Thank you, Operator. Good morning.

Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's conference call includes forward-looking statements that involve estimates, judgments, risks and uncertainties that may cause actual results to differ materially from those projected. The complete text of Shawcor's statement on forward-looking information is included in Section 4 of the fourth quarter 2018 earnings press release that is available on SEDAR and on the company's website at shawcor.com.

I'll now turn it over to Shawcor's CEO, Steve Orr.

Good morning, and thank you for joining us on this morning's conference call. In our previous quarters, we communicated our expectation that the full year 2018 results would be aligned to annualized rate of Q4 2016 adjusted EBITDA and that Q4 2018 would be a step down from the results produced in Q3 2018.

Our results this quarter were in line with what we communicated. Adjusted EBITDA in the fourth quarter of 2018 was $24 million, a decrease of 37% over the third quarter of 2018, and revenue was $354 million, an increase of 1%.

For the full year 2018, adjusted EBITDA was $135 million, slightly above Q4 2016 adjusted EBITDA annualized amount of $133 million. This quarter's results and the results of the full year 2018 were supported by the diversity of the portfolio that proved the company can be profitable in the year when our core business of pipe coating is not contributing.

I will make comments in more detail on our Q4 results, expectation for the upcoming quarters and the overall outlook in a moment. But in summary, Q4 was as expected with support coming from continued demand for products and services in our day-to-day or book and turn business particularly in North American and our Pipeline and Pipe Services segment and stable activity in automotive in our Petrochemical and Industrial segment.

The quarter did experience the forecasted Q4 seasonal impact and there was continued softness in pipe coating, specifically in international and offshore markets. With Q4 now finalized, 2018 results were solid and the company has demonstrated the value of an expanded portfolio that has more than offset the limited contribution of our core pipe coating business.

2019 results will be determined by two factors. The first is the continued strength in the base business and the second is the timing of when pipe coating activity will start contributing positively and consistently to the results.

Considering these two factors, 2019 is expected to be an improvement over 2018, but it will be a year of two halves. The first half will see continued cost related to the readiness of pipe coating facility needed for future work and to pursue projects and headwinds from Western Canada.

The second half results will see benefit of higher pipe coating activity from work secured and several of our businesses reaching optimum loading. Additionally, we expect sanctioning of work, that today we have conditional rewards, will result in backlog growth, which, in turn, will support the improved performance beyond 2019.

The future performance of Shawcor will be determined by our portfolio and the activity of our customers in the markets that we choose to play. With an expanded portfolio, which is expected to include ZCL, line of sight on the inflection point for international offshore pipe activity and our positioning in these markets, there is increased confidence for future long-term earnings growth.

I'll now turn the call over to Gaston Tano, our CFO, to provide some details on the fourth quarter financial results. Gaston?

Thanks, Steve. As Steve noted earlier, the fourth quarter results were in line with our expectations.

Revenue in the fourth quarter increased by 1% to over the third quarter of 2018. The Pipeline segment revenues increased by 2%, reflecting a positive impact from the adoption of hyperinflationary accounting in Argentina and a stable demand for our composite pipe products and girth weld inspection services in North America, partially offset by lower pipe coating activity in North America and EMAR regions.

Petrochemical and Industrial segment revenues decreased by 3% due to lower activity from our automotive heat shrink products in North America and EMAR, partially offset by higher revenues for our wire and cable products in North America. Compared to the fourth quarter from a year ago, consolidated revenues decreased by 17%, mainly due to lower revenues in the Pipeline segment, which declined by 20%, reflecting the lower large project activity in Latin America related to the completion of the Sur de Texas-Tuxpan project and lower activity in Asia Pacific and EMAR regions.

This was partially offset by higher revenue levels in North America mainly from the demand for our composite pipe products, large diameter coating and girth weld inspection service. Revenue for the Petrochemical and Industrial segment increased by 7% compared to the prior year fourth quarter, primarily due to higher revenues for our automotive heat shrink, particularly in the EMAR region, and for our wiring and cable products in North America.

