Great Lakes Dredge & Dock (GLDD) Q1 2019 Earnings Call Transcript

Great Lakes Dredge & Dock (GLDD -2.20%)
Q1 2019 Earnings Call
April 30, 2019 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Great Lakes Dredge & Dock Corporation first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Abby Sullivan, manager of investor relations.

You may begin.

Abby Sullivan -- Manager of Investor Relations

Good morning, and welcome to our quarterly conference call. Joining me on the call this morning is our chief executive officer, Lasse Petterson; and, our chief financial officer, Mark Marinko. Lasse will provide an update on the events of the quarter then Mark will continue with an update on our financial results of the quarter. Lasse will conclude with an update on the outlook for the business and market for the remainder of 2019.

Following their comments, there'll be an opportunity for questions. During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2018 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 from continuing operations reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data. With that, I'll turn the call over to Lasse.

Lasse Petterson -- Chief Executive Officer

Well, thank you, Abby, and good morning. As stated in our earnings release this morning, we had a strong first quarter of 2019, with net income from continuing operations of $20.5 million, and adjusted EBITDA from continuing operations of $43.8 million. Before discussing our financial results, I will start with a moment on our safety. Our focus is always to perform all tasks in a safe manner and we continue our overall improved safety performance during the first quarter.

In spite of this focus, we experienced two lost time incidents. This is a clear reminder that even with our incidents and injury-free philosophy and commitment, we are not immune from risk and we learn from every event and strive to ensure through training, improved procedures and engineering out the hazards to avoid similar incidents to reoccur in the future. Finally, I'm pleased to recognize our Charleston project team for receiving the 2019 Environmental Stewardship Award from the Maritime Association of South Carolina. This is just one example of the tremendous focus of our project teams on ensuring that our work is done in an environmentally sensitive, responsible and safe manner.

Now returning to our results for the quarter, we entered 2019 having completed our restructuring program at the end of last year, and we have now seen the benefits of the full plan in place. The first quarter was an exceptional quarter driven by strong project performance in our domestic fleet. That Tampa Big Bend project is now complete, well ahead on the U.S. Army Corps of Engineers' schedule, and we expect to complete the San Jacinto River project in Houston, Texas in the next few weeks, also ahead of schedule.

The Ellis Island moved to the Charleston Port deepening project, where she outperformed the capabilities we have previously experienced with the hopper dredge on our port deepening project. This enhanced capability by the Ellis Island combined with the improvements and upgrades we made to other dredges in our fleet were key contributors to the strong results in the quarter. Plus, we are pleased with the first quarter results. We do have, as noted in our last earnings call, five planned dry dockings in the second and third quarters, which is heavier than normal and which will impact revenue and results in the remainder of 2019.

During the quarter, we paid down the remaining cash balance on our revolver credit facility and continued to build our cash position to $123 million at March 31. Our net debt-to-EBITDA ratio is now down to 1.53. As expected, during first quarter this year, the domestic bid market was lower than the prior year, with only $290 million in total project awards, of which Great Lakes was awarded $35.1 million and comprised a one beach renewal project and two maintenance dredging projects. Please well note the variability in contract wins from quarter to quarter or from one year to year is not unusual and the win rate is not indicative of the win rate the company is likely to achieve this year.

In April of this -- in the month of April, the company was a low bidder on three projects totaling $31 million, which we expect to be added to the backlog in our second quarter. As stated in our previous earnings calls, we expect in 2019 bid market to be approximately $1.6 billion, and we are confident in our ability to secure our targeted market share. We look forward to continued partnership with the U.S. Army Corps of Engineers, the port authorities and energy companies to ensure the safe and successful completion of these projects on time and on budget.

And with those updates, I'll turn the call over to Mark, to discuss the results for the quarter.

Mark Marinko -- Chief Financial Officer

Thank you, Lasse. I will start with the quarterly results and then discuss some specifics related to our dredging business. Please remember that as of December 31, 2018, all results from our E&I segment have been placed into discontinued operations and are, therefore, not included in the results that I will discuss. I will provide a quick update on discontinued operations near the end of my remarks.

