Mary Morrissey - Investor Relations Mark Marinko - Chief Financial Officer Jon Berger - Chief Executive Officer.

Scott Levine - Imperial Capital Allie Hemmings - D.A. Davidson & Co Rick D'Auteuil - Columbia Funds Series Trust Shu Tang - Morgan Stanley Jonathan Tanwanteng - CJS Securities, Inc.

Good day, ladies and gentlemen, and welcome to the Great Lakes Dredge and Dock Corp First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session later on and the instructions will be given at that time.

[Operator Instructions] As a reminder, this call is being recorded. And now I would like to welcome out host for today's conference, Ms. Mary Morrissey, Investor Relations. Please go ahead..

Thank you. Good morning. This is Mary Morrissey, and I welcome you to our quarterly conference call. Jon Berger, our Chief Executive Officer; and Mark Marinko, our Chief Financial Officer, will discuss the operational and financial results for the quarter ending March 31, 2015. Following their comments, there will be 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 2014 Form 10-K and subsequent filings.

During this call, we will also refer to certain non-GAAP financial measures, including adjusted EBITDA from continuing operations, which are explained in the net income to adjusted EBITDA reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.

I would now turn the call over to Mark Marinko, our CFO..

Thank you, Mary. And good morning to everyone joining us. I would like to start the call by discussing the fiscal year 2015 guidance that we provided earlier this morning in our earnings release. We are expecting this year to be a significant improvement over 2014 with estimated adjusted EBITDA expected in the range of $97 million to $107 million.

It is not common for us to provide guidance but we wanted to reassure our shareholders and our other stakeholders, the management is confident that the first quarter results are not indicative rest of the year. We expect several positive factors that differentiate the reminder of the year from the first quarter.

Our dredging segment is very well positioned to have a strong year, believed by an expected improvement in fleet utilization having just started two major Sandy-related projects in New Jersey. The $135 million Savannah Harbor entrance channel deepening that we’re awarded the first quarter is obviously a great addition to the backlog.

During the first quarter, our environmental remediation business was in a cyclical low point with a Magnus acquisition in November of 2014. The impact of this seasonality was magnified during the first quarter of 2015 compared to last year’s first quarter. Now the spring is upon us, we expect this segment’s performance to improve.

Finally for both segments, the vast majority of backlog has been secured margins that we believe will enable us to achieve adjusted EBITDA of $97 million to $107 million. And I’ll review the first quarter results. Total Company revenues in the first quarter of 2015 were $175 million on power with the first quarter of 2014.

Our dredging segment revenues were down 5% in the current quarter at $154 million. With lower coastal protection and rivers and lakes dredging revenue, partially offset by higher foreign, domestic capital and maintenance dredging. Our environmental remediation segments revenue increased 69% to $22 million for the first quarter.

Keep in mind that this was the first quarter that Magnus’ results are including in this segment adding $8 million in revenue. The total Company gross profit margin for the quarter decreased to 6% compared to 12% for the first quarter of 2014.

Our dredging segment’s gross profit margin slightly declined from 13% in the first quarter of 2014 t o12% in the most recent quarter. With project mix and improved utilization of our fleet in the Middle East, being the primary factors.

The environmental remediation segment had a loss for the first quarter this year compared to breakeven gross project margin in the first quarter in the prior year. Negative gross profit for the quarter was $7.6 million compared to being breakeven during the first quarter of 2014.

The drivers include $3 million in project losses and approximately $3.6 million related to higher overhead costs. I will break both of these down in further detail. The $3 million decrease in related to project losses can be broken out at follows.

Terra accounts for $2 million of a loss, primarily driven by $1.4 million loss at the land development project. Cost overruns occurred due to material disposal cost, they were higher than the original estimate due to the material being classified as hazardous.

Higher than expected costs associated with transportation disposal of battery casings and a change in scope. Magnus had 934,000 in contract losses for the first quarter. Magnus had a contract loss of just under $1 million on a project. Work on this project has been completed. In addition, Magnus has change orders and a claim on other jobs.

It is more customary for the environmental and remediation segment have change orders than our traditional dredging business. The $3.6 million increase in overhead cost in the first quarter 2015 compared to the first quarter last year is detailed as follows.

Terra accounts were approximately $1.6 of the increase primarily due to increased labor and other costs and Magnus accounts were approximately $2 million of the increase. Again this is the first quarter that Magnus’ results have been included in this segment.

