Earnings Call Transcript - GLDD Q1 2022

Operator, Operator

Good day and thank you for standing by. Welcome to the First Quarter of 2022 for Great Lakes Dredge & Dock Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Tina Baginskis, Director of Investor Relations. Thank you and please go ahead.

Tina Baginskis, Director of Investor Relations

Thank you. Good morning and welcome to our first quarter conference call. Joining me on the call this morning is our President and Chief Executive Officer, Lasse Petterson, and our Chief Financial Officer, Scott Kornblau. Lasse will provide an update on the events of the quarter and the year, then Scott will continue with an update on our financial results for the quarter and the year. Lasse will conclude with an update on the outlook for the business and market. Following their comments, there will be an opportunity for questions. During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in our earnings release and in filings with the SEC, including our 2020 Form 10-K and subsequent filings. During this call, we also refer to certain non-GAAP financial measures, including adjusted EBITDA, which are explained in the net income to adjusted EBITDA reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data. With that, I will turn the call over to Lasse.

Lasse Petterson, CEO

Thank you, Tina. As stated in our earnings release, although we report solid results for the first quarter of 2022, we did not fully meet our expectations, as we experienced delays from abnormal weather events, production impacts on various jobs, and some lingering costs from the COVID-19 pandemic that began to diminish as the quarter progressed. In our last earnings call, we discussed two bomb cyclones that brought heavy snow and coastal flooding to the northeast in January and strong sustained winds impacted several projects in the Southeast, pushing production into later quarters. Climate change continues to impact our nation and our coasts continue to see damage as a result of severe storms and rising waters. Although these weather events have short-term impacts on our operations, the resulting damage adds to the recurring nature and increased long-term demand for dredging and related projects. As we noted previously, planned drydockings of six vessels will have an impact on our overall 2022 results as the vessels in drydock are high revenue generators. The large hopper dredge Liberty Island was in scheduled drydock the entire first quarter but will be returning to work in the second quarter, and the largest vessel, the hopper dredge Ellis Island, is scheduled for drydocking in the second half of the year. In addition, two dredges were partially idle during the quarter due to delays in mobilizing on several projects. As we continue to renew our fleets, we are focusing on initiatives that improve fuel efficiency and reduce emissions, as well as greenhouse gases and other pollutants. Currently, we are upgrading the cutter suction dredge Carolina and the company's largest booster station, the Buster, which we expect will reduce NOx and particulate emissions by more than 80% from these two units. These vessels will both commence work in June on the first phase of the Houston Shipping Channel widening project where the mechanical dredge, our Dredge 54 has already started working in April. Additionally, engines throughout the fleet are being replaced with new and more efficient models to help conserve fuel and reduce emissions. A new building program which consists of our new build hopper dredge, which is a midsize hopper dredge, remains on schedule and on budget with an expected delivery in the first quarter of 2023. We also have an option for a sister ship with deliveries scheduled for 2024. After decommissioning several of our oldest dredges in 2017, we have invested in productivity upgrades to our best-performing vessels, and combined with our ongoing fleet renewal program, we have positioned ourselves well to meet current and future market demands. Our 2021 ESG report has been posted today. It provides an overview of the initiatives we undertook and the progress we achieved in environmental protection, improvements to the safety and well-being of our employees and business partners, community contributions, partnerships, fleet improvements, governance practices, and our rapid and thorough response to the COVID pandemic. As part of our engagement with stakeholders and partners, we recently signed an agreement with the College of Engineering at Texas A&M University to provide funding and technical support for what will become the Great Lakes Dredge & Dock Laboratory for dredging and coastal studies. Great Lakes has had a long and robust relationship with Texas A&M, which has included research, participation in, and teaching all the dredging short courses and advocacy for the ocean and coastal engineering profession, this agreement will allow us to formulate and build on that relationship. Turning to the exciting news we announced yesterday, Equinor awarded Great Lakes our first major contract in the new offshore wind generation market. Equinor and our partner BP have chosen the Great Lakes and Van Oord consortium to perform the subsea rock installation work for the Empire Wind I and II wind farms on the East Coast of the U.S. This project is estimated to provide over two gigawatts of renewable energy to the state of New York. The renewable power generated by the two wind farms will power more than 1 million households in New York. This project is considered a flagship offshore wind development, shaping the future of this industry in the U.S. And this award is significant for entry into this new market. The project team will be mobilized and start work this year, with the installation of rock and style protection starting in 2025. This award will also provide a solid foundation as we build the backlog for a new subsea rock station vessel to be delivered from the yard in the second half of 2024. Great Lakes will be generating local content, employment, and economic benefits in the state of New York by purchasing rock from domestic New York quarries and using its marine logistic base at Staten Island for its site operations. I will now turn the call over to Scott to further discuss the results for the quarter and the year, and then I'll provide commentary on the market as it goes forward.