Consolidated gross margins for the fourth quarter were 28.2%, lower than the 29.5% in the third quarter of 2018 and also lower than the 37.9% in the fourth quarter a year ago. The Pipeline segment gross margin for the fourth quarter decreased to 28.2% from 39% a year ago, reflecting lower large project activity in Latin America and lower facility utilization in EMAR and Asia Pacific.

Petrochemical and Industrial segment gross margin was 27.9%, lower than the 27.7% in the third quarter of 2018 and slightly lower than the gross margin of 28.1% that was reported in the fourth quarter of 2017. We expect consolidated margin in the first half of 2019 to be negatively impacted by the continued low pipe coating activity in the international and offshore markets and higher cost to maintain idle assets, reactivate plants and pursue large projects.

On a consolidated basis, adjusted EBITDA for the fourth quarter is $24 million, lower than the $38 million reported in the third quarter of 2018. The current quarter has been adjusted for the impact from the adoption of hyperinflation accounting for our operations in Argentina.

On an adjusted basis, the current quarter's performance reflected typical slowdown in our several businesses along with ongoing investments in our pipe coating business for idle assets and project pursuits. In addition, it reflects stable demand in North America for our composite pipe products and integrity field inspection services.

The current quarter results were negatively impacted by $4 million increase in SG&A expenses compared to the third quarter of 2018, primarily due to higher costs from professional fees, advertising, insurance and other costs. Adjusted EBITDA for the fourth quarter was lower than $67 million reported in the fourth quarter of 2017.

The decrease is primarily related to lower large project activity in Latin America related to the completion of the Sur de Texas-Tuxpan project, partially offset by higher activity in our North American based business. In addition, the current quarter was positively impacted by a decrease of $21 million in SG&A expenses compared to a year ago, reflecting lower incentive compensation expenses where the prior-year period include an increase related to government-mandated employee profit sharing on large project activity in Latin America and lower cost of professional fees, advertising, insurance and other items.

Now let's discuss cash flows from the quarter. Before changes in noncash working capital, cash provided from operating activities for the fourth quarter is $24 million, a decline from the $35 million from operating activities in the third quarter.

This decrease is primarily related to lower net income and a change in a noncash item in the quarter, mainly provisions, share-based compensation, unrealized loss and derivatives and other noncash items. Compared to the $59 million that was provided from operating activities in the fourth quarter a year ago, the current quarter is primarily down due to lower to net income and lower amortization of property, plant and equipment, provision and other noncash items.

The change in noncash working capital in the fourth quarter was a net cash inflow of $27 million compared to an outflow of $55 million in the third quarter of 2018 and an inflow of $38 million in the prior year period. The $27 million cash inflow from working capital in the current quarter is primarily due to lower accounts receivable, contract assets and prepaid, higher accounts payable and a positive impact from foreign exchange.

Cash used in investing activities in the fourth quarter was $23 million, primarily due to capital expenditures on property, plant and equipment to support current activity levels and growth in our businesses. During the fourth quarter, cash used in financing activities was $10 million, reflecting the payment of our regular quarterly dividend.

Net cash flow for the fourth quarter in 2018 was a positive $27 million compared to a negative $52 million in the third quarter of 2018 and a positive $78 million a year ago. With respect to the balance sheet, our position remains solid.

The company's cash and short-term investments increased during the fourth quarter to $219 million. The increase reflects a decline in noncash working capital at the end of the fourth quarter to $174 million from the $193 million that we had at the end of the third quarter but higher than the $89 million at the start of the year.

The increase in noncash working capital that occurred during 2018 was expected and reflects continuing investments to support the growth of our base business in North America, while the start of the year balance was positively impacted by the timing of collections related to large project activities in the fourth quarter of 2017. From a debt perspective, the company continues to maintain a low leverage ratio with long-term debt of $268 million and $44 million of standard letters of credit as of December 31, 2018.

