Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation third quarter 2020 earnings conference call. My name is Paul, and I will be your coordinator for today. At this time, all participants are 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 is being recorded for replay purposes. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. At this time, I will turn the conference over to your host, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

Hello, everyone, and thank you for joining us today. With us on the call are Ronald Tutor, our Chairman and CEO, and Gary Smalley, Executive Vice President and CFO. Before discussing 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. And with that, I will turn the call over to Ronald Tutor.

Thanks, Jorge. Good afternoon and thank you, everyone, for joining us. As expected, this year is continuing to progress extremely well, despite the impact of COVID-19 that we have been experiencing during the entirety of the year. In the third quarter, COVID-19 had a lessening impact on our business as the vast majority of our projects have been considered essential and are still working. And I will try not to dwell on COVID-19 as a part of our life, but we are prospering despite it. This has allowed us to progress our work subject only to the timeliness of manpower reductions when one of our workers contacts COVID-19 and then we quarantine those workers that work in his area or associated with those employees. As a result, the impact on our workforce so far has not been significant as whenever we've been losing people to COVID, we've replaced them from the unions and been able to work accordingly. However, as an aside, most of our public agencies, in particular the transit authority agencies, have recognized COVID as a cost-reimbursable event and are preparing to pay us the direct costs, namely layoffs, cost of sick leaves, etc. I don't know that we'll get reimbursed for impacts on schedule or loss of revenue. I doubt it. However, we are being paid some of the direct cost. Moving on, we delivered another set of solid results this quarter with particularly strong performance from our civil and building segments. Our revenue grew 21% year-over-year in the third quarter, driven by double-digit growth across all segments. We continued executing substantial work on several large civil projects, including California High Speed Rail, Minneapolis Southwest Light Rail Transit, Purple Line's two and three stations, as well as Purple Line three tunnels in Los Angeles, and the Newark Airport Terminal One, as well as on large building projects such as the Choctaw Casino in Oklahoma and another large hospitality and gaming project and a large technology building project in California. I don't mention those specific names because they're under confidentiality, but they are what they are. Our revenue growth through the first nine months of this year has been equally strong at 21%. In fact, we delivered the highest third quarter revenue growth since 2014 and the highest revenue growth for the first nine months of any year since the merger in 2008. We generated $73 million of operating cash in the third quarter, another great result that followed the $92 million of operating cash generated in the prior quarter. More importantly, we generated $131 million of operating cash through the first nine months of 2020, which also set a new record since our merger in 2018. This was consistent with our expectations for continued strong cash flow in the second half of this year. We anticipate that we will again produce a healthy cash result for the fourth quarter, concluding what should now be a record year of operating cash. Our operating cash this quarter was largely driven by collections associated with major civil jobs and continued progress made on certain settlements. Strong cash generation in the third quarter keeps us well ahead of expectations for operating cash through the first nine months of 2020. Operating income of $83 million was another highlight of our third quarter results. It was the highest third quarter results again since the merger in 2008 and was up 73% compared to the same quarter last year. The significant increase was the result of continued progress on several high-margin civil jobs that I mentioned earlier, as well as a favorable arbitration ruling that we announced a few weeks ago. Our operating income this quarter would have been significantly higher had it not been for that $15 million charge we were required to take in the specialty contractor segment due to an adverse legal ruling we received pertaining to a completed mechanical project in California that was concluded four to four and a half years ago. In a moment, Gary will review all the financial results of the quarter, including specifics around the COVID-19 impacts year to date. But I will reiterate that our results for the third quarter were very strong and particularly outstanding for operating income and operating cash. Our major design-build projects are all advancing well, which gives me confidence we'll continue to see strong growth and profitability this year and next. Our backlog remains solid at $9.2 billion at the end of the third quarter. And importantly, the backlog is of longer duration than what you might expect. Thank you for joining us. combined with a relatively low volume of new awards during the first six months of the year compared to last year. That lack of awards is simply projects