Scott Kornblau, CFO

Thanks, Lasse, and good morning everyone. Let me start by giving some color on our first quarter results. For the first quarter of 2022, revenues were $194.3 million, net income was $11.1 million, and adjusted EBITDA was $29.7 million. Contract revenues of $194.3 million for the first quarter of 2022 increased $16.7 million or 9.4% from the first quarter of 2021. The quarter-over-quarter increase in revenue was due to higher domestic capital and coastal protection revenue, partially offset by a decrease in revenue from maintenance dredging, rivers and lakes, and foreign projects. First quarter revenue came in about 10% above the guidance given on the last earnings call, primarily due to pulling a job forward into the first quarter that was previously expected to occur in the second half of the year and the positive settlement of claims from recently completed projects. Current quarter gross profit of $33.1 million is flat compared with the first quarter of 2021. Gross profit margin this quarter was 17% compared to $18.6 million in the prior quarter and was a few points lower than the guidance given on the last call due to the previously mentioned weather impacts and a couple of production issues related to differing site-soil conditions. During the first quarter, we had minimal COVID-related production impacts, and COVID expenses were approximately $1 million, most of which were incurred at the beginning of the quarter. Operating income for the current quarter of $18.8 million increased $2.1 million from the prior year quarter, primarily due to lower general and administrative expenses. G&A expense came in at $14.6 million during the first quarter of 2022, which is down $1.7 million from the prior year quarter, primarily due to lower stock incentive expense and Houston relocation costs. G&A was approximately $2 million lower than prior quarter guidance, primarily due to lower than expected stock incentive expense and the timing of adding additional headcount related to building up our offshore wind team. Net interest expense of $4 million for the first quarter of 2022 came in at guidance and was down from $6.6 million in the first quarter of 2021, primarily due to the lower interest rate on the senior notes, which were refinanced in the second quarter of 2021. First quarter 2022 income tax expense of $3.3 million increased $1.9 million from the same quarter of 2021 due to the higher income and a one-time tax deduction related to stock compensation in the first quarter of 2021. Rounding out the P&L, net income for the first quarter of 2022 was $11.1 million, up from $8.8 million in the prior year quarter. Next, we turn to our balance sheet, where we ended the first quarter of 2022 with $142.6 million in cash, no debt maturities until 2029, and our revolver remains undrawn. First quarter 2022 capital expenditures were $25.6 million, which included $12.7 million in maintenance CapEx, $8.7 million for the construction of our new hopper dredge, and approximately $4 million for the construction of the new scows and multi-cats. Absent any additional new builds, the full-year capex guidance I gave on the last call of $165 million remains unchanged. I'll conclude with some commentary on the second quarter of 2022. We expect revenues to be between $175 million and $185 million. Liberty Island, which was in the shipyard for her regulatory drydocking all of the first quarter, is expected to return to work later this quarter. The cutter dredge Carolina entered the shipyard towards the end of the first quarter for emission reduction upgrades and is expected to return to work in June. The dredge New York is scheduled to enter the shipyard in the latter part of the second quarter for her regulatory drydocking, and the dredge 54, which completed her regulatory drydocking towards the end of the first quarter, is currently working at the Houston Ship Channel. We expect gross profit margin to be higher in the second quarter compared to the first quarter but may experience a drag from the first quarter weather and production impacts. G&A expense is expected to be about $16 million and net interest expense should continue to slightly decrease each quarter throughout the year as more interest is capitalized as the new builds progress. With that, I'll turn the call back over to Lasse for his remarks on the outlook moving forward.