The company also had available unutilized credit facilities of over $455 million. As we communicated in the ZCL Composites acquisition announcement, Shawcor has entered into a commitment letter with the Toronto-Dominion Bank and National Bank of Canada as co-lead arrangers providing a USD 500 million, four year senior unsecured revolving credit facility.

This facility will be used to fund the arrangement and replace Shawcor's existing credit facilities. The company is in the final stage of completing a new financing with an existing banking syndicate and anticipate it will close prior to the end of the first quarter of 2019.

In addition, on January 30, 2019, the company gave notice to its senior noteholders that we will repay on March 7, 2019, the entire principal amount outstanding with accrued interest totaling $200 million and a make-whole payment estimate of approximately $5 million. I would now turn it back to Steve for his commentary on the company's outlook.

Steve?

Thank you, Gaston. Over the past several weeks, Gaston and I have had the opportunity to meet many of our existing shareholders, potential investors and members of the analyst community.

We very much appreciate the time taken by all to meet with us and discuss the past, current and future challenges and opportunities for the company. I do believe these meetings are very valuable and ensuring there's an understanding of the considerations behind the decisions and actions being taken and the views of those that have a choice of where they invest.

Now turning to Q4. The fourth quarter of 2018 was as expected and together with the previous three quarters, delivered the results as we messaged for the full year 2018 similar to the annualized rate of Q4 2016 adjusted EBITDA.

The quarter benefited from strength in composite line pipe, girth weld inspection and book and turn pipe coatings in North America. Additionally, there was positives related to offshore pipe coating activity in our U.S.

Gulf of Mexico, Mexican and Brazilian facilities. As expected, there was a fourth quarter seasonal impact in several of our businesses as facilities and customers ran a short quarter and the continued drag from the readiness of our pipe coating facilities.

The one area that was not forecasted to be as weak was in our businesses in Western Canada. The expected winter season preparation spending was very muted and in fact was disappointing.

Overall in Q4, our business in Western Canada was negatively impacted by approximately $2 million to $3 million compared to what we had experienced in 2017. 2018 was an important year for the company as it was able to deliver acceptable profitability, $135 million adjusted EBITDA in a year where the core legacy business of pipe coating did not contribute to the overall results.

Furthermore, the diversified base business is supporting the company's ability to ensure the future success of pipe coating as projects are pursued. Overall, 2018 proved to be a pivotal year.

As I mentioned in my opening comments, 2019 is looking like a year of two halves. The first half will see continued strength in the base business and the burdening from pipe coating.

The cost that we are tracking in order to position the company to win more in recent quarters has been approximately $15 million per quarter. If we did not have the visibility on future projects, as reflected in our bid and budgetary of $2.9 billion, this investment would not be required and we would take actions to eliminate it.

The second half of the year will be stronger as the impact of the swing and pipe coating will be visible as it starts to be a contributor. This is a result of work that is already secured in our backlog of $459 million such as Liza II that is no longer conditional and is fully under contract and better utilization of plants.

Overall, we expect that 2019 will be an improvement over 2018 with Q1 being the weakest as pipe coating utilization will be at the lowest and the reality of Western Canada's drilling season being very poor. Our strategic rationale to spend money to maintain a global footprint can be summarized as follows.

First, existing facilities win work because they have proven capabilities. Customers choose to award large projects to pipe coating facilities with a strong track record.

Though we do have the ability to mobilize and demobilize plans for applicable projects, such as we did in the Sur de Texas project, in most cases, an existing facility will have a significant advantage to win a project over a mobilized option because of the perceived execution risk. As a result, our global footprint consists of facilities across Americas, Europe, Middle East and Asia Pacific regions in various operational readiness modes from ramp-up, active ramp-down and closed.

Each of these modes carry different levels of cost that we constantly evaluate against the probability of projects being sanctioned and of Shawcor being awarded through the leveraging of the geographical placement of the facilities and the multiple logistics scenarios that are associated with each opportunity. Second, a global footprint enables technology adoption.