Total company operating loss was $7 million for the quarter, down from operating income of $3 million from the prior year quarter.

Operating income, our dredging segment increased to just under $8 million for the quarter, up 6% from the same period in the prior year with lower G&A expenses as a result of lower incentive pay and legal expenses partially offsetting the decline in gross project margin.

The environmental and remediation segment reported operating loss of $15 million, a decrease of almost $11 million compared to the first quarter 2014. Terra’s operating loss for the quarter was $7 million and Magnus’ operating loss was $8 million.

As I stated previously given the seasonality that the environmental and remediation segment faced during the winter months, we budgeted for an operating loss in this segment but not of this size.

In addition to the factors discussed previously, Magnus had a $4 million in incremental G&A expense during the quarter including $1.6 million of amortization of intangibles related to the acquisition. Terra’s G&A expenses were flat year-over-year.

Turning to the dredging segment, the domestic dredging bid market for the first quarter of 2015 was $249 million, down compared to the first quarter of 2014 of approximately $376 million. The first quarter last year include the $90 million award in our rivers and lakes division and also the $32 million option Port Miami deepening project.

In total, the company 84% of the overall domestic dredging bid market during the first quarter of 2015, which is above our prior three year average of 43%, it is mainly due to the $135 million Port of Savannah deepening award.

Please remember that variability in contract wins from quarter-to-quarter is not an usual and the win rate for one quarter is indicative of the win rate the company is likely to achieve for the full year.

In the first three months of 2015, Great Lakes won 94% or $136 million of the capital projects awarded, 100% or $23 million of the coastal protection projects awarded, 60% or $46 million of the maintenance projects awarded and 100% or $3 million of the rivers and lakes projects awarded.

Contracted dredging backlog at March 31, 2015 totaled $637 million compared to backlog at December 31, 2014 of $594 million. The environmental and remediation segment backlog was $104 million at March 31, 2015, a $29 million increase compared to year-end backlog with Magnus making up $75 million backlog in Terra accounting for the remainder.

At March 21, 2014, we had $31 million in cash on our balance sheet compared to $42 million at the end of last year and had drawn $20 million on our revolver. During the quarter, we took out a $16 million note to purchase one of our vessels that was financed through an operating lease, bringing our net debt to $334 million.

At the end of the first quarter, our coverage ratios were within our convenience. Total CapEx for the quarter was $18 million, which $6 million in maintenance CapEx and $12 CapEx including just under $7 million for the ATB build during the first quarter. For the year, we expect to start spend $45 million on the ATB.

Now, I will turn the call over Jon Berger, who is going to discuss some of the highlights of the quarter as well as consideration that may affect our business moving forward..

Thank you, Mark, and good morning, everybody. Thank you for joining us. To eco what Mark said at the beginning of the call, by no mean should our first results capture shadow of the rest of the year. We are confident that we’ll deliver a strong year and wanted to demonstrate this by providing in our expected adjusted EBITDA.

Before we discussing the first quarter results, I’d like to point out that we celebrated our 125 year anniversary of dredging during the quarter. Few companies achieved this milestone and I am very proud to be part of an organization that had successfully delivered results for over a century.

I’d like to congratulate all the Great Lakes’ employees past and present, particularly those in our dredging division for contribution success of our company. Let’s turn the first quarter results.

The dredging segment performed as we had expected in the first quarter with revenues down almost 5% and operating margins flat at about 5% compared to the first quarter of 2014. As you are aware, the mix of projects that we are working on varies from quarter-to-quarter, which can impact revenue and margins in any particular quarter.

In addition to project mix, the segment benefited from having significantly more of its Middle East based equipment utilized on the Suez Canal and East Hidd projects during the first quarter compared to last year’s first quarter, not only generating higher revenues but also covering more of our fixed costs.

We completed the East Hidd project in February and we are ahead of schedule on the Suez project with the estimated completion date moved up to mid-to-late summer compared with original completion date in October. I just got back in the Suez project late last week and the project is going very well with production levels higher than anticipated.

With the Suez project ramping up earlier than expected; we are actively pursuing several opportunities in the Gulf region. We are hopeful that we will find for the Middle East fleet for the rest of the year good work. But as we have indicated, we are exploring all opportunities to optimize our international fleet.