Lasse Petterson, CEO

The U.S. Army Corps of Engineers has received record funding in 2022 and as they have throughout the pandemic, they have continued the bid schedule for all types of dredging including for deepenings, port maintenance and expansion, and coastal protection and restoration projects. In 2021, the domestic market reached $1.8 billion in projects bid and we expect the 2022 bid market to be equally strong. However, we have seen some delays in new bids here at the start of this year. We expect bid activities to increase substantially in the second and third quarter, and we expect to see bids from multiple new phases of port deepening projects in Norfolk, Freeport, Mobile, Sabine, Corpus, and additional phases of the substantial Houston Ship Channel widening project. These major capital projects are where Great Lakes can excel with our technical expertise, experience, safety, performance, and a large, diverse fleet. Europe is currently reevaluating the sourcing of energy after the Russian invasion of Ukraine, which will require imports of large quantities of LNG. Included in our low bids pending are two LNG projects that are still pending notice to proceed by the clients. Both of these clients are now firming up their investment plans, and one of these clients has already instructed their EPC contractor to start construction of its export facility in the second quarter of 2022, and preparation for the dredging would commence soon thereafter. We ended the first quarter with a 50% market share or equal to $95 million, and it consisted of several coastal protection projects that would add to our total backlog. Their awards included the coastal storm risk management East Rockway inlet subcontract for $37.2 million, the Avon and Buxton beaches project for $25.9 million, the Carolina and Kure Beach project at $20.3 million, and the Nags Head Beach project for $11.6 million. We ended the quarter with a $474 million backlog and $505.3 million in low bids and option pending awards. Post-quarter end, we were low bidder on the New Jersey Wind Port Stage 1 Channel Deepening Project, which will create a navigation channel from the Federal Delaware River Channel to the hub-style offshore wind marshalling port. Valued at $7 million, it is not a major dredging project. However, it is significant as the New Jersey Wind Port will be the first purpose-built wind port on the East Coast providing heavy lift and component facilities with open access to the Atlantic Ocean. We continue to see strong support from the administration for the dredging industry. On March 15 this year, the Omnibus Appropriation Bill was signed into law, including funding for the U.S. Army Corps of Engineers totaling $8.3 billion for fiscal year 2022. This is an increase of $548 million above the fiscal year 2021 and an increase of $1.6 billion above the President's original budget request. Now, turning to the U.S. offshore wind power generation market, with our first award, we remain confident that this will provide Great Lakes with a strong opportunity for growth and diversification in building this new business. In March of 2021, the White House announced new initiatives that will advance the administration's goals to expand the nation's offshore wind energy capacity in the coming decade by opening new areas of developments, improving environmental permitting, and increasing public financing for projects. As part of the initiative, the Department of the Interior, Energy, and Commerce committed to a shared goal of installing 30 gigawatts of offshore wind power generation capacity in U.S. waters by 2030. In January of this year, the administration announced plans to auction more than 480,000 acres in the New York plight for six new offshore wind energy leases, the administration's first wind sale and the largest lease sale ever offered with potential build-out capacity of over seven gigawatts. So, last year, we solidified our plans to enter the offshore wind market by signing a $197 million contract with a Philly Shipyard to build the first U.S.-flagged Jones Act compliant inclined fall vessel for subsea rock installation for wind turbine foundations, which now has its first project set to start in 2022. In parallel to the vessel bill, we have been busy bidding for a multitude of offshore wind farm projects for rock installation planned for 2025 and beyond. Major wind farm developers like Equinor, Dominion, Ersted, AVANGRID, and the U.S. Wind have already issued RFQs and they are in the process of selecting suppliers for the wind farm developments. And with the Equinor-BP award yesterday as a strong start, we have good opportunities ahead to add new projects to our backlog, providing solid activity for our vessel from 2025 and onward. As the offshore wind industry is developing here in the U.S., the global offshore wind market is forecasted to boom with more than 200 gigawatts of offshore wind generation capacity expected to be installed globally over the next 10 years. We expect this will keep the large international contractors involved in offshore wind very busy for the next years, keeping the vessel and equipment demand high. In conclusion, although we were faced with some challenges in the first quarter of this year, we are confident in the decisions we have made and the strategic initiatives we have implemented to grow and improve our fleet and business. We are optimistic that domestic dredging market demand will remain strong in the coming years, and the ongoing developments in U.S. offshore wind generation will provide an avenue for diversification and growth for our company. And with that, I'll turn it over for questions.

