Greetings, and welcome to the Primoris Services Corporation Fourth Quarter and Full Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce Ms. Kate Tholking. Thank you. You may begin.

Thank you, Danielle. Good morning, everyone, and thank you for joining us today. Our speakers for today will be Brian Pratt, Chairman, President and Chief Executive Officer of Primoris Services Corporation; and Pete Moerbeek, Executive Vice President and Chief Financial Officer. Before we start, I'd like to remind everyone that statements made during today's call may contain certain forward-looking statements including with regard to the company's future performance. Words such as estimated, believes, expects, projects, may, or future or similar expressions are intended to identify forward-looking statements. Forward-looking statements inherently involve risks and uncertainties including, without limitation, those discussed in this morning's press release, and detailed in the Risk Factors section and other portions of our Annual Report on Form 10-K for the period ended December 31, 2013, which we plan to file next Monday, and other filings with the SEC. Primoris does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. I'd now like to turn the call over to our CEO, Brian Pratt.

Thanks, Kate. Good morning, and thank you all for joining us today. We are pleased to share with you our fourth quarter and full year results. Starting with the numbers. Revenues in quarter four were $538 million, which is a 12% increase over 2012's results. This was reasonable top-line growth nearly all organic and we are pleased with this number. However, more important numbers are earnings. Our Q4 profits were $23 million, a record for us. Even with a few unusual items in the mix, which Pete will laboriously explain later, we earned an impressive $0.44 per share in the quarter and $1.35 per share for the full year. We did this while maintaining what I believe one of the strongest balance sheets in the industry. Our year-end cash balance, including short-term investments, was a record $215 million, and our tangible net worth was a record $235 million. Five-and-a-half years ago when we became public, our tangible net worth was right at about $45 million. While you might not fully appreciate the importance of this metric, when tough times come around in our industry, and sooner or later they will, tangible net worth is one of the most important metrics our clients, our banks, and our bonding companies look to. I am very proud of our balance sheet as pound for pound we confront with the best in our industry. To share a little more detail I will start in the east. Cardinal Mechanical, Sprint, Saxon, Force, and James Industrial were part of the east segment through the fourth quarter. Going forward, they will form a new segment, Primoris Energy Services headed by Jim Henry. Cardinal Contractors had a solid fourth quarter with revenues up $2.5 million and improved margins. Government agencies in Florida have initiated spending plans at a…

Thank you, Brian. We will not file our Form 10K until Monday, which means I will have to clearly annunciate on the number that follow. Primoris fourth quarter revenues were $538 million and net income attributable to Primoris was $22.5 million or $0.44 per share. Our net income increased by 32% compared to the 2012 fourth quarter and for the full year, we saw 23% increase in net income. The $0.44 was a quarterly record and was a sequential increase of $0.02. We achieved these results even with several one-time items that cumulatively reduced our earnings in the quarter. Unusual expenses included charges of $1.7 million related to the management change at FSSI for a collectability reserve for a prepayment associated with a five-year employment contract and the write down of an intangible asset. We also recorded $1.4 million charge for a combination of the increased probability that Q3C will obtain its 2014 earn out target and an adjustment to the fair market carrying value of an investment Q3C made in a small company. $: Partially offsetting the impact of these expenses was the benefit of $6.5 million as we determined that Sprint, Saxon and FSSI did not and would not meet their earn out targets and the contingent consideration were credited to other income. To help understand our revenues, our two largest customers in the fourth quarter were both Rockford gas utility customers together accounting for 17% of total fourth quarter revenue. And our third largest customer was TxDOT at $36 million for the quarter, an increased of $8 million from the prior year fourth quarter. Unfortunately, our Louisiana market remains challenged as our Louisiana DOT revenues decreased by $28 million from Q4 last year to this year. Our traditional large northern California public utility continued as one of…

Thank you. (Operator Instructions). Our first question from Lee Jagoda of CJS Securities. Please proceed with your question.