Our global facility footprint provides a channel to market for our new products and allows technology to be transferred from one location to another to take advantage of specific offshore and onshore opportunities. Once a proprietary technology is deployed into a new market, it is -- it becomes a substantial differentiator.

An example of this is ULTRA. ULTRA is a proprietary Shawcor insulation coating product that was initially commercialized and deployed into the Norwegian North Sea tieback market in 2010 from our Norway facility.

This technology was deployed in Australia offshore market in 2016 from our Malaysia facility and in the Brazilian deepwater market in 2017 through our Brazilian facility. We are now actively bidding ULTRA in Malaysia, Australia, Brazil and East Africa basins, and we will further expand the ULTRA market into other basins where we have facilities such as the Gulf of Mexico.

We have a funnel of several new offshore technologies in development that we plan on commercializing in 2019 and we will deploy this -- them in the same manner as ULTRA through our footprint of proven facilities. Thirdly, certainty of execution is enabled through multiple locations.

Our global footprint also allows our customers access to capacity for multiple facilities for very large pipe coating projects. The security of capacity is another key strategic advantage that we use to win large projects.

A recent example of this is the insulation coating requirements of the Liza series of offshore projects in Guyana with nearly overlapping phases. We were able to offer deepwater insulation from our Channelview, Texas facility for Phase 1, supported by our facility in Veracruz, Mexico to produce deepwater insulation for Phase 2 when Channelview's capacity was insufficient.

And we are providing additional backup capacity from our Brazilian facility for subsequent phases. This was only made possible through our existing network of facilities.

As a result of this approach, the Veracruz plant is now the only deepwater coating facility in Mexico set to capitalize on future activity in the Mexican deepwater market. Another example that we hope to prove is the need for capacity for large projects from the resurgence of LNG projects in Australia and Papua New Guinea where new gas sales are forecast to be tied into existing or expanded gas processing plants.

The number and size of these projected pipelines will require massive pipe coating and handling capacity which can be provided from our twin sites in Malaysia and Indonesia. Both these sites have been upgraded and expanded since the last wall of work and provides backup to each other, which customers value for critical projects.

I would note, the recently signed conditional letter award with the selected EPC for an offshore Australian project with pipe coating revenue estimated over $100 million starting in 2020 demonstrates how a multiple plant approach can be part of a differentiation strategy. Shawcor's strategy is to build a company that is recognized for integrity, technology and execution.

This strategy is supported by long-term fundamentals, aging infrastructure, reservoir depletion and energy sustainability. With increased visibility on future earnings that are now supported by a diverse base business, global pipe coating projects moving forward and a strong balance sheet, Shawcor is executing its growth strategy, which involves both organic and inorganic initiatives.

For clarity and as I have communicated in the past calls, organically, we are focused on continuing to look to bring new products and services to market, for example, new composite line pipe products, advanced girth weld inspection technology and next-generation flow assurance coatings and to bring online additional capacity where it is justified and has an acceptable level of return. Inorganically, Shawcor has evaluated opportunities that are aligned to our enterprise strategy, our strengths, our sustainable businesses and have clearly identified cost and revenue synergies.

This inorganic filtering has resulted in the recent ZCL announcement. I'll now turn the call over to Shannon, the operator, to open it up for questions you may have for Gaston and I.

Operator?

Always appreciate the added color on the projects that you're chasing. Nice to see some project wins, even though they're not quite final yet.

I wanted to start with the Australian project that you decided. How should we think about the timing for that $100 million plus potential project?

Is that something that could be a near-term announcement? Is it in late 2019?

I think you said it as being a 2020 impact.

Yes. So right now, the project for me, in the past, we always discussed two risk elements.

So number one, would Shawcor win the project and would the project go ahead? This particular project, I think we're comfortable now that we -- our contract we have in place with firm terms and conditions and pricing with the chosen EPC that is doing the FEE or the front-end engineering secures the workforce if the project goes ahead.

The project actually has contracted gas offtake contracts. So they have contracted the gas or the takeaway already, so they have an obligation.