Operator, Operator

Our first question comes from the line of Joe Gomes of Noble Capital Markets. Your line is now open.

Joshua Zoepfel, Analyst

Hi, this is Joshua Zoepfel filling in for Joe Gomes. Just my first question is regarding the yesterday's announcement of the Empire offshore wind project. Can you provide just any more detail on that? And if so, like why would they choose you guys over maybe some other peers?

Lasse Petterson, CEO

Well, we certainly hope they chose us because we had the best technical solution on the test bid for the work. The combination of Great Lakes as the largest dredging contractor and subsea construction company in the U.S., combined with Van Oord, which is a world-leading and maybe the most experienced contractor building out offshore wind farms. I think the client saw the value and recognized the benefits of our offering.

Joshua Zoepfel, Analyst

Great, thank you for that. And just one more and just I was looking to see, like to toggle the labor market looking for the company. Are you guys just seeing any good retention of current employees and any good attraction of new ones?

Lasse Petterson, CEO

Well, the labor market continues to be tight and we see that both in our staff, in our offices, and also on our vessels that the labor market is changing. And we are looking at this very hard in order to make sure that we retain the staff we have, but also to make sure that we are attractive when it comes to new recruitments. So, it is different than it was before the pandemic, but we have staff and we have plans in place to ensure that we can man our projects as we go forward.

Joshua Zoepfel, Analyst

Great. Thank you for that. I'll get back to the queue. Thank you so much for the question.

Operator, Operator

Our next question comes from the line of Jon Tanwanteng of CJS Securities. Your line is now open.

Jon Tanwanteng, Analyst

Good morning, everyone. Thank you for taking my questions, and congratulations on the Empire win; it's great to see it all come together after such a long time. My first question is about the scale of the project, specifically the contract size and duration, as well as the expected benefits and how quickly it ramps up. Could you provide more details on those aspects?

Scott Kornblau, CFO

Yes, Hey, Jon. Good morning, it's Scott. At this time, we're not allowed to disclose the value of the contract, but let me give you some general commentary on the award and some thoughts on how we think about this wind vessel going forward. The Empire Wind award was the first step for building backlog for the SRI for 2025 and 2026. As these types of contracts are typically awarded with two to three years lead-time, the operator can reserve the vessel capacity. The scopes for Great Lakes on the Empire Wind Project are expected to keep this vessel utilized for nearly half of 2025 and half of 2026. We have bid on multiple other projects to absorb the rest of the vessel's availability for those two years and beyond. Once our wind vessel is fully utilized and operational, we expect annual revenue to exceed $100 million a year and margin to be similar to our more complex dredging capital projects.

Jon Tanwanteng, Analyst

Great. That's really helpful. Thank you, Scott. And I was wondering, once you get towards that 100% utilization, how many other shifts will you be thinking you're needing? Is that in the discussion right now? Or is it something you're still going to wait until December or I guess later this year before you're going to decide that?

Lasse Petterson, CEO

Yes, as you know, we have an option to build an additional vessel, but we will see how the market develops. Our first focus here will be to make sure that this vessel is fully utilized. And if the market takes off, and if we see that the ambitions from the administration of the 30 gigawatts are coming true, then certainly we will need more capacity than the one vessel.