So Brian, could you go into a little more detail and describe some of the issues that may have caused Sprint's action and Force to not achieve their earn out in '13? Could you quantify the shortfall versus internal expectation? And then as a follow up, whether the issues have been resolved as we moved forward into '14?

Okay, that will take the rest of the call. So to hear a longer answer but basically these two companies were not doing particularly well when we bought them. And we acquired a lot of smaller assets last year. we just never turned them around aggressively and we thought we give the current management kind of a try based on our obligation on the earn out. And without trying to change them too much so we can allow them to achieve that part of the purchase price. But we were just slow in making the changes we needed to make and we needed to make senior level changes to really turn the companies around, which we've changed both senior level execs. Ultimately, our goal was to always kind of meld all these companies together. 2014 will make a lot of difference to the market but we're going try and meld our operations together, you will be able to see that to try and lever some of the attributes and advantages that we have plus kind of our overheads but also we're going to rebrand and put everything more under the Primoris umbrella. But we'd always intended to kind of mush these groups down in Houston but you have to be careful when you do that with earn outs and your purchase contract. That's one of the things I don't like about to announce. You can't really jungle these companies up to what you should to achieve optimum efficiency. So we've now done that. they're now cross-selling; they're now using common estimating software. We've always used common contracting and insurances and everything else but we think we put most of them all in one building down there so Jim Hendrick can get his hands around everybody's neck on any given day. So, I think -- and we've made substantive changes in the way we bid work. They got caught in a pretty tough environment. We're seeing a transition from hard dollar work to reimbursable work, and that's needed in the industry because the amount of work that's available and the poor productivity you're going to get in the lesser of employee you're going to get to do this work with the labor shortage down there. And they had some hard dollar work they were trying to finish while the market went to reimbursable. On one of the jobs we had the one piece of hard dollar work for one of industrial gas guys. They gave the rest of the job reimbursable to two other contractors and they just hired all our people and they were paying more, and we had the cheaper pricing. Guess where all the good left and went to the other jobs. So anecdotally kind of what happened to both companies. But we're confident we got our hands around. Jim is really focused on it and we're going to have a lot better cohesiveness and a lot better efficiently run group, so.

Lee, neither of them contributed positively to our earnings in 2013.

Yes, they're both on losses for the year.

Okay, that's very helpful. And then Pete, can you just quantify the close out amount related to NRG in Q4?

I'm not sure that we really want to release that, Lee. I think obviously you can tell by the margin that we had a very positive Q4 although NRG is not the only thing that impacted that. there were a couple of other things that we finished or we had settlements on but I think it probably doesn’t make sense to get that specific.

Okay. and then one bookkeeping type question --

No, no, no, I already said you're really allowed to ask one question when you chime in, so.

Go ahead, Lee, what you got?

Will you be providing any kind of segment restatement prior to Q1 so we can get a better feel for the seasonality and the margin mix within --

Since we're already two-thirds of the way through Q1 I'm not sure. Yes, we will do our best to either hopefully do it on an 8-K or clearly show you when we do file the Q and have the next call to show you the migration. Its probably sounds more from a financial standpoint than it should be because really what we're doing is pulling apart the east segment into a couple of different pieces.

Our next question comes from Tahira Afzal with KeyBanc. Please proceed with your question.

First question is you had a fabulous 2013, you're entering 2014 where it starts sourcing up 10% year-over-year. is that and the profitability returning to some of your most challenged business going to be really sufficient to really drive your margins up this year? and I guess what I'm trying to see is as we look at 2014 and we look at growth and all these end masses that are really working well, how we should be looking at our numbers?

