcome.
|
|
Operator:
|
Our
next question comes from Steven Gambuzza with Longbow
Capital.
|
|
Steven
Gambuzza:
|
Good
morning.
|
|
Joe
Burgess:
|
Good
morning Steve.
|
|
Steven
Gambuzza:
|
I
was wondering if you could comment on some of the larger opportunities in
the deep water Gulf of Mexico and whether you'd expect some of those
projects like Chevron Jack or Big Foot to come into play in 2010 or
whether those are more 2011, '12 opportunities.
|
|
Joe
Burgess:
|
They
look solidly in 2011.
|
|
Steven
Gambuzza:
|
Okay
so nothing - there's nothing in your 2010 outlook really as to those
opportunities?
|
|
Joe
Burgess:
|
No.
We don't have anything in our '10 plan. We're very active on both of those
that you mentioned and others. If you look at the history particularly of
Bot - well Corrpro has been involved in that as well. But Bayou has
enjoyed a very strong position in its company history of course in being a
- word am I looking for - they've captured a lot of coating business for
these off shore projects over time and we believe they're well
positioned.
|
|
And
of course, you know, we're in the early stages of providing, you know,
pricing and logistics to support as to some of those expansion
opportunities.
|
|
|
I
think we're also looking at expanding our capability in the insulation
markets. Some of the - just to give you - just to size that for you,
there's some of the early look at some of the Chevron Jack pricing if you
see some coatings opportunities in the $30 to $35 million range and but
the insulation opportunities at probably three times that in terms of
overall value.
|
|
|
Bayou's
had a longstanding relationship with one of the top insulators in the
business, Perma-Pipe, that they were in a joint venture with in New
Iberia. So we're taking a look at expanding that. And of course Perma-Pipe
was also our - a 49% partner of ours as we expanded our coating and
insulation capability into the Canadian market with the Garneau the small
Garneau acquisition earlier in the year.
|
|
|
Steven
Gambuzza:
|
And
so in 2010 would you expect the key driver for Bayou's operations to be
more of some of the natural gas pipeline activity going on in the various
shale areas around their - your manufacturing facility?
|
|
Joe
Burgess:
|
Yes.
They're getting a continuing - they're starting to pick up a lot of work
as kind of people are resuscitating investment in the Hainesville shale
and the Fayetteville shale field. TransCanada is starting to be active
again. You know, so but it's mostly - it'll be mostly driven by
that.
|
|
Steven
Gambuzza:
|
Great.
Thanks very much.
|
|
Joe
Burgess:
|
Although
they're - although I will say Steve there's a lot of pricing activity. And
it's our expectation that the off shore work returns. It's kind of
interesting because if you really look at a kind of a ten year profile,
Bayou, you know, probably has like a 40 to 45% off shore mix over that ten
year timeframe.
|
|
And
of course that's gone to nothing or basically nothing now. So we're pretty
excited and there's a lot of inquiry and pricing activity going out with
frankly customers that Bayou has supported for a long time. So, that we
think is going to be some significant upside for us in 2011 when that
capital profile returns.
|
|
|
Steven
Gambuzza:
|
Thank
you very much. Congratulations.
|
|
Joe
Burgess:
|
You're
welcome. Thank you.
|
|
Operator:
|
With
no further questions in the queue, I'll turn the conference back over to
our presenters for any additional or closing remarks.
|
|
Joe
Burgess:
|
Was
that me? Well I just thank you. Thank you for your time. Thank you for
your continued interest in Insituform. We appreciate the questions and
we've got, you know, as I kind of said in summary on that question that I
was asked, we really feel like we have a lot of positive momentum across
really the breadth of our businesses.
|
|
And
certainly we have to stay focused because, you know, it can be challenging
to execute in both these businesses and in these markets. They remain
competitive but we're comfortable with where we're
at...
|
|
|
David
Martin:
|
Yes.
|
|
Joe
Burgess:
|
. .
. and feel like we're well positioned to enjoy a very strong 2010. So
thank you again.
|
|
Operator:
|
And
with that that does conclude our today's conference. We thank you for your
participation.
|
END