Jon Tanwanteng, Analyst

Okay, great. And then are you any closer to the decision on the second hopper dredge?

Lasse Petterson, CEO

Yes, we have an option that expires in June of this year, and we see the dredging market as very active. So, we are looking very keenly at whether to exercise that option or not.

Jon Tanwanteng, Analyst

Okay. Understood. And then finally, just the commentary on the slower bids entering this year. Lasse, I know you've been expecting a little bit of weakness in the first quarter. Seems like it's slower than even that. Does that impact your expectations for the year just in terms of how much work you can perform through the year end? Or is this more of a we can make it up a little bit later as these awards start rolling out?

Lasse Petterson, CEO

Yes, and there's two questions there. One is on the bid markets and I think the bid market will recover. There are some major projects that are in the Corps of Engineers listing in addition to the LNG projects that are out there. When it comes to the bid market, we expect it to pick up quite strongly in the second and third quarter.

Jon Tanwanteng, Analyst

Hello? Lasse?

Operator, Operator

It seems like they've dropped. Let's just wait a few minutes to see if they dial back in.

Jon Tanwanteng, Analyst

Okay.

Operator, Operator

You guys are back on. Sorry, Jon.

Jon Tanwanteng, Analyst

No worries. The bids for the beginning of the year versus your expectations for the whole year.

Scott Kornblau, CFO

Did you hear it? I just want to make sure we don't repeat what Lasse or I said?

Jon Tanwanteng, Analyst

I think I caught the first few seconds and then it cut off.

Lasse Petterson, CEO

Okay, so I'll comment on the bid markets. Yes, the bid market was slow here in the first quarter, but we expect it to pick up quite strongly in the second and third quarters. I expect the market to be just as strong or even stronger than it was last year. And particularly with the LNG development stuff, we do see when it comes to revenue developments for the year, I'll let Scott comment on that.

Scott Kornblau, CFO

Yeah, Jon. So with the $474 million of backlog that we ended the quarter with, we expect roughly 80% of that to convert to revenue in 2022. The second quarter, we are pretty much fully utilized, except for some of the regulatory drydocking that I've talked about before. But we already have the dance card full on that. Q3 there is some availability, we've got two or three vessels that we're bidding work on right now that we are hopeful will be able to fill in the next month or two. So they'll be able to seamlessly move into work. We have a couple more that have availability in Q4 again, working on filling that out. So nothing changes the way we were thinking about 2022 as a whole; we knew that Q1 would be slow bidding and it will start picking up in Q2 and Q3, and that's when we would fill out the second half of the year.

Jon Tanwanteng, Analyst

Okay, great. Thank you. I appreciate that.

Operator, Operator

Our next question comes from the line of Adam Thalhimer of Thomson Davis. Your line is now open.

Adam Thalhimer, Analyst

Hey, good morning, guys. Congrats on the solid Q1.

Lasse Petterson, CEO

Good morning.

Adam Thalhimer, Analyst

I want to start out on the margins. You're starting out the year a little slower than you expected. Does any of that have to do with kind of general inflation or supply chain issues?

Lasse Petterson, CEO

No, Adam. I mean, really, the drag on margin that we saw in Q1 was related to all the weather issues or production issues, which caused some delays. So those costs that we incurred because of those delays and production impacts are really what's dragging the margin down, because you see the revenue was solid and actually slightly higher than what we saw, but it's just the costs we incurred when we have these weather and production issues that really drag it down. And as I foreshadowed in my commentary, it's not just the one and done; this does drag the project down not just for the quarter, but until the end. We will still see some of the Q1 impacts, rearing themselves up in Q2 as some of these projects progress, but we also have a bunch of fresh projects starting as well that we should be able to recover. I do think that quarter-over-quarter, we will see an increase in margin, even with some of the impacts that we will still feel from these issues.

Adam Thalhimer, Analyst

Okay, has the bidding changed at all in terms of contingencies that you can put in for fuel or some of these older contracts that are coming back? What kind of protections do you have in there for inflation?

