Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation third quarter 2021 earnings conference call. My name is Kyle, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following management's prepared marks, 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 and thank you for your interest and participation. With us on today's 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 this 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 Form 10-K, which was filed on February 24, 2021, 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, I will now turn the call over to Ronald Tutor.

Thanks, Jorge. Good afternoon, and thank you for joining us. As anticipated, we had a strong third quarter of new award bookings, which totaled $2.1 billion and drove a 12% quarter-over-quarter increase in our backlog to a very solid level at $8.4 billion. Major new awards included the Cedars-Sinai Marina Del Rey Replacement Hospital of Los Angeles County for Rudolph and Sletten, the $471 million LAX Airport Metro Connector for the Los Angeles Metropolitan Subway District, the $220 million I-70 Missouri River Bridge for Lunda Construction, a $122 million military firing range project in Guam, and a $98 million military housing project in Guam for Black Construction. and of course our $71 million share of the Friant Kern Canal project in California. Customer demand for our construction services remains very strong as evidenced by the extraordinary sustained pipeline of large projects that we have been bidding recently and will continue to bid over the next several quarters. Currently, we are awaiting decisions and subsequent awards over several projects bid in the last 45 days. Those projects being the $3 billion plus JFK Terminal 1 project and the $2 plus billion Maryland Purple Line, excuse me, light rail project and the $2 plus billion Metro North and the Penn Station Access Project in New York City. In addition, we are optimistic that the substantial incremental funding expected to eventually flow from the proposed Federal Infrastructure Bill will result in significantly extended duration of even greater demand with a large number of high margin civil projects that we will be able to pursue as well as free up Resolves of ongoing projects as almost every one of our agencies will receive further funds. Until recently, the COVID-19 pandemic has had an adverse effect on both the volume and timing of new awards, with new awards and bid projects basically frozen for the last 18 months until the last 60 to 90 days. In other words, had COVID not occurred, obviously our backlog would be substantially higher today because of the frozen period of 18 months where very little work was awarded. Our third quarter revenue, as a result thereof, came in below budget, partly as a result of these impacts, but also due to lower than anticipated contributions from certain building projects in California and the Gulf Coast that were delayed. Compared to last year's third quarter, which was particularly strong revenue-wise, we experienced reduced activity in this year's third quarter on various building segment projects in California and Oklahoma that have recently completed or will complete very shortly. However, now that our backlog has started growing again and we anticipate further increases significantly as we win our expected share, we believe our revenue should begin to stabilize and eventually grow again as it did last year with more substantial growth starting in the first quarter as anticipated when these construction phases hit our backlog. Our strong civil segment operating margin of 11.9% through the first nine months of 2021 continues to reflect a favorable mixed shift toward higher margin projects.