And it is scheduled to FID early in 2020 with pipe coating activity commencing shortly thereafter. So it is -- it will not hit the backlog because we'll continue to put these conditional awards to keep them in our bid.

But it would quickly make a step change in our backlog in early 2020 should the project FID on time and there's no reason in this particular project that I see that it would not FID on time or even earlier.

That makes sense. And so keeping on that theme then, can you help us understand or even better, could you quantify for us how much of the conditional awards are in that bid book?

So we look at a $1 billion bid book, we look at a $450 million backlog. There's almost like a wedge in between there, your backlog which is awarded, your bid book which you're waiting for, but there's a portion of that bid book, which is -- it just -- it's very high probability like the Australian project.

Could you help us understand how much of that $1 billion worth of bid work is very, very high probability?

Yes. So I think, first of all, you've identified something that we're having a challenge on how we actually communicate correctly.

So our backlog, just to go over it one more time, is work that we have secured under contract that we have a pipe scheduled for firm pricing conditions and will be executed in the forward-looking 12 months. Bid is work that we have firm proposals in place, and should we be awarded to work, we would do, and then of course, budgetaries where we provided estimates primarily for ASC numbers.

Right now, if you look at this large build in the bid number, it is because we're getting better visibility on projects because they're advancing. So I think you can safely say, of course, there's $100 million that we've already communicated.

There's probably at least another $50 million there.

Sorry, $50 million, 5-0?

Yes, at least 5-0, yes. So I would be comfortable to say between $150 million to $200 million of work that we have visibility on where we have firm terms and conditions and pricing with the chosen EPC with the project.

The EPC is participating in the feed with an option to do the construction and installation of the project FID.

Got it. So out of the $1 billion in the bid book, there's probably $150 million to $200 million where your probability, your internal probability is very high because the reasons you outlined.

And the balance of it, the remaining $800 million to $850 million would be just a lower probability as it's earlier on in the process?

It would be the historical probability where both the risk of the project going ahead and not winning the project exists, right? I would also say, probably in the quarter, what we're starting to see as a change is there are now -- the projects that are moving ahead that are not using the contracting model kind of back to the historic rates, so the BP Tortue opportunity was in FID, right?

It did not go through the feed then FID process, right? So that project would be in our bid and it would be a standard type project where both the risk of winning and the risk of the project going ahead would still be there, right?

Okay. And then just one more in the backlog, not to hound it too much.

But you mentioned, Stephen, in your sort of concluding remarks there, that you carry the $15 million in quarterly costs, in quarterly negative EBITDA for the facilities that you're just keeping active for the backlog. Based on a probability -- your probability assessment of the project being sanctioned and then you winning it, et cetera, et cetera, can you give us an insight as to what the probability is that you've assigned in aggregate to your $1 billion bid book and $1.5 billion budgetary estimates that results in Shawcor burning through about $60 million a year to keep those facilities sort of ready to rock for that?

No, I think it's hard to say. We'd have to do it by -- project for project.

I think what we can say is that we are singling that by the time we get through 2018, pipe coating will no longer have a drag in our utilization both because of the large project wins but overall smaller projects that are starting to come in. We will be able to absorb the cost of the pursuits within the pipe coating business, right?

Got it. Okay, so that $60 million or $15 million quarterly drag will be gone and then some as you sort of execute on these products?

Yes, I think that's what we are messaging, right? We're calling out the $15 million and the $15 million, of course, are in several different buckets.

But if we did not have a view -- the way we look at it, if we didn't have a view on a positive outlook for pipe coating, several of these facilities and the Asia Pacific facilities that I've already called out that are critical for this $100 million selection from the EPC, we wouldn't have the cost and we wouldn't be doing the upgrades in the facility to do, for example, double jointing.

Got it, okay. And then lastly for me, so I don't hog the times here, just margin profile of the backlog versus your margins.

I mean, obviously, you were in a period here of lower margins because of a lot of these things here. But if we sort of go back to the periods when you were executing larger projects, how should we think about the margin profile of the backlog versus the margin profile that you experienced when you were executing larger projects of sort of the mid-teens EBITDA?