We're still not going to give guidance. Every year we have a project and you guys -- and its your job to really get into the weeds. Listen, I like that, it really helps up. Believe it or not I like getting good hard questions from you guys, not all on the call but as much and all the time when our presentations and we are in town there. But every year we get this question. Well, what you cannot do without El Segundo or what you cannot do without PG&E, what you cannot do without Ruby or what you cannot do without LA1 or what you cannot do without the Long Beach parking structure? And every year we seem to find another place to make a lot of money and to find growth. I think that is why people should invest in our stock. I have learned a lot. I am sitting here watching the prices go up and down this morning after earnings release and I have learned that beating your earnings by 10% is not as good as having your stuff in bold print and then leading with your safety statistics. I am looking at our peer groups that are doing well today obviously. So we just lead with basically good news and it was all organic. The one time the one caller goes, well, geez, you have been too dependent on acquisitions, what you can do if you cannot find an acquisition? Hey, we did all that. I am not big on buying troubled companies. We have been approached, as you know Tahira, by several other larger public companies that need help. And my philosophy has always been hey, I can make enough of my own problems, I do not what to fix somebody else's. I…

That is actually helpful. And I have had my own bumps this earnings quarter, so I totally understand. I guess the second question I had is, Brian, around a year and three months ago exactly when I looked at my notes, you were one of the first people who talk about 2015 and '16 being very, very good years potentially for the pipeline industry and you have seen all your bears follow and come sort of grasp upon to that timeline. Can you talk about what you are seeing out there on the pipeline side for those years now? And how important would Keystone be in terms of the timing of the that tightening starting?

Right now, you have got clients to have their favorite contractors. And our clients have a lot of wind at their back. You have got regions that have different contractors like we have talked about. If you are going to work a large -- on most projects, smaller intermediate projects, below the Mason-Dixon line, you are not able to go down there, can you? You're going to have to open shop. On the summers, like California is really going to struggle if you are trying to do an open shop. So everybody has kind of pocketed, either with a client or with a region. Keystone is a little bit outside of that realm. Then we have clients of course that are just absolute whores. They will buy their services whoever will hand them to them. And then, they are hard to work for too because they are bottom dollar buyers. I think we just had senior management guys here in the last couple week and we're having a big meeting in Dallas next week. Everybody is pretty optimistic. The work has gotten smaller, although there is some big big projects coming outside of Keystone. There is going to be projects build to get oil out of the Bakken whether it be Keystone or somebody else. The rail guys have struggled, they have about five accidents, five significant accidents in last couple years. You are talking about -- sometime some low cal double-digit deltas between what it cost to ship or rail or pipeline. And obviously, it would appear that the rail guys are no safer, are they? And so I think pipelines are going to get built with the exception of maybe California. It makes sense to have a new crude line out there. They have already got plenty of…

Got it. Okay. And I will follow the Arnie law and get back in queue.

Thank you.

Our next question is from Jason Wangler of Wunderlich Securities. Please proceed.

Good morning. Just curious you talked about the small water business and obviously you guys have talked a lot about the issues that were coming through Texas and other areas. Can you just kind of talk about what you are seeing there from a whether its bidding or even the prospect of is it coming from the state or the municipalities or you are seeing it from the companies or it's a kind of a conglomeration, just kind of some color on what you see on the water side?

Well Norm Bangle, I've met him years ago when he was a cell tower guy. He was a cell tower developer and he lives into (inaudible) New Broncos down outside of San Antonio and he has been taken class out West Texas for about three or four years. And that the users range from the oil drillers, the production guys, the E&P guys to the municipals. The stage has actually raised money here to assist in development. They've been very helpful with us. They are actually sponsoring one of our larger projects and that they have been very helpful both (inaudible) Stan Perry, there is little power thing going on there because this is Perry's last term. But and (inaudible) is a good guy two I mean, both of them have been real helpful. We don't really want any state money. We've got an agreement with the bank that is pretty favorable. We've got the first project, which is I don't know $8 million, $9 million that basically takes water from the City of Semiole and which has got too much arsenic getting under the new EPA standards and too much chloride, and we're basically taking their water, cleaning it up and sell it back to them. There is numerous, numerous, numerous of those kinds of projects. And then you have got the other projects where they just don't have enough water and there a little bit sweet water out there, but most of it has got lot of dissolved solids and nasty stuff in it. So some of the projects will involve hundreds of miles of large diameter pipeline for conveyance with large membrane plants to treat the dissolved solids. You can't drink anything above 100 or 150 just kind of distasteful in terms of total dissolved solids parts…

I appreciate the color. Thank you.