For the first quarter of 2019, revenues were $192.6 million, net income from continuing operations was $20.5 million and adjusted EBITDA from continuing operations was $43.8 million. Total company revenues for the first quarter of 2019 represented a $59 million or 44% increase compared to the first quarter of 2018. The revenue increase was a result of strong project performance in the fleet including a contract modification to increase the scope of the work on a project in Delaware. Gross profit from continuing operations was $49.9 million compared to $14.1 million in the first quarter of 2018.

Gross profit margin was 25.9% compared to 10.6% in the prior-year quarter. Total company operating income was $34.8 million, which is an increase of $33.5 million over the prior-year quarter. The increase is driven by the additional revenue and strong project performance resulting from enhanced project planning, preparation and execution. We also saw lower plant expense in the quarter mainly as a result of deferment of two dry docks originally scheduled to begin in the first quarter that are now scheduled to start in the second quarter.

These factors were partially offset by an increase in G&A expense in the first quarter related to incentive compensation. Net income from continuing operations for the first quarter of 2019 was $20.5 million compared to a net loss from continuing operations of $7 million in the prior-year quarter. The current quarter net income includes net interest expense of $7.6 million and an income tax expense of $6.9 million. Net income for the first quarter of 2018 included $8.7 million in net interest expense and a $2.5 million income tax benefit.

The reduction in net interest expense is driven by the significant paydown on our revolver. Adjusted EBITDA from continuing operations for the first quarter of 2019 was $43.8 million compared to adjusted EBITDA from continuing operations of $13.7 million in the first quarter of 2018. Next, we turn to our balance sheet, where in March 31, 2019, we had $123 million in cash. During the quarter, we paid down the remaining borrowings on our revolver.

Our net debt, at March 31, 2019, was $199.2 million. Our total capital expenditures for the quarter were $7.7 million. As noted in our last earnings announcement, last year the company purchased a clamshell dredge from a competitor who is exiting that market. We made the final payment on this dredge in April of 2019 in the amount of $10 million.

As we announced earlier this year, we expect to divest of our environmental and infrastructure business in the first half of 2019. We are currently working through the process. As a result of that decision, we have placed the E&I business in the discontinued operations for accounting purposes. During the first quarter of 2019, net loss from discontinued operations was $3.5 million compared to a net loss from discontinued operations of $2.3 million in the first quarter of 2018.

Contracted backlog in March 31, 2019 totaled $575 million compared to backlog at December 31 of 2018 of $707 million. The high revenues in project performance in the first quarter combined with the low domestic bid market caused this anticipated drop in backlog. With that, I will turn the call back over to Lasse for his remarks on the outlook moving forward.

Lasse Petterson -- Chief Executive Officer

Thank you, Mark. As noted previously, we expect the domestic bid market to be robust in the second half of the year. Our focus will remain on the large and technically challenging port deepening projects, major coastal restoration projects and channel deepening projects driven by new energy export facilities on the Gulf Coast, projects where we can excel with our technical expertise, experience and diverse fleet. Several additional phases of deepening work on projects where we are already working are expected to bid in the second half of 2019 such as Charleston, Savannah and Corpus Christi.

We also expect to bid on new projects in the ports of Norfolk and Freeport, Texas. And we expect to bid large coastal protection projects in Mississippi and Louisiana. Finally, as noted in our previous earnings call, the U.S. Senate Committee on Appropriations passed supplemental appropriations in 2018 for disaster relief and recovery, which included $17.4 billion for the corps to fund projects, projects that will reduce the risk of future damage from flood and storm events.

And some estimate indicates as much as $1.8 billion of this work will be dredging related. At the end of 2018, Congress passed an additional $1.7 billion of supplemental appropriations for disaster relief funding as a result of Hurricane Florence. We have not yet seen any bidding activities from these funds but expect movement on these projects in the second half of the year. The international market remains low.

We are currently working on a large-scale land reclamation project in Bahrain, keeping our two dredges there busy. As you recall, in 2018, we moved one large cutter dredge and one clamshell dredge back to participate in the active U.S. market with good results. In conclusion, the first quarter 2019 was excellent.