Yes. So I guess, Greg, the best way to describe it is as utilization in our pipe coating facilities improves, gross margins will improve.

But I mean, the level of a large project, the size of Sur de Texas, you haven't heard us talk about those type of projects in respect to the implications it has in for '19 and '20, right? So I think margins will improve sequentially during 2019, but it will be basically a utilization of facilities and a stable demand that we have for our North American base business.

I just have two clarification questions and then another sort of following on Greg's line of questioning. So first, just from your comments, I think you mentioned Q1 pipe coating realization will be the lowest.

And I just wanted clarification on -- if you see that for this current down cycle or is that for the year in 2019?

No, no. Certainly, for the overall year, we expect pipe coating to be an improvement over 2018, without question.

And it's because it's simply the work that we have secured already in our backlog, we'll make pipe coating better than 2018, right?

I think the comment was on Q1 in particular.

Yes. So Q1 will not and it will be a continued drag that we saw in Q4, it may be even higher because we'll have higher cost in pursuit.

We will not see the impact of the backlog really because we'll just be starting Liza II in Q1. So I don't expect pipe coating to do much in Q1.

In fact, Western Canada is a pretty core story for pipe coating, which I think will change as we go through the year and the tariffs are figured out from Canadian steel going to the U.S. So to restate what I'm saying directly is Q1 will be soft for pipe coating, potentially even softer than it was in Q4.

And we strongly believe that overall 2019 will be stronger than '18 for pipe coating just based on what we already have secured.

Okay, great. And then you also referenced your Western Canadian business down $2 million to $3 million.

I just wanted to confirm that you're talking about EBITDA there?

Yes. Bottom line, yes, yes.

Okay. So then the question I have is just if you could comment on your view of your competitive positioning for the backlog of FIDs that are out there in various markets.

It sounded like from your commentary, you believe you're quite well positioned out of Veracruz. But elsewhere globally, how do you feel about where you stand both in light of the EPCs that are being used now and then in terms of more sort of historically standard processes?

So the -- maybe as a starting point, we'll talk about how things have changed. So in the past, we would have bid to the operator.

We would have bid to the EPC. We would have bid to the pipe mills for the same project.

Today, what's happening, and I'll use an actual project as an example, is Exxon Mobil went and provided the EPCs, the plants that were qualified for use for pipe coating and then the EPCs then bid those pipe coating facilities on in their larger scope of work. So our competitive advantage is to ensure that we have facilities that are qualified for the operators and we can then -- or then can work with EPCs.

In the particular example of Guyana and projects that -- or pipe coating facilities that were the best to serve that market, there's only really one other possible competitor and they're not qualified by Exxon Mobil, which is a JV that's done in Louisiana and the Gulf of Mexico. So in that particular case, our competitive advantage is actually quite strong.

But there is a price point where, of course, they, the EPCs, will push quite hard a second, third party. And so in that place, we're actually in a pretty strong and increasingly stronger position as now we have three facilities to serve offshore Brazil, Gulf of Mexico, both in the U.S.

and the Mexican side and then opportunities that are offshore in Latin America, so that's quite a lot. The one that I worry about the most and has the largest wave of work that's coming, of course, is related to the Asia Pacific offshore because our strongest competitor is really a regional competitor and their footprint is quite strong in Malaysia and they have done large projects.

So -- but I think what's going to happen very quickly, certainly as Browse is determined and Scarborough is determined and Barroso is determined, I think the capacity in those markets, even with two of us there is going to start to tighten. The third area that we talk about quite a bit, it is a constantly changing, evolving market in the Middle East.

And our current facility in Iraq, which is really set up to serve the Middle East is somewhat at a disadvantage now because local content is becoming so important. So for example, in Saudi or in Qatar -- or if Qatar has isolated themselves or has been isolated for the rest of the Middle East, the strategy there has to be some way of a local and there is already pipe coaters in Saudi, for example.