In Brazil, we also worked on a small project and added two additional small projects to backlog during the first quarter. We continued to see Brazil as an attractive niche market opportunity for us and are tracking several opportunities in that market.

Turning to backlog for a moment; as you may recall, during our 2014 annual earnings call, I stated that we are entering 2015 with significantly more of our fleet committed then in each of the last five year. With nearly $250 million an additional awards in the first quarter of this year, we are even better positioned.

Including the $200 million in Sandy related coastal protection work, we didn’t began to work off a lot of our backlog we had year-end until the second quarter. As a result, you should expect to see an uptick in our dredging utilization in the second quarter compared to the first quarter.

We already have mobilized registered the Jersey shore and work in underway rebuild the coast line and help mitigate the risk examines at future storms may bring. Part of the $250 million in awards during the first quarter includes the first phase of the Savannah Harbor expansion project, which I am very pleased that we have been awarded.

This is $135 million multiyear project that will begin later this year with completion targeted for the summer of 2018. Similar to what we saw the funding in the Port Miami project, the state of Georgia took an early an active role in bringing this project to full vision.

Having committed $266 million of the total project cost, as a Panama Canal deepening project continues to near 2016 completion core to becoming even more aware of the need to have a port deep enough to accommodate Post-Panamax vessels in order to stay competitive.

We’ve remained confident that this competitive pressure will lead to potential major port deepening projects over the next decade with projects continuing at a measured pace. Looking ahead to future bidding opportunities, we’re remained optimistic.

The cores delayed some projects that we expected to be tendered in the first quarter, but we believe these projects will be bit later in the year. Generally speaking, we are optimistic that fitting activity will begin to pickup in the second quarter compared to the first quarter and will accelerate in the second half of the year.

In the Gulf, some of the early note of funding that BP has been released and the state impacted by oil spills are moving forward with major restoration project. Longer term, we’re encouraged that there will be an even greater opportunity in the Gulf ones the BP trail conclude and restore act fines are paid. However, the timing of this is uncertain.

And despite the changes in the energy markets, some of the LNG projects in the Gulf that we have been tracking still appear to be moving forward. On the East Coast, we also anticipate seeing some Sandy-related coastal projection work to be tendered in the second half of the year.

As we’ve previously sated, approximately $5 billion in funding was appropriated after super storm Sandy. Approximately $1 billion has been spent to-date. There is no time on using this funding. Earlier this year, the north Atlantic division of the Amicor published the U.S.

core of engineers recently completed a report detailing the results of the three year study to address coastal storm and floor risk in the region effected by Sandy. This report will set the foundation for future work. Let’s turn to Washington for a moment, invested in domestic maritime infrastructure continues to win more attention and appropriations.

As we know, the federal budget process is quite complicated that we are very encouraged that the House, Energy and Water Development, E&WD appropriation subcommittee approved its spending bill for the cores and its earliest stage in 40 years.

Thanks to the leadership of House Subcommittee Chairman, Mike Simpson and supported by a house amendment by representatives Hon and [indiscernible] the bills fiscal year 2016 appropriation of $1.25 million hit the HMTF spending goal established in WRRDA.

This amount is a record and is 14% higher than last year’s $1.1 billion and well above the $915 million that the administration requested from the HCMF. The budget discussion now moves to the sand and we are working very hard with others in our correlation that the final budget will maintain those levels.

We also continued to be encouraged at the high level of discussion and knowledge in congress concerning the Harbor Maintenance Trust Fund. We note that Congress man, Charles Pestana continues to lead and articulate the Harbor Maintenance Trust Fund reform message and he is pleased with the success on his initiative.

Now let’s turn to the environmental and remediation segment. As we discussed, the environmental remediation segment had a challenging first quarter. As Mark states, we budgeted a loss for this business segment but the actual loss was greater than anticipated.

Despite being based outside of Sacramento, California, Magnus’ business experienced the cyclicality during the winter months with the cold rainy and damp weather affecting the business. California actually has restrictions in place prohibiting work on the levees and dams during this time of year.

Magnus therefore in accent magnifies the impact of seasonality in this business segment.

Compared to its historical first quarter performance, Magnus’ first quarter results are in line with expectation and we expect to see a market improvement in the next two quarter similar to its historical performance with the business peaking in the third quarter.