It was an excellent start to what we believe to be another active year for Great Lakes. With solid projects in backlog and a strong outlook for the domestic market, we believe 2019, even with the planned dry docks, will continue the success we saw in 2018. The changes we implemented have significantly improved our productivity and results, and we are now in a position to make timely, prudent investments in our fleet, enhancing the current assets and planning for future additions. We remain steadfast to deliver projects safely on time and on budget, resulting in quality work to our clients, a safe working environment for our employees and improved positive returns for our shareholders.

And with that, I'll turn the call over for questions. 

Questions and Answers:

Operator

[Operator instructions] Our first question comes from the line of Poe Fratt with NOBLE Capital Markets.

Poe Fratt -- Noble Capital Markets -- Analyst

I wanted to, one, from a top-down standpoint, just ask whether your total market outlook of $1.6 billion, it's down a little bit from 2018, does that include the LNG projects that you highlighted in the press release? And could you sort of quantify the impact of those LNG projects as you look at 2019 and maybe 2020?

Lasse Petterson -- Chief Executive Officer

Yes. The bid market does include those export facilities deepening projects. The interesting part for us on this is that it is new clients that are coming to the markets. So it is energy companies that diversify our client portfolio so that we have commercial clients in addition to the Corps of Engineers.

I'll ask Mark to comment on the quantification of this for this and next year.

Mark Marinko -- Chief Financial Officer

Yes. So we estimate in that $1.6 million, about $200 million of bidding this year related to the LNG opportunities.

Poe Fratt -- Noble Capital Markets -- Analyst

Great. And then if we could just look at the quarter a little bit more granularly, the dry dock deferral, what impact did that have on the first quarter? Can you quantify that impact?

Mark Marinko -- Chief Financial Officer

Yes. It was about $5 million.

Poe Fratt -- Noble Capital Markets -- Analyst

And looking at the second and third quarter, would the positive from the first quarter in a sense be a commensurate negative for the second and third quarter? Or sort of can you help me understand how that's going to impact the second and third quarter, Mark?

Mark Marinko -- Chief Financial Officer

Yes. Both of those dredges that we deferred are going to go in the dry dock in second quarter so it will impact second quarter.

Poe Fratt -- Noble Capital Markets -- Analyst

To the same extent?

Mark Marinko -- Chief Financial Officer

Correct.

Poe Fratt -- Noble Capital Markets -- Analyst

OK. And then, if you look at the -- you highlighted the productivity and the early completion. Can you quantify the impact of Tampa Bay and whether there were any project adjustments because you were so well ahead of schedule?

Mark Marinko -- Chief Financial Officer

No. So yes, well, one, I don't -- I kind of shy away from giving away the individual project profitability, but really it was just really the Army Corps schedule that we beat. It didn't have an extraordinary, I'll say, benefit to our regular margins. So that's really just related to the Army Corps because they want it completed.

From our schedule, we were pretty close to where we want it to be. So it wouldn't have an additional benefit to the quarter.

Poe Fratt -- Noble Capital Markets -- Analyst

If I could ask one more, if you would. Mark, could you bridge the change in cash from -- you have ended the year at roughly $34 million to an increase close to $85 million or $88 million for the quarter. If I look at your cash flow from operations for working capital changes, I'm looking at something on the order of $27 million. You spent about $7 million or $8 million and you paid down about $11 million of debt.

Would the other roughly $80 million, can you quantify that? Or just give me a little bit more color on what -- how the cash went up so significantly in the first quarter?

Mark Marinko -- Chief Financial Officer

Right. So the biggest change to the cash in the first quarter was related to working capital. So we had a significant change in accounts receivable in terms of we had a very good collection performance in the quarter in terms of the timings of the billings and the collections. So we had a positive between our accounts receivable and work in process, a $30 million improvement in the quarter.

And then on the liability side, our billings in excess of contract revenues was another $30 million -- $36 million in the quarter. That was positive as we worked on projects that we were performing exceptionally well on, in particular, Charleston. So yes, between those two items, we had about $65 million of positive cash flow for the quarter. Those were the biggest drivers.