So that kind of tells you where we are. So I don't think we're in any worse position than we were prior to the downturn.

I think the competitive pressure in Asia Pacific, which is the largest opportunity in magnitude, is out there. So there will be some low-margin work as we start filling capacity.

I have a few questions. Maybe following up on Greg's question on the positioning of $15 million per quarter, a couple sort of some questions on that.

Do you see that tailing off by Q3, is the first question. And the second question would be, clearly, you're spending this money, what I would call, for a multiplier effect if you're spending an annualized $60 million.

You're clearly pursuing something over $100 million of revenue. Could you, and if you can, provide some guidance on how big the price could be?

So first of all, we will continue to spend the $15 million. But of course, the $15 million will start to be absorbed as the plants are turned on, right?

So the problem with the $15 million now is, for example, we're spending money to keep the -- both facilities in Asia Pacific warm stacked, but they're not generating enough revenue to pay for themselves. But you can't have -- you can't hash that facility, right?

And we have put money in it to do -- and I mentioned already, double jointing, so that costs money to do that. So I don't expect the $15 million to go away.

Now the $15 million, as I mentioned, will be absorbed in underutilized facilities. But we will continue to reposition or to shutter plants and so the $15 million will be spent.

If you ask, okay, what is the size of the opportunity, it's $2.9 billion. There is a lot of work that -- just from the time we closed the quarter and did a summary of projects, there's four new projects that are material opportunities that are really not even captured in our budgetary or bid.

So look, $2.9 billion is -- the number is now starting to get silly, but the bid are real projects. There's $1 billion, say, of real projects there.

And the $1 billion, if you spread them from end of '19 into 2021, there's a lot of work of pipe coating projects out there, right?

Focusing a bit on a segment that's never talked about too much, the Petrochemical and Industrial segment has been a very consistent performer, plus or minus 3% growth annually. Should we continue to see that?

Could there be an acceleration given some sort of macro trends? Or is there something different to consider in that?

And the other thing is, do we typically see a seasonal slowdown? I've noticed that in the last few years in Q4.

Yes, absolutely. So the seasonal slowdown that we forecasted was certainly from the two businesses that are in the Petrochemical and Industrial, which is our ShawFlex brand, which is around cabling or engineered cabling.

And the second is the heat shrink, which is primarily tied to automotive. The macroeconomics on the heat shrink business is tied very tightly to the number of vehicles that are made and electronic contents on those vehicles.

So I think all of us can see the cars that we drive today are getting more electrical components. So that is only going to progress.

So it's a nice -- and we've added -- I think with something Gaston did, sort of an analysis. Since 2016, we've added 25% additional capacity into the DSG-Canusa business in both Germany, here in Canada and Toronto and in China, so this is growing.

What you don't see in the overall numbers is ShawFlex actually has three types of businesses. One which is the lowest margin by high revenue numbers, can be high revenue if we choose to chase it, is high-volume, stalking-type cable, high-volume -- we don't -- you don't make -- the margins are quite low.

Then you have kind of the next tier up which is cabling that's used, for example, on ERT or transit. And then at the very, very high, you have highly engineered cable which would go to, for example, the Burlington Bridge or nuclear refurbishment.

Those are -- that's a good way to look at the business. If you look forward, we would expect continually growth, so single-digit growth for DSG around heat shrink, again, tied to electrical content, so we're quite happy with the business, and we would have put capacity in it if this wasn't the case.

But probably the swing for this business is the refurbishment business associated with highly engineered cable. So the one thing that I would watch if I was trying to figure out that business is, and I've already kind of alluded to it, is look at the nuclear infrastructure rebuild that's on the horizon.

And I think that would be an equivalent to a large project pipe coating in that business, right? So the swing up and down will be that type of work.

Okay, thanks for that. That adds a lot of color to a segment that probably isn't focused on a lot.

Just a point of clarification for both of you regarding the improvement in 2019 versus 2018. When you make those comments, that is exclusive of ZCL, is that correct?