You bet.

Our next question comes from Adam Thalhimer with BB&T Capital Markets. Please proceed. Adam Thalhimer - BB&T Capital Markets: Hey, good morning guys.

Hey, Adam. Adam Thalhimer - BB&T Capital Markets: So did you said -- I think I heard you correctly, you said you think margins in '14 will be better than '12. Is that a consolidated margin or you -- segment-by-segment?

No, it is consolidated. Adam Thalhimer - BB&T Capital Markets: And then, on the east segment, when do you think you might start to release some of the I-35 work in the profit?

Well, we take profit on it every month, but not a lot. We are pretty conservative as the things unfold as various benchmarks and risk levels, we always -- everybody likes good through prices at the end not bad one. So we are pretty conservative about how we release contingency and how the permits are issued. You got -- I just went through this, whether they are auditor. It is not as simple as saying we are 10% done let us take 10% of the profit. Every month we do it kind of cursory review and every quarter we really drill down hard and we say, okay, what is it really going to cost to complete the stuff and it changes every quarter. And I do not like back end profit out. That is why we do not have some of the big guys with surprises, some of our peers do. We do not like taking a job that is 90% complete and go oops. We are too aggressive on knocking down the contingency. So we are taking it every month. But the last job they award is a four year job. So it is going to be three and a half more years before we see the close out on that. But these jobs are continued, and as the contingency requirement goes down we should -- unless there is problem on the job or an unforeseen issue, we should be able to continue to release bigger and bigger junction contingency. So as we hit our stride, I think Danny told me his peak revenue on the I-35 work is third quarter was not as peak its get to that level and it runs hard for a couple of years. But when we get to run a full bore, as we get into that we will start seeing improved margins because of the contingency will go down. Adam Thalhimer - BB&T Capital Markets: Okay. And then, I think somebody already asked this question, but in terms of kind of quantify El Segundo Q4, I mean, you said -- you gave a directional, I mean you said most of the gross profit increase in west was El Segundo. Is it sort of $20 million out of the $22 or?

Correct.

No plus. Adam Thalhimer - BB&T Capital Markets: I mean, I assume we can put in the case. That is not huge difference.

No, we are not going to give the specific details on the case. Adam Thalhimer - BB&T Capital Markets: Okay. And then, Brian, what are your thoughts on that, right because you say that there have -- I totally agree with you that there have been other projects like Ruby where you do get big profits at the end. But I mean El Segundo seems to be pretty large relative to those. And then, what are your thoughts on -- I mean may be some of these pipelines out that started up late? But I mean, where could some of that extra profit come from in '14?

Well, when we brought Q3C in the end of '12, when they were at $93 million run rate. We spent $22 million or $23 million on additional equipment for them. There is a request for them by Denis for I think 17 for this year. So they went from 93 to 168. And I think in their Jay is very profitable. He runs a greater organization, they are very lean. It is kind or recurring kind of work. We have got several other clients that have actually terminated some of their contractors and asked us to become a lot bigger players in some of our better markets. So you add another comparable amount on revenues there with a kind of gross margin Jay makes that makes up a good portion of El Segundo. We got a lot of good solar work. We stayed out the solar business out in California for a number of years because of the crappy terms that the clients were operating on. And you do not guess what, the idiots that took -- I'm sorry, I should not say this. Some of our peer groups that took that wok did not do very well. So, we are now finishing all the work that they are doing and we are getting it name our terms. So I think some of that will replace El Segundo. I will tell you a story and I am sorry wax on these things but I would like to have a little color. Most of you guys do not this, but my dad ran ARB before I got out of school. And he left -- he had some illness and some other stuff, and he sold the business to another guy. And I bought back from the other guys eight, nine years…

I don't guidance. Like I just said, I'm very proud the where -- I think you will be proud of us this time next year. Adam Thalhimer - BB&T Capital Markets: Okay. Thanks, Brian.