Poe Fratt -- Noble Capital Markets -- Analyst

OK. Great. And then, do you expect, I mean, all things considered right now, where are you expecting cash to end up for the next couple of quarters? And then the question -- begs the question is, what do you start to do with that cash? It's well above your historic levels and you're looking at the bond maturity at some point in time. And if you could just sort of walk through where you think cash will be over the course of the year and then sort of how you're going to allocate that capital, if you wouldn't mind.

Mark Marinko -- Chief Financial Officer

Yes. Sure. So a couple of things to point out from a cash standpoint. For the rest of the year, as we go through the next three quarters, we have -- what you didn't have in the first quarter was any interest payments on our bonds, which happened in May and November of $13 million each in those quarters, in second quarter and fourth quarter.

From a capex, our capex, as we've stated, is going to be about $40 million for the year. We only had about $7.7 million. So you'll have a little, compared to the first quarter, an increase, you'll get about $33 million to go, $32 million for the rest of the year. Some of that related to the dry docks we have upcoming.

So you will have a, going into the quarters forward, you'll have not as much movement positively on cash flow as we did in the first quarter related to those two items. And then the third item, I would tell you, is our work -- these working capital changes, we won't see that type of really superior positive move in the quarters going forward from a working capital perspective. So for the rest of the year, we do expect kind of just a -- when you get through to the end of the year, just a marginal increase from where we are today for those reasons.

Poe Fratt -- Noble Capital Markets -- Analyst

I'm sorry, Mark. A marginal increase in cash over the rest of the year or is it just --

Mark Marinko -- Chief Financial Officer

Yes, yes, yes. Over the rest, yes.

Poe Fratt -- Noble Capital Markets -- Analyst

So the working capital change that you saw in the first quarter are durable over the rest of the year. They're not going to reverse over the course of the year?

Mark Marinko -- Chief Financial Officer

Yes. Well, they'll reverse. They will reverse a little bit and so you should have a little negative to the working capital as you go through the rest of the year from where we are today.

Operator

And our next question comes from the line of DeForest Hinman with Walthausen & Co.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

On the dry docking, you mentioned the two dry docks of $5 million, I believe, cost impact in '20 -- sorry, 2019. Can you help us understand the revenue impacts of the dredges that will be out of commission in the second quarter?

Mark Marinko -- Chief Financial Officer

So I'm trying to -- I don't have that number right in front of me on those two dredges. Yes, that one, sorry, I don't have that one right in front of me, I don't have that number related to those two specific projects for those two dredges.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And then just in terms of where we are with those dry dockings, I know it's April. Are those completed and those are back in the field? Or are they still pending to be done in the second quarter?

Mark Marinko -- Chief Financial Officer

Yes. No, both of those -- actually, they're not completed yet and they're actually not for the whole quarter. So they actually are going -- one is going to dry dock in June, and the other one is --

Lasse Petterson -- Chief Executive Officer

Completed in June.

Mark Marinko -- Chief Financial Officer

And will be completed in June.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

And one of them is already completed, is that what you're saying?

Mark Marinko -- Chief Financial Officer

No, neither are completed yet.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. So one is in June, when is the other one?

Mark Marinko -- Chief Financial Officer

Sorry. They'll both be completed in June.

Lasse Petterson -- Chief Executive Officer

One's in dock right now.

Mark Marinko -- Chief Financial Officer

And one's in dry dock now.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And then, can you help us understand the three in the third quarter? What will the timing look like on those dry docks? And what's the cost impact?

Mark Marinko -- Chief Financial Officer

Yes. So the three, it would go out to the third quarter, will be one is for -- and they do cross from quarters, they're in about -- one's in about three months from July through September, so that's really the entire quarter. The other one is really July and August in the quarter, so kind of two-thirds of the quarter. And then, the other one is kind of August, September, so again, two-thirds of the quarter.

So those impacts will be, from an opportunity standpoint, if you had a little bit more than the $5 million, so think of it around the $7.5 million range in the third quarter.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. That's very helpful. Can you help us understand the margin profile of the business going forward? And I say that with the understanding that first quarter '19 was an exceptionally good quarter. But we've also touched on some of the increased capabilities of the Ellis Island in terms of it might be even better than what we thought in terms of speed, productivity and then, I think, we've also mentioned some ability to do some rock work.