Over the last couple of years, we have made multiple investments for growth on our environmental and remediation business. The combination of investing too rapidly in our previously acquired business and the slowdown in the oil and gas end market contributed to no capturing anticipated revenues from these investments.

We recognize that the investments we need we made need to be rationalized over the combined business and we are working aggressively to identify areas where cost can be rationalized. As Mark discussed in great detail, some of the change orders and claims in this segment and I’d like to briefly comment on it.

Unlike the dredging segment, change orders in the environmental and remediation business are expected and routine.

We will do our best to minimize them by insuring that contracts and negotiate in a fair manner and that we receive acknowledgement from the client when a change order is necessary, so that we have an opportunity to be paid properly for our work and to be fairly compensated when a change in conditioning arise.

As this segment is fully integrated, we expect to manage the change order process in this segment. However in the interim, they may have a meaningful impact on the variability of quarterly results. Finally, I want to take a moment to discuss the segments backlog of a $104 million at March 31.

Both Terra and Magnus increased their backlog by more than a third compared to year-end and while Magnus is still continuing to finalize an agreement on the last two years of the significant mine remediation project and has already received a $17 million work order to begin mobilization I early work for this large scale project.

Ones this contract is finalized, Magus will have over 90% of its budgeted revenue in backlog in 2015. Terra’s backlog puts in a stable position as it moves into the second quarter. Terra is bidding on several projects that would grow their backlog significantly of which some need to be captured to hit our 2015 plan.

I am very encouraged that Terra, Magnus are pursuing some considerable opportunities jointly at this point. Our expectation for the segment’s annual performance and long term outlook is positive. We are confident that diversification is critical to smoothing out the volatility in our dredging business and profitably growing the company.

And the environmental remediation business is an attractive complementary market that will create value for the company. We will build in our 125 year tradition, we are committed to being a successful land and water based environmental dredging and remediation provider in the United States.

Finally, as Mark indicated, we expect 2015 to be a significant improvement versus 2014 results and our confident in the guidance we shared in the press release in earlier remarks.

To conclude, we would like to take this opportunity to thank our stakeholders for your dedication and commitment and I would like to reiterate our step has commitment to delivering a strong performance for the rest of the year. With that we would like to open it for questions..

Thank you. [Operator Instructions] And our first question comes from the line of Scott Levine from Imperial Capital..

Hey, good morning, guys..

Good morning, Scott..

So I just wanted to dive down on the remediation business a little bit more. I think you had indicated Jon that there was a little bit bigger loss and you anticipated in the quarter and at these contract charges are routine in the business, but really just trying to get a little bit better sense of and you was in much below guidance.

And as your outlook for this year much different than what it would have been in theory if you’d issued this guidance on the fourth quarter earnings call. Just looking for a sense of those these results are coming in order to your expectation..

Yeah, great question. When we did the transaction, we actually bought a few claims. We need to work through them. We have a couple of contracts that we’ve picked up some claims I believe on the Terra side. Those will be negotiated out because the project is coming to conclusion in the second quarter.

So I don’t believe guidance would have been tremendously different. We knew Magnus was coming into the year with significant backlog. As Mark said margins that are consistent with where we expected them to be.

Terra has a little bit of work they got to book to get us where we want to get them and they have had some slow miss in the oil and gas segment both in the work they do in upper Michigan and the location that we opened in Cushing, Oklahoma where is - obviously is the big oil and gas storage where they do a bunch of tank cleaning work that with a record amount there.

So I am - I don’t believe we’d be tremendously different in our guidance today where our guidance is for the full year now..

Got it, thanks.

Then turning to dredging, so you know you pointed some positive developments in the budgeting front for the Army Corps, it has strong first quarter for bookings but our guiding to it back end of the year for the Army Corps, could you characterize how you see the full year dib market in ‘15 and could it better than ‘14 given the strength in Q1 with the huge win rate coming off of Savannah?.

No, I mean FY ‘14 was an exceptional year. We’ve seen the Army Corp pushback a big beach job in New Jersey and that was a - that’s probably a nine digit kind of project. So we think it will be a good year for dibbing.

I think we expect to see something is coming out in the Gulf, but I don’t think it’s going to be a quarter-on-quarter better year than ‘14..

And some more comparable I guess all in?.

Yeah, I think plus or minus, yeah I think that’s probably a fair statement. And then it’s just will we see any private work in the LNG or work like that coming out, that’s right..

Got it, great. Thank you..

