Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to Tutor Perini Corporation's first quarter 2020 earnings conference call. My name is Devin, and I will be your coordinator for today. At this time, all participants are placed in a listen-only mode. Following management's prepared remarks, we will be opening the call for a question and answer session. As a reminder, this conference call is being recorded for replay purposes. If anyone should require operator assistance during the conference, please press the star zero on your telephone keypad. I would now like to turn the conference over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please go ahead.

Hello, everyone, and thank you for your participation. With us today on the call are Ronald Tutor, Chairman and CEO, and Gary Smalley, Executive Vice President and CFO. Before we discuss our results, I will remind everyone that during today's call, we will be making forward-looking statements, which are based on management's current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially. You can find our disclosures about risk factors that could potentially contribute to such differences in our most recent Form 10-K, which was filed on February 26, 2020, and in the Form 10-Q that we are filing today. The company assumes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required by law. With that said, I will turn the call over to Ronald Tutor.

Thanks, Jorge, and good afternoon to everyone, and thanks for joining us. Our first quarter results were nothing short of outstanding and well ahead of our own expectations. We delivered double-digit revenue growth across all our segments, with particularly strong growth generated by the civil and specialty contractors groups, driven as usual by the large infrastructure projects that continue to accelerate as anticipated. These include Newark Airport Terminal 1, Minneapolis Southwest Light Rail, the Purple Line Sections 2 and 3 contracts, as well as Section 3 tunnels, California High Speed Rail, and the significant work on the east side access in New York City, namely the projects being CQ33 and CS179. Our operating income in the quarter more than doubled Our expectations compared to last year's first quarter do again to the broad-based revenue growth across all our segments, as well as improved performance in our New York City, in particular, specialty contractors business units. Gary will provide the details of our financial results in a moment, but to highlight, we delivered the strongest first quarter revenue growth in the past eight years. and the highest first quarter EPS in the past 10 years. As everyone understands and I believe, the first quarter has been traditionally always our weakest quarter in revenue, earnings and cash flow because of the severe impacts of the winter on our East Coast and Midwest operations, which is what makes this quarter so gratifying. So suffice it to say we are enjoying an excellent start to the year and confident that the rest of the year will continue to show progress and improve performance compared to last year. And interesting, it's in spite of the impacts of COVID-19 today. I'll go on to say we're fortunate the COVID-19 pandemic did not have much of an impact on our ability to generate these results. While we have experienced some temporary project issues, particularly in New York City and secondarily on the Newark Terminal in New Jersey, the vast majority of our projects have been deemed essential services, which has allowed us to continue our project activities while trying to maintain the social distancing and hygiene requirements of our agencies. Since our higher margin projects have continued to operate and had very little impact of the COVID-19 to date, we currently do not anticipate that the pandemic will materially affect our results for 2020. So we must caution that there is a certain uncertainty about whether it could reoccur and in fact accelerate, even though we don't believe that will be the case. Our backlog stood at 10.6 billion at the end of the first quarter, certainly a very healthy level that we believe will continue to fuel solid revenue growth and higher profits. Compared to last year's first quarter, which featured a record 3.2 billion of new awards and contract adjustments, and ended up in the largest backlog in our history. This year's first quarter included a modest 587 million of new awards and adjustments. This highlights how our backlog can and sometimes does fluctuate when comparing different periods due to the timing of large awards. I might add that certain of the jobs that we anticipated bidding in the first and second quarter thanks to the COVID crisis have been pushed back from 60 to 90 days. So the one area that has had impact is the bidding of work and the second area has been the ability to meet and resolve issues. We continue to be encouraged and extremely busy managing the bidding opportunities that were constantly presented. Some of the significant new awards Booked this quarter were two military projects by our PMSI unit at Camp Lejeune in North Carolina and one at Cape Canaveral in Florida, totaling $133 million. In addition, Frontier