And in the past, it was more of a suction-only type dredge as it was originally envisioned. And also tying that in with a robust bidding environment that potentially helps us take bidding margins higher. When we start to sharpen our pencils on the model, is 20% gross margin too low going forward with the current environment that we're in?

Mark Marinko -- Chief Financial Officer

Yes. So we're actually looking right around that number for gross profit margin. I think we finished last year about high 17s, 18%. So we have this movement up to 20%.

For those reasons, we're looking at the year. So it'll depend, again, the dry docks, obviously, have an impact to the year and then project performance and opportunities, but we're looking around that range this year at a 20% gross profit margin, so an improvement versus last year. And the Ellis Island is obviously a good reason for that.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And then as we start to think about 2020, would you characterize that year as being similar, more or less in terms of the dry docking exposure to 2019?

Mark Marinko -- Chief Financial Officer

It's a little less next year.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And maybe just update everybody on the bid discipline in terms of how we're looking at the bids coming in the second half. Is it -- would you characterize it as a better, similar, worse than the last year in terms of the bidding price environment?

Lasse Petterson -- Chief Executive Officer

Well, as I said in my remarks, we expect the -- this year to be similar to or a little lower than last year, but the cycle of deepening projects, which we are targeting, is continuing, and we do see bids coming out, on new faces, on projects where we already are working and also new projects coming to the market. So we still expect a strong year for this year and this market continuing into next year.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

I was thinking more from a margin profile. Is the -- given the tightness I think you've characterized, is the bid environment actually improving from a margin perspective?

Lasse Petterson -- Chief Executive Officer

Well, the bidding environment is good. And with the -- we are hopeful that these new projects that comes from the supplemental deal will be added to the bid market, so when that comes out, we will see how that impacts the market.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And E&I business, can you update everybody on where we are in the process of exiting that business?

Mark Marinko -- Chief Financial Officer

Yes. It's Mark. We're in the process going through that. We're talking to multiple parties right now.

Still anticipating divesting of the business in the first half of this year. So that's -- based on where we are in the process, I really don't want to give too much more color around that, but that's where we are.

DeForest Hinman -- Walthausen and Company LLC -- Analyst

OK. And then can you update us on capital allocation priorities? I mean the deleveraging is phenomenal from a debt-to-EBITDA perspective. Stock is up a little bit today. But when you start to put pen to paper, the valuation metrics could arguably justify meaningfully higher share price and an expanded multiple.

So help us understand capital allocation priorities. And does share repurchase become a possibility going forward?

Mark Marinko -- Chief Financial Officer

So as I said a little bit earlier related to Poe's question about cash for the rest of the year, so from where we are today, we just kind of expect for the rest of the year kind of a marginal improvement from cash from where we are today based on the interest payments and things we need to make for the remaining three quarters of the year. And then, when you talk about capital allocation and utilizing it too, what we really have left on the cash debt is the senior notes, which you can start to call May of 2020, but that's at a premium and then May of 2021 at par. And then, those mature in May of 2022. So I think we would take a look at that when you get to the May of 2021 when they come out at par.

As Lasse mentioned in his remarks, we are looking at in the future investing in our fleet. We've done some of that already with the clamshell dredge we purchased late last year. So some of that capital will go to that and not -- we expect that not in the coming-up quarters, but we are looking at that for the future. And then, we'll look at the debt going forward.

Based on that, I would say a share repurchase at this time really isn't on the table at the moment. But we are -- based on the performance continues to accelerate, we'll look at those other options.

Operator

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

Jon Tanwanteng -- CJS Securities -- Analyst

First off, just to follow up on the capital allocation. How close exactly are you to making a decision on new dredge investments, one? And two, do you have any ability to buy back your senior debt in open markets?

Lasse Petterson -- Chief Executive Officer

As I said in my notes, back in 2017 and through '18, we have optimized our fleet to the market that we saw in our look -- our long-term look at the market here in the U.S. We did have some new assets that we wanted to acquire and we did so with the mechanical dredge that we bought from a competitor last year. Also remember that the Ellis is new to the market. We are looking at her performance and see what that -- if that changes the outlook for new assets that we would like to invest in.