And our next question comes from the line of Allie Hemmings from D.A. Davidson..

Hi. Good morning..

Good morning, Allie..

I was wondering if you take a little bit about the timing you expect for the environmental segment in terms of potential ramp up of margin..

Yeah, let Mark jump on that one..

Sure. So yeah you’ll see - I think we mention that they really see the peak in Q3 for the environmental business for really both pieces there, it’s very similar. So we see a ramp up in Q2 with Q3 peaking and then Q4 kind of similar to Q2..

Okay, thank you very much..

Sure..

Yeah and one thing you know, I mean we talked about this before and I want to be clear. One of the long term goals we have is to smooth out this revenue.

So we have got to do a couple of things and most important is build work outside of the geographic regions they are because in California and the pacific North West where Magnus has real strength, you just can’t do work there, typical work during the winter months.

And then obviously the Midwest where historically Terra has done most of their work, again it’s hard to work during those months. So we’re working real hard in integrating them. And as we integrate them with some of the opportunities on the water, we think long term we’ll be able to balance that out a little bit..

Great, thanks so much..

[Operator Instructions] And our next question or comment comes from the line of Rick D'Auteuil from Columbia. Your line is open..

Hi Jon, how are you..

Good Rick. Thanks..

Lat quarter you had a number of contract and change order issues, I think primarily in the E&R. You layered on some more this quarter. And I believe you saw you would have some recoveries as you negotiated and maybe one was going to require litigating.

But - can you bring us up to date on the status of that? And then I’d love to hear how much of that is in your EBITDA guidance on the recover side versus that being upside if in fact it happens..

Yeah. Very good question. We really hadn’t realized anything yet. The big change orders or claims at Terra should be negotiate in the second quarter because that project is coming to conclusion and the expectation is that the land will sold. So I expect in the second quarter that one will get resolved.

And in Magnus, we are working through the change orders and I hope that will get in in the second quarter. But to answer your guidance questions, none of that was included in our guidance range..

Okay..

So we did not forecast any of that. So if we receive those and we don’t have major claims coming out the backend, it potentially is upside..

Is there, it sounds like there was at least some talk about recognizing that the E&R business has systemic change orders as part of it’s just business line.

Is there a way to internal procedurally address those proactively, so we don’t caught in this catch up phase?.

Yeah, I mean, let’s not forget that that all construction really has change orders. The luxury of dredging is your cline is the Army Corp of engineer and it’s so for scribe that is a very clear process and there isn’t significant change order there because we’ve been that 70, 80, 125 years with the Army Corp.

So whether it’s us, whether you are road builder, you are anyone else, there is always a change orders in construction.

But absolutely we spent a significant amount of time since both acquiring Terra and Magnus of instituting from a contract management standpoint from inserting out internal legal department in the process that we will speed up the process and claims and at least have it very well documented.

And actually part of our ERP system and all the systems we’re putting in place is to also help with that so that we have that, we capture the cost much more quicker and we have in the past. So one of our strength we believe will be our ability to manage that process better than they did as individual companies..

And then the one that could potentially go to litigation is that still on that track?.

Yes..

Yes..

Okay and that is highly unlikely to be resolved this year, right?.

Yeah, I would say that, yes..

Okay..

But just Rick, I do want to point out that at the end of the day most of these down quarter, I mean some - you negotiate something is pretty cutting your eye, others you go through a - you go through a process but very rarely you actually go to trial.

And I will tell you, the best companies change orders could and should be good things for the company, you tend to get additional income at higher margins. So we just have to make sure that we become one of those companies that managed with this change order process profitably..

Yeah, I mean from past experience it sounds like when you quantify a number and you put it out there to us, you end up expecting $0.50, $0.60 and $1 on the recovery side, that probably isn’t great margin business, it’s actually - so..

That claims versus change orders, two different things, right..

Okay..

Yeah, and you have to separate the two of them..

Okay. And then on the diversification effort, I think utilities were one of the targeted end markets.

What’s - you have any successes there yet or?.

Yeah, I mean we actually are doing some work. We had one joint project for a major utility that included both our dredging and our - and environmental work, that projects got put on hold because they found a mechanism to short term deal with the problem they have, but we are going to redirect that with them in the fall.

It was a pilot project, the pilot project actually we produce that at a higher level and then we suppose to and we are successful but they had a short term way to do achieve. But we think long term they are going to have to come back to us.