You bet.

Our next question is from Daniel Mannes from Avondale. Please proceed with your question.

Good morning everyone. I'm not sure how am I going to follow that up. Pretty fired up today, Brian.

Well, I'm sitting here looking at our price and look at these other guys and I was pretty proud of our numbers but, like I said I guess, we should've left -- lend with our safety statistics, so.

I'm sure they are all looking it up up on you though from your performance over the last 12 months. So you got to take everything with you got to look at it over a period of time, but --

Dan, you know me pretty well. I'm pretty thick skinned.

Yeah, I know. So Highland, maybe some other potential growth opportunities that we haven't talked about. Some of your peer have talked a lot about the market in the south of Mexico on the pipeline side. Obviously, you have a lot capabilities on pipeline. And as I look back at your history, (inaudible) you've done some work there in the past. I guess I would ask is that a market you are excited about and how do you think about it given your experience in that market and maybe even some stuff those there as well.

Well, one of the guys that you cover that and tell us all the opportunity down there came to us a couple of weeks when asked to join our consortium ,but we were active down there. The biggest problem we have in Mexico as you do in most of Latin America, I mean people don't realize, because we have been in public about five and a half years, but we have been doing international work since I was the first guy to drill the crossing under Taichung Harbor in Taiwan. That was 1991. So we've been international for long. We drill holes and put pipe in India for Gas Authority, we've rebuilt the Clark to the -- Subic Bay to Clark pipeline for us Oscar Wyatt. We have been all over the world with what we do except your Europe, I'm not wild about going to Europe. Mexico is not a bad place to work. The problem out there is there is really no legal system. And the joke in Mexico is a good judge is a judge that stays bribed. It's a tough place to work. So if we find the right client in which case this is a blend of a Mexican client and a U.S. client. You get under the right laws which are U.S. laws or international arbitration which is my second bigger choice. You get onto the right conditions and with the right kinds of cash flow and those things, then it's okay to go down there, but you get into litigation down there and Mexican law with a Mexican adversary you will be down there in litigation for 15 or 20 years. I leave this thing and retired here in 20 years. I don't want to have one of those kinds of things hanging…

No, that's great, and I mean, when you combine that also to what's going on in Canada it does sound like maybe it is more of a North American market. So when you think about the capacity opportunity particularly around the pipeline side just, it also rolls together pretty nicely over the next couple of years.

Well, when I looked at the numbers for '12 and we import 3.6 million barrels of oil a day. That's what we import of which about one in a quarter from Canada, and that is for '12. And I would guess that our domestic productions at 400,000, 500,000 barrels a day at this point. If these assholes would get off our backs and let us build the system and drill the wells, there is no doubt -- Keystone, how much of that would be replaced by Keystone? At the peak of the well that blew out in the Gulf of Mexico with the peak leaking, the peak amount of leak it was 600,000, 700,000 barrels a day. People are just silly if they think we got to energy to independent within a couple of years then they will just take the handcuffs off and let us go out and do it. That's without replacing crude with LNG and the trucks and everything else that is available to us. The opportunity is here. All the Europeans are trying to get into the U.S. because they see the opportunity. And the action is here, it is not a -- it is in Canada, the Tarzans, its a water full resource and we are out there. Well, we've had an office in Calvary for 10 years. It's just that our guys are so busy here that this is no reason to go up there. Obviously, we are chasing the work from (inaudible) Murray over to (inaudible), hell, everybody is, and it is going to take out everybody. God did not intend for people to put a pipeline across the Canadian Rockies in an union environment. It is going to be incredibly expensive to build a pipeline across there, but it will get build because they need to do it because gas in Japan is 17, 18 bucks and gas here is 6, it needs to go there.