We are looking at the signs of new assets that we would like to add to the fleet as old assets are getting closer to their retirement age, but we have no firm plans at this point in time to make those investments for this year.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. Great. And just on the bonds?

Mark Marinko -- Chief Financial Officer

Yes. The bonds, Jon, we could on the public market retire. They were trading, I haven't looked in the last couple of weeks, but in the 103 range, 103.5 range, so there's a premium to those bonds. So again, I think as we look at what that would be in May of 2021 at par, that looks a little more attractive than paying the premium now.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. Fair enough. In terms of just how we should think of your utilization in Q2 and Q3, given where you stand with the dry docking, the current backlog and scheduling, how close can you get to the last three quarters' liquidation rate margins before your ships come back, off dry dock and these bigger orders start rolling in, in the back half or fourth quarter?

Mark Marinko -- Chief Financial Officer

Yes. So from a margin perspective, in a heavier dry dock quarter, what you really see in second and third quarter, you're looking at kind of the margins we had last year, in a 17% range, 18% range at the gross profit line. And then, obviously, in the lower dry dock quarters, we've been at 20%, above 20%. So that's the kind of impact that a dry dock will have -- or multiple dry docks would have in a quarter.

Obviously, there's other variables, what jobs do we have in the queue and the margins on those jobs, but just generally, what we're looking at for the remainder of this year.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. And do you expect utilization on the ships that aren't in dry dock to be high through those two quarters?

Mark Marinko -- Chief Financial Officer

Yes. We have great -- very good backlog. Obviously, the backlog is down from the really high we had in the fourth quarter but still well above our historicals. So yes, we have -- everything else will be very busy while the other ones are in dry dock.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. Great. And then, I think just to clarify, you said that the $5 million dry docking cost in Q1 was deferred to Q2. And it would be more like $7.5 million once you include the lost potential revenue.

You had previously mentioned that -- on the last call, you have $10 million of additional dry docking cost this year compared to last year. Is that also associated with a lost opportunity cost, maybe $5 million on top of that?

Mark Marinko -- Chief Financial Officer

So I would say it's different. That additional dry dock cost is really when we talk about capital expenditure, so that's that change versus last year. So that would be different than what's the kind of P&L impact.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. Do you have any clarity on the P&L impact?

Mark Marinko -- Chief Financial Officer

So you mean from the -- so is your question on the P&L impact from the dry docks in the quarter?

Jon Tanwanteng -- CJS Securities -- Analyst

Maybe to make it easier, the total cost or EBITDA impact of all the dry dockings this year compared to last year if you could.

Mark Marinko -- Chief Financial Officer

I don't -- yes, I mean no, I don't have that one right in front of me, but that number is vacuum. It's a little different because -- not different, but I know if that's meaningful enough because of the different level of backlog we have today compared to last year -- going into last year. So I know if it's meaningful enough, but I don't have the total impact of the dry docks from last year right in front of me.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. That's fine. Can you just provide what benefit you got from the Delaware extension that you had and expect to go into the year?

Mark Marinko -- Chief Financial Officer

Yes. It was about $10 million in the quarter.

Jon Tanwanteng -- CJS Securities -- Analyst

Is that revenue?

Mark Marinko -- Chief Financial Officer

No, that's profit, gross profit.

Jon Tanwanteng -- CJS Securities -- Analyst

Gross profit. OK. Great. And then, just what's going on in -- international and the Middle East? You said your two dredges are at work, but I felt that your liquidation will be a little bit better than what happened there.

Is there anything that's going on that we should be aware of and what are the prospects in the future?

Lasse Petterson -- Chief Executive Officer

As I said, our two remaining dredges in that market is busy here performing their work in Bahrain. The international market, we haven't seen significant recovery in that market, so we'll continue with the fleet or the reduced fleet that we have out there and scale that according to the prospects that we see in the region going forward.

Operator

And it looks like we have a follow-up question from the line of Poe Fratt with NOBLE Capital Markets.

Poe Fratt -- Noble Capital Markets -- Analyst

The $10 million profit that you realized on the Delaware project's scope expansion, will we see any benefit over the rest of the year or is that just exclusive to the first quarter?