being stopped, work not going out to bid while all our agencies try to determine how they're going to fund all of their growth desires. These are all delayed until I believe after the election and there's a direction going forward and at the very least rescue packages by the federal government. We booked $625 million of new awards and contract adjustments in the third quarter of 2020. The most significant of these included $121 million for our share of the South Coast Light Rail Project in Massachusetts where we're in a joint venture with Middlesex, a local contractor in the area. $75 million of additional funding at Rudolph and Slutton for various building projects in California, a $54 million mixed-use building project in California, and a $47 million military facility for black construction. Speaking of black, they not only have an extraordinarily successful year, But the future bodes extremely well because all of the discussions for many years of the Marines moving from Okinawa to Guam is absolutely taking place with bidding opportunities in the range of over $2 billion over the next 18 months on the island of Guam sponsored by the U.S. Navy. Black's revenue and profits are growing at nearly double any prior previous years. with an extraordinary increase in all the construction on Guam where we've been dominant for the last 40 years. We believe that our backlog still has the potential to grow over the next few quarters as we have already submitted several bids for new large projects that are pending customers' decisions and contract awards in the coming months. For example, we are awaiting the outcome and next steps related to the bid our team submitted for the Honolulu Rail Transit T3 project. We are also awaiting decisions regarding our submitted bid for the early stage work on what will eventually be the $8 billion Sepulveda Transit Corridor T3 project in Los Angeles. In addition, we anticipate bidding in early December the LAMTA's $450 million LAX Airport Metro Connector project with an award expected by the first quarter of 2021, as well as bidding on several large civil segment projects during the first half of 2021. As we noted last quarter, several major bid opportunities over the next year have been deferred while public agencies await federal supplemental funding and budgetary certainty. Once we move past the election results, we are optimistic that the sorely needed federal funding for infrastructure will be authorized sooner than later. Most in our industry continue to expect that the federal government will approve a substantial supplemental funding package aimed at supporting state and local transportation agencies' critical infrastructure needs, as well as their tremendous revenue shortfalls necessary for them to continue to function. Other large forthcoming bids include the $2 billion Newark Airport Air Train, the $2 billion JFK Airport Landway Development Project, The $1.4 billion portal bids replacement in New Jersey, which we now expect to bid in the third quarter next year. And the $1.2 billion Metro North Penn Station access in New York. It also appears that in the third quarter of 2021, we expect to bid the $2 billion Bay Area Rapid Transit Silicon Valley Phase II extension, which is a very large tunnel in the excavation in support of Two stations. Further out on the horizon, we are looking forward to the $4 billion West Santa Ana Transit Corridor and the $1.5 billion East San Fernando Valley Corridor, both for Los Angeles Metropolitan Transit Authority. In New York, we have been following, as we've spoken to previously, the $3.5 million Port Authority Bus Terminal and, of course, the $2 billion LaGuardia Air Train. Our building segments larger prospective opportunities include approximately $2.1 billion for six large hospitality and gaming projects in Virginia, California, Louisiana, and North Carolina, an $800 million new hospital in Northern California, the $500 million Burbank Airport Terminal replacement, and a $265 million veterans home facility in Northern California. In fact, we were provided a notice of intent within the last few days by a confidential customer for one of those six hospitality projects with a value of approximately $350 million, the construction of which is expected to begin in the second quarter of 2021. In all, we are tracking approximately $30 billion of project opportunities, literally $20 billion of which are civil, bidding over the next 18 months and more than $10 billion of building projects, bidding or proposing over the next 12 months, with significant work envisioned to be formed on many of them by our specialty contractors units. As you can tell, as we've been asserting for some time, the volume of prospective projects remains unprecedented despite the funding challenges presented by COVID-19. Our large civil opportunities are likely to grow even more once the federal government finally authorizes the long-anticipated infrastructure program. Finally, though our year-to-date earnings per share results are ahead of budget expectations and we have been able to offset all of the impacts of COVID-19 to date, we remain cognizant of the uncertainties and as such, based on our current assessment of market conditions and our forecast for the remainder of the year, we will maintain our 2020 earnings per share guidance in the range of $1.80 to $2.10. With that, I turn the call over to Gary Smalley to present the details of our financial results. Thank you.