Can you indulge me with one ore quick one?

Yeah, sure.

Thank you.

You've been an hour up man.

Yes. I'm almost done. So real quick. You did talk a little bit -- and it would not be called as weather did not come up. You did talk a little bit about may be some challenges in the fourth quarter. I am wondering, as you look in the first quarter and this is really primarily the pipeline but your other business as well, how should we think about it especially in the context of prior years? You have generally been giving kind of cautionary term about the first quarter broadly. Just, what did you hear your thoughts there as we think about it?

Well, contractors by nature if you are good at it you are scrimmaging in the winter and you're euphoric in the summer, and I am always a scrimmage. In fact, I am sitting here in California watching it rain, which is good news down here because they're in a -- we're pretty serious drought. It's rain, it is customers that are right wiping the sleep out of their eye from the holidays, it's permit is a drag because the agencies aren’t particularly motivated, its utilities that are trying to fix their annual budget, try to re-engineer themselves along with their work and its a lot of things they did for first quarter. We were hoping that we would have Force and people like that would help us do more refinery work over the next couple years to obviate some of the downside in first quarter. But I'm not -- we got hurt in fourth quarter and recognize that on our financials with the rain and we have had some rain. But in general, the sewage job does not have a lot of problems. We got some sunshine, we have been working hard there. The bridge decks job really has not been too weather impact because really did not started (inaudible) until later, they did not have permits as they promises they did. And that has been having to work around poorly planned permitting more than anything else. And you can start here, you can start there, so you end of jumping around and five points down as you know you are suppose to go from A to B, not skip all around, so that has had a different study issues, we are dealing with the client on that. And I am sure at the end of the day everybody is going to take their responsibility. PGE has actually stayed pretty strong, stronger than been normal, they usually fall off a cliff about the second week of January but they're staying pretty strong and we think that is going to grow. They have got some bigger capital jobs they got to put out. The industrial work we are doing -- and Louisiana, when it gets wet down there, it is pretty tough to put dirt down and pour concrete, well pipe. So that has had a little bit of an impact. But we just do not know yet where we are going to be and if we did we wouldn't say.

All right. Thanks Brian.

All right. Dan. Thank you.

Our next question comes from Rick D'Auteuil with Columbia Management. Please proceed with your question.

Good morning. Good job.

Hey Rick.

Dan, kind of beat me to the punch on the Mexico question. So I guess Part B of the question is, if some of the competitors are pursuing work down there and you do not see it is desirable, I would think that does nothing but tighten the market and improve the margin picture in that business. Do you -- is that consistent with your thoughts?

Well you got to go out and give them the one project, we are kind of in the throws on. You got to go up and give them a budget estimate on a billion dollar project and they give you about two weeks. And then they short listed out and they go through this kind of Heebie Jeebies dance thing and end up two or three contractors and they are all of enough size and enough scale. Those are all going to be joint ventures of two to four contractors, the bigger job that you look at down there. And it just takes a long time. And some times you get good prices but sometimes you do not. It is not as -- it is bad as the U.S.'s legal system is, it heads above anything in Latin America. And that goes from if you have a litigation or you have to resolve a legal issue then that also goes to permitting and rights of ways and things like that. Here when you a pipeline owner goes out and pursues a project, there is a pretty firm set of loss state and how he procures it right of way. And typically they are all common career, so they had the right of condemnation. So but they choose they try not to do that just all the owners are, but there is always the trust there. In Mexico, condemnation can take five, six, seven times longer than it can here. It just isn't a well oiled legal machine with a lot of hard tough rules with precedents. So it's just a whole different can of worm. You're dealing with a Mexican labor and the social security department down there is extremely egregious in the way they prosecute things. You come in…

Okay. Thank you.