Mark Marinko -- Chief Financial Officer

No. That's exclusive to the first quarter. That's done. And then that dredge that worked on that will work in other projects.

Poe Fratt -- Noble Capital Markets -- Analyst

OK. Great. And then, Lasse, when you look at the 2018 EBITDA target, I think it was $94 million. You exceeded that very well.

It was a great year. Would you give us any color for where the 2019 EBITDA target is for the comp program?

Lasse Petterson -- Chief Executive Officer

Not specifically, but a general comment is that we put in place our restructuring plan back in 2017, and we performed on that restructuring plan throughout '18. And the benefits from that started to crystallize during the latter part of last year and is continuing into this year. So we're looking forward to a good year in 2019. Market is positive.

There's a strong bid market toward the latter part of the year, and the performance of our fleet is good. So we're optimistic about having a good 2019.

Operator

And our next question is a follow-up from the line of Jon Tanwanteng with CJS Securities.

Jon Tanwanteng -- CJS Securities -- Analyst

Just a quick follow-up on the LNG opportunity. The profile of those projects, can you just give us more color on that compared to your corporate average or maybe your capital type projects? Is that better margin? Are they usually smaller in size or higher in risk? Just help us understand the difference in those kind of projects versus what you usually do.

Lasse Petterson -- Chief Executive Officer

The projects, there's a couple of things around those projects. The positive for us is that this is commercial clients, this new work comes into the market, in addition to the traditional market that we've been seeing. And that is also in addition to the port deepening projects, which is also an additive to the market with the funds from the Corps of Engineers, with the funds from the ports and the states. And now we have new projects coming from commercial clients.

So the work is similar to what we do on port deepenings and it ranges depending on the facility, the location of the facility and so forth. So there's a wide range of project size in that market.

Jon Tanwanteng -- CJS Securities -- Analyst

OK. Great. Any color on the margins of those kinds of projects? Are they similar, like you said, to capital?

Lasse Petterson -- Chief Executive Officer

Yes. It's similar to the capital margins that we experience in other parts of the market.

Operator

And our next question comes from the line of Matt Baxter with Wynne Capital.

Unknown speaker

I want to get a little color from you on something that I see because we're in Massachusetts, and it's wind farm development. What opportunities are there for you in that, Lasse? I see a lot of ships that look like yours fooling around out there.

Lasse Petterson -- Chief Executive Officer

Yes. The market for wind energy or offshore wind energy is a very positive one. I think the opportunity there for us as a dredging company is definitely there. In Europe, there's been installed in the range of 12 gigawatts of offshore wind generating capacity over the last 10 years.

And in the U.S., if we look at all the plants that are on the East Coast, they're looking at for the next 10 to 12 years in the order of nine gigawatts. This will create opportunities for us as a dredging company, and we also, as a U.S.-based company, will look at what this new market will give us in other opportunities. If you look to the international markets, the international dredging companies have been very active in these markets, so we're actively, let's say, evaluating where we should participate.

Unknown speaker

You get some Jones Act protection out of some of this stuff, is that not correct?

Lasse Petterson -- Chief Executive Officer

Yes. Some of the activities will be Jones Act-protected and others will probably not be. There are some precedents around this from the Gulf of Mexico, in the oil and gas sector. But definitely, part of this work will be Jones Act-protected.

Unknown speaker

Well, that's great. Guys, as my motto would say, may it never be any worse. Thanks a lot for the good work.

Operator

And ladies and gentlemen, this concludes today's Q&A session. I would now like to turn the call back over to Abby Sullivan for any closing remarks.

Abby Sullivan -- Manager of Investor Relations

Thank you. We appreciate the support of our shareholders, employees and business partners, and we thank you for joining us in this discussion about the important developments and initiatives in our business. We look forward to speaking with you during our next earnings discussion in August.

Operator

[Operator signoff]

Duration: 45 minutes

Call Participants:

Abby Sullivan -- Manager of Investor Relations

Lasse Petterson -- Chief Executive Officer

Mark Marinko -- Chief Financial Officer

Poe Fratt -- Noble Capital Markets -- Analyst

DeForest Hinman -- Walthausen and Company LLC -- Analyst

Jon Tanwanteng -- CJS Securities -- Analyst

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