Kemper, our double subsidiary, booked the $64 million Blue Creek Mining Project in Alabama. As a reminder of the limited competition we're seeing for many of our large civil project pursuits, we are only one of three teams shortlisted to compete for the $1.2 billion Metro North Penn Station Access Project in New York. We expect to bid that project later this year or early next year. Today we are submitting our qualifications for the $600 million Link Union Station phase one project in Los Angeles with award of that project anticipated in the fourth quarter. In addition, we will be offering a proposal on the $7 billion Sepulveda Transit Corridor project for the Los Angeles MTA in the month of July. Excuse me, make that June. It's June, not July. The project will be executed under a design support General Contractor Framework, wherein design support and preliminary design should ultimately lead to a negotiated general contract at the end of the design and approval process. Our bid for the $400 million LAMTA Metro Connector project is expected to be on the street in the summer with an award expected in the fourth quarter. Our notable upcoming bids include the $1.5 billion Honolulu Rail Transit P3 project, which will now bid in July and should be awarded by the fourth quarter of this year. The $2 billion Bay Rapid Transit Tunnel project in San Jose, which bids in the second quarter of next year with award expected in the third quarter. And on the East Coast, We also expect to bid the $1.5 billion Newark Air Train with selection and award expected in the first quarter of 2021 and the $1.5 billion JFK Airport Landside Roadway development with selection and award anticipated by the end of 2020. Even more sizable civil bids that are further out on the horizon include the $4 billion West Santa Ana Transit Corridor and a $1.5 billion East San Fernando Corridor both for the Los Angeles MTA and the $3.5 billion Port Terminal in Manhattan in New York for the Port Authority of New York. In addition, the $2.5 billion Dunbarton Bridge Rail Corridor in Northern California as well as the $2 billion LaGuardia Air Train and a $1.4 billion Portal Bridge Replacement in New Jersey. I could go on and on, but that gives you an indication of the sheer size and specific projects within our geographical influence. Our building group's larger prospective opportunities include the $500 million Burbank Airport Terminal Replacement, the $350 million Harbor UCLA Outpatient Support Facility, a $350 million hospitality and gaming project in New Orleans, the $300 million Hudson County Courthouse in New Jersey, and various and sundry other large building work. Our specialty contractors group continues to experience strong demand driven by the volume of large civil work and building project opportunities. the majority of which would be as an exclusive subcontractor to Tutor Perini Corp. To reiterate what I have said before, the newer work that the specialty group has booked over the past two to three years at elevated margins is beginning to offset the weaker margins associated with the older legacy projects that we are in stages of completion. In terms of our effort to reduce our unbilled receivables and improve cash generation, we are definitely making strides. The only issue has been a number of settlement meetings that were set for March and April have now been postponed to June and July. With the inability to meet, we have had Three litigations where they were supposed to start in the litigation. The courthouse literally was closed until further notice. So my guess is that will set those back three months. And we've had a number of mediations that we believe will result in settlements that were tentatively set up for February and March and have now been set for June and July. So there's a very significant number of large confrontational unbilled receivables, wherein given the ability to meet and mediate, we think will resolve itself prior to the end of this year. Finally, we anticipate continued strong revenue growth across all our segments in 2020, with increasing and improved margin performance across all segments. are operating segments. The only group that has not been affected positively by the lack of competition has been the building group, which is still a victim of the low fees associated with CM work in a building industry that has plenty of competition and lots of large contractors. While our first quarter results were well ahead of expectations, and we're not significantly impacted by COVID-19. We're clearly mindful of the uncertainties around that situation and its potential to have some impact on our business going forward. Therefore, based on our results to date and our current forecast and market assessment, we are maintaining our 2020 EPS guidance in the range of $1.80 to $2.10. We will reassess our progress and performance as well as the impacts of COVID-19 and any other relevant factors later this year. But we should certainly have an excellent handle on what, if any, impacts come forward by the reporting of the second quarter. With that, I will turn the call over to Gary to present the details of our financial results.