You bet, Rick.

Our next question comes from (inaudible). Please proceed with your question.

Good morning everybody.

Hey, (inaudible).

I dived in a little late, a lot going on. So at first of all, I want to make sure I'm still on Primoris quarterly call.

No, you are on (inaudible).

And I have a question and I will stick pretty close to my knitting. On the engineering side, you guys had a nice backlog move. Is there and I want to kind of combine the comments on good outlook for petrochemical infrastructure. Would you have some visibility there? Can you talk a little bit more what's going on with those guys, and then kind of how that would translate later for the business, if it does? A matter of fact it did.

Well, we -- James, their history has been the bottom end of the plant, so when they build the big plant first thing you got to do is these plants are all in Louisiana and the wet parts of Texas. So the first things you have to do is you're going to stabilize the site, build a path to build the plant on. And James, both Conrad (inaudible) an end group that works with Danny are very good at that. One of the projects we are looking at is 8 million yards of dirt and I'm one of the dirt guy, so I'm kind of looking at the thing well, you know this is a $6 to $8 a yard. Well, you got to bring it from miles away. So it's more like $25, $30 a yard. So the numbers are big and they start early. What we do James is very good at the dirt and the concrete to go on to these plants where Force and Saxon and parts of James they are very good at the piping along with their cardinal. So we are going to see a lot of these guys just do the pipe side, and they will be late into the party, will be at the front of the party, which has two good attributes. First off, you get in before everybody else, so you start to seeing revenues earlier and, secondly, you are getting paying and client's figured out he is running out of money. So typically you get paid some of the guys later they're fighting the client's budget. We will participate in that other work, but there is a huge amount of petrochemical stuff, I mean they were talked in $50 billion to $60 billion just in Lake Charles area.

Well my question was more specific, Brian -- I'm sorry maybe I have missed it, but I was thinking more of the On-Quest guys, the backlog that you have there. What's showing up there?

I'm sorry. Well, that's fire heaters, Rogers got the fire heater the guy out of Calgary, he does a great job. He sells mostly international which is good margins. OnQuest margins out in the call asked earlier about margins, they do exceptionally well. They get great margins and that's where some of this make ups going to be for El Segundo, but mostly of their's -- the good margin they have with these small mini and micro LNGs. And they are fabulous. We have got a deal with Stabilus, we announced earlier and that's up to five plants and if that works up they are going to build more. The big one that kind of stuck up on us that we are working really hard right now is that all the ships now when they come into the national waters of the US after meeting the EPA standards and for air pollution well they are all either fuel oil or diesel driven. They will meet the new standards. So they are -- and the only reasonable thing they can do is LNG, they can't put compressed gas in there, and they are not going to run it all on diesel, because it's dirty so they do a blend. They run up to about 70% LNG and 30% diesel. The engines won't work as well if you don't get at least the 30%, but they can meet the new standards with that. So we are seeing a huge influx of proposals just to meet the needs in the ports and there is no big LNG places to get these. So they are going to make the LNG and the ports and distribute it to the various places with barges and we think that's going to be a great market. But at $40 million or $50 million apiece how many of those do you need?

But that's what judging the backlog, it's already there?

Yes, well, you got to remember, lot of the stuff there is a couple of different manufactures in the equipment for this stuff, we have alliances with both. Chart is just a great, great company. And so we have to get in the queue and have to get the parts. Some of the clients are actually going directly to him in ordering the parts ahead of this, just to get in that in line to get the stuff build. Because this is not something they are doing for fun, this is something -- it is regulatory mandate. And so they are all design built, and we are very good at this. Our guys are just very -- they are the best in this. They pluck a switch and make LNG. Everybody else's process takes a while you got to cook the thing up, and when you have that and you can make LNG on a moment's notice instead of having it rule the planet you need less storage and storage is very expensive and you plans are more responsive to what you need it. So our guys are great. We think it is going to be a huge market for us. In fact, we are looking desperately for more capacity because we think we got enough that we really need to grow our end, our ability to perform work faster than what we can do internally.