Lasse Petterson, CEO

Yes. So, for most of the core contracts, once we bid them, the costs are locked. However, for fuel, we do have a very aggressive hedging program. So we are able to minimize the impact from fuel, because we do endeavor, and we always have to hedge at least 80% of our expected fuel consumption, and we top that up. So fuel is really not very impactful for us when it comes to how we perform against bids. As we bid on new projects, we don't just go back and look at what costs were; we have a view on what costs are going to be, and we make sure that we build all of those in as we bid all projects going forward.

Adam Thalhimer, Analyst

Okay, got it. And then on dry docking, it sounds like the schedule for the back half of the year is actually not as heavy as you were thinking, maybe three or four months ago. Is that true?

Lasse Petterson, CEO

No, I mean, nothing really has changed. The Carolina, which is in now for its emission upgrades, was not part of that original commentary that we gave on the number of dry dockings, because we were just talking about regulatory dry docking. So this was an emission upgrade instead, but now the schedule is still right now, pretty much the same. I kind of laid out what the second quarter would look like. We still would have three regulatory dry dockings in the second half of the year, including the Ellis Island.

Adam Thalhimer, Analyst

Okay. And just last one for me, you mentioned kind of five deepening projects. What's the timing on when those could get awarded? And how do you expect backlog to trend as we move through the year?

Scott Kornblau, CFO

Yes, as I said, the bidding here starts ready to kick off in the second quarter and the third quarter is going to be very busy. So the backlog will start to be built as we move from, I would say, from second quarter into third quarter. That goes for the deepening projects. We know that the second phase of the Houston widening project is under evaluation at this point in time, and that may be awarded here in the second quarter. We have other phases of Freeport and Sabine, and so on that corpus comp is getting towards the end of the third quarter and fourth quarter. The LNG projects, we have already been bidding those projects. So we are expecting the FID to go forward. As I said, one of the projects is already moving into the EPC construction, and we are installing the preparations for the dredging here in the second half of this year, but the dredging itself will probably start early next year at the earliest. There are other LNG projects and the ones that we have in the low bid pending, which are also being reconsidered. But probably will not be bid until next year.

Adam Thalhimer, Analyst

Okay. Good color. Thanks, guys.

Operator, Operator

Our next question comes from the line of DeForest Hinman of Walthausen & Company. Your line is now open.

DeForest Hinman, Analyst

Thanks for taking my questions. The offshore projects seem to be becoming more tangible with the announcement regarding the New York project. Can you help us understand what this will look like as we move forward? I'm asking because I believe you have a solid understanding of the geology involved, especially with the shelf. We are considering how all those units will connect offshore and reach back to the mainland. Will there be dredging needed beyond just the rock dumping vessel to get those cables to shore? Will they be laid on the surface, or will they be buried in a trench? Is this something that could represent future revenue exposure as well?

Lasse Petterson, CEO

Yes, there are additional scopes that we are looking at. When it comes to offshore wind, we are focused on the scalp protection, because those are the larger contracts, and it is important for us to get contracts backlogged for our vessel that we are building. However, there are additional scopes around some dredging, particularly when it comes to the shore approaches. We are looking at scopes that will add to our backlog once those are updated and awarded.

DeForest Hinman, Analyst

And then regarding the geology aspect, outside of the coast of New York, is that service performed with a suction dredge or a cutter dredge? What does that geology look like?

Lasse Petterson, CEO

Yeah. The work that we are looking at is related to shore approaches for the export cable. That's where you tie into the shore, and where the approach is complicated. Various techniques can be used there. It could involve dredging, it could involve digging it with a mechanical dredge, or it could involve a collar dredge. We just have to see where the approaches are happening. The other scopes that we are looking at, which seem to be an issue for offshore wind, are the scalp protection around cables in general. I don't know if you saw what Aerostats was out with a press release earlier this year where they had to go out and provide additional scalp protection on the cables for their wind farms in Europe. We expect there will be additional scopes here when it comes to protecting all the cables themselves, which provides additional work for us.

