Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation's first quarter 2021 earnings conference call. My name is Joe 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 call is being recorded for replay purposes. At this time, I will turn the conference over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

Hello, everyone. Thank you for your interest and participation today. With us on the call are Ronald Tutor, 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 Thanks, Jorge. Good afternoon.

and thank you for joining us. We are off to a good start this year, having delivered solid first quarter results that were ahead of expectations. The COVID-19 pandemic had a limited impact on our results in the first quarter, although we still continue to incur pandemic related additional costs, most of which we're seeking to recover from our customers as allowed by the contractual terms. It is certainly positive that vaccination coverage has been rapidly increasing across the United States, and I'm hopeful that the pandemic's worst effects are continuing to diminish so that a robust economic recovery may continue over the coming months. Gary Smalley, our CFO, will provide you with the details of our financial results for the quarter a bit later, but Overall, I'm pleased that our revenue and earnings per share came in ahead of budget and remain confident in our business outlook. And as such, we continue to affirm our earnings per share guidance for 2021. Notably, despite a slight revenue decline compared to the first quarter of last year, our operating income actually grew 5% as a result of a favorable shift toward higher margin civil projects. We had anticipated this mixed shift because certain large civil projects in the Northeast are now completing whereas certain significant higher margin civil projects in California and Guam are advancing largely offsetting the declining revenue and more than offsetting and their declining profit contributions. In fact, our civil segment operating margin for the first quarter increased 100 basis points year over year to 10.5%, certainly a strong result for what is typically a lower margin quarter. Some of the major projects that contributed to our first quarter revenue included California High Speed Rail, San Francisco Central Subway, Purple Lines 2 and 3, as well as the Purple Line 3 tunnels, the Division 20 portal widening projects all in Los Angeles, the Minneapolis Southwest Light Rail, the Newark Airport Terminal 1, and the Anderson Air Force Base housing project in Guam, as well as certain other large projects in both the building and specialty contractor segments. We ended the first quarter with a backlog of $8.1 billion down slightly compared to $8.3 billion at the end of 2020 as a result of revenue that outpaced the volume of new awards in the quarter. I will note that we're expecting to book into backlog in the second quarter our newest project for the Los Angeles MTA, the previously announced 478 million LAX Airport Metro Connector. Our backlog remains solid and provides us with good revenue stability over the next several years as it includes certain very large projects such as the Los Angeles Purple Line Subway work that are expected to continue their progress for another three to four years. As I mentioned last quarter, the COVID-19 pandemic has had a substantial impact on our new awards and our backlog in 2020, and as a result could continue to cause significant impacts to our customers' revenue sources, which in turn has created temporary funding uncertainties. These are all the obvious delays that were occasioned by the lack of funding which took projects that were ready to bid and took them off and put them back on the shelf. We are now seeing those projects come out on a very significant scale as money becomes made available. As such, the COVID impacts are diminishing Government funding is increasing and of course this doesn't even take into consideration the infrastructure bill that the Biden administration is pushing. We remain very optimistic that our backlog growth will resume by the second half of this year and should be significant by the second quarter next year. We booked 1 billion of new awards and contract adjustments in the first quarter of 2021, including a $269 million government building facility in Yountville, California, with Rudolph and Sletten, and more than $220 million in various civil projects for Lunda Construction in the Midwest, and an additional $120 million of additional funding for the mass transit project in San Francisco. As I have alluded to previously, there is a seemingly endless list of major projects that we are preparing to bid this year and next. In May, we will be submitting our preliminary proposal for the $4 billion JFK Terminal 1 project and expect selection of the general contractor by September of this year. Other bids in the Northeast this year include the $1.5 billion portal bridge project in New Jersey, which is a design bid build expecting to bid in the third quarter with an award toward the end of 2021. In addition, We're working on a proposal for the $1.5 billion Maryland Purple Line project due in July in Maryland with this contract award expected to be in the late fall of 2021. The $1.2 billion Metro North Penn Station access in New York will bid in the fourth quarter with an award anticipated by January of 2022. The $1.5 billion Newport, excuse me, Newark Airport Air Train is expected to bid in the third quarter of this year with an award anticipated by the end of 2021. And the $2 billion LaGuardia Air Train for the Port Authority of New York bidding in the fourth quarter of this year with an award If that were not enough, and the list continues, in Northern California, the $4 billion Santa Clara Valley Transportation Authority BART Phase 2 tunnels, stations, systems, and buildings are also expected to commence bidding incrementally beginning in the third quarter of this year, with the first major award being the tunnels anticipated in the fourth quarter. We have pre-qualified for the tunnels and are in the process for all of the other prime contracts that are contemplated within that $4 billion package. In addition, in Southern California, we are pre-qualifying for the $700 million Englewood elevated people mover, which is supposed to bid in the fourth quarter of this year. In Hawaii, as we've discussed previously, The Honolulu Rail Project is expected to proceed with a construction GC approach of awarding the first $300 million of design and construction to whoever they determine to be the appropriate bidder and then negotiating the balance of the work with them on a CMGC. That is what's being anticipated and what we're being communicated. and that should take place by the fourth quarter of this year. Finally, black construction or Guam subsidiary continues to be overwhelmed by all of the projects in Guam, two of which we are bidding on the island of Tinian and another on the island of Palau and they're all in the range of 150 to 200 million each. Other bids on the horizon include the $1.4 billion JFK landside roadway development, the $4 billion West Santa Ana transit corridor, and frankly, I could read on and on, but it's beginning to even bore me. There is just a tremendous level of infrastructure. Again, I'm encouraged by the Biden administration's strong focus on infrastructure investments. and the continuing and increased likelihood that we're going to get a major infrastructure bill by the end of this year. Even without that infrastructure bill, federal funds are flowing into all the major state projects I previously listed, and we expect them to go ahead independent of the infrastructure bill. Clearly, as we've stated before and as obvious to anyone knowledgeable of our industry, we're extremely well positioned to reap these benefits as we continue to be one of only a handful of bidders that either qualify or propose on these major projects. In ending, based on our results through the first quarter and our outlook for the remainder of the year, we are very confident in affirming our earnings per share guidance for 2021 in the range of $1.80 to $2.20. As a reminder, our earnings in 2021, as it's always been, are expected to be weighted more heavily in the second half due to the typical Business Seasonality, as well as the timing previously discussed. Thank you. And with that, I'll turn the call over to Gary Smalley to present the details of our financial result.