Yes, that's correct, Elias.

Okay. And I'll close off with this one.

The bid book grew, it grew very substantially. Again, following up a bit on Greg's question, is the bid book increases to me by two new factors, new work coming in and old work -- or sorry, work that's been awarded that has rolled into the 12-month window.

Can you give us or give everyone a feel for sort of the breakdown of that potentially in the quarter and maybe going forward because that might be a crack that doesn't show up in the back -- sorry, in the bid book.

Sorry, Elias, can you just explain that question a little bit? I'm not sure...

Sure. If backlog increases by $100 million, some of that could come from a project that was outside the 12-month window that's pushed in and some can come from a new project that's within 12 months.

That's correct. Yes, you're right.

And in -- yes, less, of course, what you've turned?

Yes.

So I think it's dependent on the size of the project. So for example, Liza II, went into -- from bid to backlog, but there -- if we would've done it on a particular date, the majority would've been outside the 12 months.

Now of course, there's -- the majority of it is all in backlog, it was very little outside. It is only really using the larger projects that extend beyond the 12 months.

For example, Sur de Texas, all of it pretty much fits in. So right now, I would say very -- what we have outside the 12 months that is secured is a fraction of the current backlog.

Okay, that's what I was looking at. So when you're seeing a build in backlog, what you're doing is you're seeing -- through '19, you're seeing new projects essentially hitting, not rolling in projects that are already there?

Yes, correct. And the next assumption you can make, because we use the amount $30 million and above, the increase in backlog is not from projects that we won that's greater than -- that's outside the 12 months, but it's usually for projects that are less than the $30 million that are being booked during the quarter, right?

Yes, that's what I was trying to read into.

And there is some backlog beyond the 12 months, for example, for these two that amounted to this large amount.

It's not big.

A couple things that came up over the course of the call. Steve, you mentioned the Veracruz facility and sort of a somewhat captive audience there for projects in the region.

Can you give us an idea of how big that audience would be, either size of projects dollar wise or number wise?

No, I think my comments around the cap divide for the Veracruz facility is the Gulf of Mexico geology doesn't change depending on whether it's U.S. or Mexican.

So the Gulf of Mexico projects and the basins there will extend into the Mexican deepwater. The difference will be, in order to play in the Mexican market, you will have to have a presence in Mexico.

And we are now the only, what I would call flow assurance or wet insulation coating provider in the Mexican environment, right?

Got it. So it's not specific projects necessarily within the bid or budgetary book that you're talking about.

It's more just conceptually, that is somewhat of a captive region for you?

Absolutely, yes. And then the second comment I made towards Maggie is -- the question was if you look at the redundancy that we have been in facilities in Asia Pacific which is critical in winning work, we have set ourselves the same way now with the Channelview facility in -- on the coast of the Gulf of Mexico, the Veracruz facility that's on the coast of Gulf of Mexico but positioned in Mexico and then Brazil.

So we now have a very nice three way facilities that have worked in their own regions but can hand over and cover each other.

Got it. Just bit of a factual one.

Is Liza II in the backlog now?

Yes, it is. And as Gaston has mentioned, there's a very small portion of it that's outside the 12 months, but it's -- the majority of it is now.

But it's in that $459 million we saw with the result?

Yes, correct. And it's fully under contract, pipe schedules were actually -- the plants are doing what we call testing right now to go online in Veracruz and we have other work in Channelview.

So both Veracruz -- by the time we break into Q2, Channelview and Veracruz will be very busy.

Got it. And then last one for me, just factual, the ZCL closing.

You previously -- we previously got communication either from you or ZCL that the March 26 shareholder vote with a closing in early Q2, just wanted to check in and see if everything is still on track for that with messaging.

Yes, Greg. The shareholder vote for ZCL shareholders is scheduled for March 26, and we will close shortly thereafter in early Q2.

Well, thank you very much for attending this quarter's call. And we look forward to updating you again on the next -- on the close of the next quarter.

So thank you.