DeForest Hinman, Analyst

Okay, that's helpful. And then an LNG contract or sorry, apologies, not the LNG contract, the offshore contract that we just discussed, I think I know the answer to the question, but can you just refresh us? And I guess it's probably one of the first contracts of its kind in the U.S. But just in terms of how we're getting paid. It sounds like on a lot of the dredging contracts, it's some revenue amount per ton. Is that similar or dissimilar? Just help us understand how that contract is structured?

Lasse Petterson, CEO

Yes, it is similar to the way that we price our dredging contracts; it is a cost per unit. So, we are being paid for the rock that we are placing on the seafloor. The structure of the contracts is pretty much the same. When it comes to how the scope is split up, we have a cooperation partnership with Van Oord, and Van Oord has done this work in Europe prior and has vessels that are active in Europe at this point in time. So, with our Jones Act vessel, we will do the work that is required for Jones Act vessel to perform. Then we have additional capacity we can bring in with Van Oord vessels.

DeForest Hinman, Analyst

Regarding the LNG projects, the situation between Russia and Ukraine has significantly altered global perspectives on gas supply. Have you had any discussions with engineering construction firms that could shed light on what the sentiment is in the U.S. regarding LNG projects and their potential to assist Europe? It seems to me that there is an increasing political component alongside the economic factors involved in building these facilities. While the financial metrics appear favorable, any insights you could share with investors and shareholders about your views and what you're hearing on these projects would be appreciated.

Lasse Petterson, CEO

Yes, as I referred to, these projects have been waiting for a final investment decision. Those final investments decisions made by the owner of these terminals have been dependent on entering into long-term supply contracts. Prior to last year, before the invasion of Ukraine, these contracts seemed to be more difficult to get in place. Now, after the invasion, Europe is looking at a much more diverse strategy for supply of energy, which includes the import of LNG. The ones we talked to, and you can see it in the press releases from the companies, are optimistic about entering these long-term contracts very shortly, which then leads up to an investment decision on the financing of the project. So, I think these projects will be accelerated and start moving forward on the back end of this new situation in Europe.

DeForest Hinman, Analyst

Okay. Thank you for taking the questions.

Operator, Operator

We have Jon Tanwanteng of CJS Securities again on the line. Your line is now open.

Jon Tanwanteng, Analyst

Hi, thanks for the follow-up. My first one is just you mentioned a pull-in in the quarter. I was wondering what the impact was just in terms of revenue and margin and which quarter you pulled it from?

Scott Kornblau, CFO

When I mentioned we, it was a job that was originally scheduled for the second half of the year, but we managed to accommodate a request from our customer and moved it to the first quarter. I won't go into specific details about the project, but I previously mentioned the 10% increase we had from guidance. This played a significant role in that increase, and the margins were similar to what we saw for the quarter. Therefore, the job itself didn't significantly impact the margins, but there was certainly an increase in revenue that shifted from the second half of the year to the first quarter.

Jon Tanwanteng, Analyst

Okay, great. Thanks for that. Second, can you provide a little bit more granular impact of when the Ellis goes into dry dock and kind of the expected impact from that? Maybe the time and kind of the specific quarter it's going to be?

Scott Kornblau, CFO

Yes, I still don't have a specific quarter. We're going to be very flexible and make sure that we work it as much as we can, take it down at the right time to get it back. So, it's still somewhere in the second half; it's very possible that it'll kind of hurdle the quarters, but don't have that completely nailed down yet. Because of the impact that the vessel does have to our bottom line and because it's a relatively new vessel, we are expecting it to be on the shorter end of the number of days that you would normally see a vessel out, and we have challenged our team to get in and out so we can get back to making money. We do see some of our vessels, especially the older ones, that can be 90 plus days in the yard. This will be well inside of that. We're hoping to have it in and out in under two months.

Jon Tanwanteng, Analyst

Okay, great. Thank you, Scott.

Operator, Operator

There are no further questions coming in at this time. I'm now turning the call back over to Tina.

Tina Baginskis, Director 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. Thank you.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.