Our rivers and lakes division is starting a project in the fall for a lake, it’s a dredging project but it really involves providing water another nuclear power plant in Arkansas. So the answer is, we are making some headway there. We are focusing some of our sales and marketing people on the environmental side specifically on that.

We are doing a project right now for the TVA and I believe we have some of our environmental people meeting with them later this week. So we are making some progress and long term we like that marketplace..

Thank you..

And our next question comes from the line of Shu Tang from Morgan Stanley..

Good morning, guys..

Good morning..

Can I just clarify a couple of questions, the contract scope change in 4Q with the Brownfield redevelopment project in New Jersey, is that Magnus or Terra?.

That’s Terra..

That’s Terra, right? Okay.

And with this quarter with the $1.4 million contract loss at a site redevelopment project, is that Magnus or Terra?.

That’s Terra..

That’s Terra too, okay, cool. And just two more questions.

When - can you provide a breakdown of your long term debt between your revolver and the long term debt is unsecured debt? And as you said you want to change, you want implement some initiative to smooth out the volatility of revenue, when you do that, how much capacity you think you’ll be incurring on an annual run rate basis?.

Yeah, I’ll let Mark address that question second. But the smoothing out of revenue is really not a CapEx issue, it’s really just a better utilization of the assets we have and both the fiscal assets and the intellectual and people assets throughout the year.

So it’s not a - that’s not a CapEx, we don’t see it as an investment to be able to smooth out revenues.

Mark, do you want to address the deck question?.

Sure. We have as I mentioned 20 million on a revolver at 331. We have 275 million in our senior notes. We have about what you found on the ATB loan, that’s the other piece, 40 - 45 million on our loan for the ATB that we took out end of last year. So should be the big pieces..

And our revolver is really just - it’s a working capital line and used for our line of credit for project support. So that really isn’t long term..

Okay, cool.

And then looking at your senior notes, it becomes callable and thinking about some of your capital structure going forward, what are some of your thoughts around that timing I guess?.

Yeah, I think the notes are obviously you can call anytime now, but I think the premiums about three in change 103 plus. So we spend time looking at that, I think it steps down in January of next year to 101. So obviously they come due in 19, so we’ll do something before then.

It’s - and we spent a little time last fall looking at it 103 and you just didn’t make any sense, we’ll do that same analysis again in late fall here when it steps down 101. And just depending what the market is like. I think that give you a different view just because of the premium to call back.

So we’ll continue to monitor it, we do and we’re certainly not on any pressure to do it, but when the time is right, we’ll do it..

Okay, thank you very much..

Yeah, thanks..

And our next question comes from the line of Steven Hanford [ph] from Atlantic Investment Partners..

Thank you. I think you all have done a wonderful job in a paining work, but are much less wonderful job in making it profitable over the years, so I followed the company and I am curious in terms of who you are looking to within the contracting industry generally as models for how to significantly improve that performance..

Okay, let me take that in two segments and I’ll start with the dredging segment. Domestically, we are the best performing dredging company. And we are the only one that works internationally and we spend a good bit of time working with three out of the four at least of the big Dutch and Belgium companies.

So we certainly work with them and we do joint ventures with them, we do projects with them. So we certainly look at them. One other things that we have been wrestling with for a very long time is we have a set of equipment that is old, getting older and cost a lot to maintain.

And we have tried to be disciplined over the last three or four years to get rid of equipment that we thought was not providing an adequate return on assets. And we have invested in some equipment that we think is going to have a meaningful change in our ability to generate return on those assets. But it takes a long time to move that ship.

But over the last three to four year, this management team has gotten way more focused on return on assets and that’s why we sold asset which is a total change than people in the past have done.

On the environmental side, remediation side, it’s a work in process but our investment in that business is nowhere near that the capital investment at the dredging side and the returns that it should provide will certainly support the investment from a return standpoint going longer term.

And the other part is that as a public company we - and one that works well worldwide we have certain amount of capital overhead - G&A overhead, excuse me - that we have to spread over a higher revenue base. And so we have to grow the top line revenue to be spread that overtime. And so those are the strategies we are doing.

I think again certainly we need to better, I don’t think there is any argument Steve, but we think we are getting closer and I think we certainly getting rid of some joint ventures and we are recouping those investments and we’re investing them getting rid of nasty which is a bad performing company, getting rid of older equipment are all geared toward us driving a better return on equity and return on assets..