Okay. And no, you did not have that a lot of projects themselves in backlog?

No. Right now, and what we got is, we got one and a half projects spoken for. We got up to five with Stabilus which is in one of those is not -- one of those is in there, the other four aren't. And then we got several projects where basically what we do is, we do the feed on it and we do some preliminary engineering, we put some hard dollars on it, then they convert the project to an EPC after they are comfortable with the number. And we are very confident because these guys know our numbers, we built enough of them, we can give them a pretty good number to start with, they are not going to waste engineering money and they are not build it if we come into it with that number.

All right. Thank you for the time, for a great quarter.

Hey, thanks (inaudible).

Our next question comes from Lee Jagoda of CJS Securities.

:

Well you back in the queue by five for that. We're running out of time.

But I just had one I thought I would ask you. A lot of companies we deal with announce share buybacks. How did your board come up with the $23 million level?

Well, we thought we would approve $23,238,540, then we thought it was kind of silly. We think there are plenty of shares on the street and so, we have been issuing a few shares here and there. We have got a great management bonus plan where the guys get shares at a little bit of discount but then they are locked up for a couple years, they cannot leave without forfeiting them. And so we just think they we will use some of it in order to facilitate that because we do not really want to issue much. And then, we just think based on what we see in the acquisition market that we just think that were pretty good price right now. Our shares are at a very good price. And if somebody thinks they worth less then we will buy it.

Congratulations on good results. Thanks.

Hey, thanks, Arnie.

Thank you. Our last question comes from John Rogers of Davidson. Please proceed with your question.

Hi, good morning. Brian, I know you have touched some of this a little bit. But especially on the bottom work that you referred to with James, what do you see in terms of proposal activity or aligning with I guess the larger EPCM companies out in the 2015, 2016, '17? Is the market slipping at all in your mind?

Well, when you look at the water work coming through the pipeline --

Yes. I mean there is a -- sorry, I'm interrupting you. Yes, there is lot of excitement, not so much from you but others about the way the work and talk about 60,000 craft labors, people needed in the Gulf Coast, and more recently it seems those numbers have come down and everybody is talking about an extended cycle. So I am trying to get your sense, what you are seeing there and is that better for (inaudible) and how do you participate in that?

Well, where I was going with this a lot of work that is working its right down to the guys that are bigger fool than ourselves to build it, has to get through the engineering side first. And if there is a -- and now, it is more like a -- they originally estimated 200,000 crafts person shortage, which I think it will be that acute whether it is an extended cycle or not because a lot of the people left the industry, they just do not -- being a construction guy as "not glamorous" as it was 34 years ago. But it is having to work us quite to the engineering groups and the permitting groups. And you got rather unfriendly federal regulators, most of the state regulators are pretty friendly. But with -- you are going to get for engineering, it is going to take longer. And then the permitting process is going to take longer or not, not probably as much because of regulatory -- not because you are trying to be difficult to permit but they're inundated with permit request. So it is going to slip, they always do. We then -- several very large projects get delayed and then I'm under the confidentiality, so I can tell you which ones. They are not cancelled, they are delayed, and some makes a well as price of gas, I doubt it. Most these guys do not buy, they do not build billion-dollar plans because the price of gas blips up for a quarter. I think we are going to have cheap gas for a long time. But I do see the same thing. But that is pretty good actually because there is enough to go around for every contractor out there and if it is an extended…

Okay. Thank you and congratulations.

Thank you. I would now like to turn the conference back over to Brian Pratt for closing comments.

Closing today's call I'd like to thank all our stakeholders that believe in us, the men and women driving the nails, welding the pipe, to the investors that have believed in our ability to crate value for them. Pete, I truly am gratified to be able to work for you. Thank you for the privilege. Goodbye.