Thank you. I was going to ask if the equipment issue - I knew the equipment was old but it doesn’t appear just from the bid result that anyone is coming actually with equipment that’s materially better enough that they are winning bids that you would otherwise win..

Well, I mean, yes - yeah I mean certainly Weeks is making investment, they’ve made investments in cutter, they are making investments in a harbor. We have - the nice thing is we have the luxury, the markets starting to grow for us nicely.

And I think we see a positive long term market size, but since - even since I’ve been here, we see the cost of maintenance and is growing on this big fleet and our guy will spend a great amount of time studying that and seeing how we can drive it down.

And one interesting thing I think you have to look as, we’re seeing projects moving into a wheelhouse of bigger projects, longer term projects, use of bigger suite of equipment on projects, but the one thing that you have to think about there is you are only as good as your weakest link, so when you have a six, seven, eight key piece of equipment on a project and specially long pumping and something happens, it affects a bigger suite of projects, that’s why maintenance and the work we’ve been doing on the maintenance and kind of focusing on that long term has to be part of our strategy and we have to learn how to do that better or we have to be able to rationalize some of our equipment.

But there is some building going on besides our ATB. A long answer to a short question certainly Weeks came out with a new cutter, they are building a harbor, they started before us, but they’ve had some problem, so their harbor is probably going to be out a year after ours.

There is a couple of clamshell that even put into the market or being put in the market. So the answer is, people are looking but the market is also growing itself, that’s a positive..

Thank you very much. We’re waiting for you..

Thank you..

And our next question comes from the line of Jon Tanwanteng from CJS Securities..

Good morning, guys.

Just trying to clarify, how much do you currently have outstanding in terms of change orders and claims across the businesses and what percent you expect to realize this year?.

Mark tells me there is about 7 million or 8 million in the E&R business. We have not budgeted in our guidance any of that and I hate speculated on what we’ll get..

Okay and if it comes through, is that a 100% operating margin or is there some other stuff that comes out of that?.

Yeah, anything we pick up, the way we account for it all the cost we take at when we do the work, so that all disrupts directly..

Okay, and I just wanted to touch on the dredge that you bought in the quarter, can you talk about the motivation behind that?.

Yeah, we are coming off lease and I think the economics of it were better to own it versus just to release it..

Okay and then going a bit further, just a spending, you have the ATB that you are working on, what’s the target for debt and cash levels, couple of quarter maybe exit in the year, how you are managing that including the revolver and everything else?.

So the ATB going well, it make a principal and interest payment every month so that will drop down through the year. We’re with the improved performance of the company, we look for the revolver to be down close to zero as it was year-end.

First quarter whether it being little slow, we make big interest payment on the notes expected it to be - to draw a little bit on revolver but we look for not much change in that..

Okay, thank you very much..

Sure..

And next we have a follow-up question from the line of Rick D'Auteuil from Columbia..

Just a quick one, in your outlook you talk about on the environmental and remediation side of the business rationalizing the overhead, what’s the time frame for that and what you are looking to take out in the cost side of that..

Yeah, and good question and we - obviously probably invested ahead of some of the markets in our acquisition from two years ago. And in acquiring Magnus, we the first integration we did is to get him on our systems to do some basic HR and do some planning.

So what we’re looking to do now is to basically move toward puller integration that includes all the sales and marketing that includes equipment where possible to get out of rental equipment when we can.

Even though during their bust season, it’s impossible not to, but to rationalize that also to better utilize project management staff and the skill sets that go across both service lines. But there is a set of cost that probably 1million to 2 million that from where we were on standalone entities we expect to get out of that.

And we’re working on that right now. We probably put in place certainly in Terra at least that already from our original budget. And we think we should have our full line of site in the next four to six week on the rest of it..

Okay and so even in the back half of this year, we’ll see some benefit to that?.

Yes, sure..

Okay, thank you..

And I am not showing any further questions. I would like turn the call back to Mary Morrissey, Investor Relations..

Thank you and thank you everyone for joining us. We appreciate the support of our shareholders, employees and business partners. And we are glad that we had this opportunity to discuss some important development initiatives in our business. We look forward to speaking with you during our next earnings discussion in August. Thank you..

And ladies and gentlemen thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Have a great day everyone..