Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Fourth Quarter 2021 Earnings Conference Call. My name is Laura, 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. At this time, I would like to 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 joining us today. With us on the call are Ronald Tudor, 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 Form 10-K, which 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 now turn the call over to Ronald Suter.

Thank you, Jorge. Good afternoon, and thank you for joining us. We had a good year overall in 2021 and concluded with a solid fourth quarter of profitability, highlighted by strong performance in the civil segment, which delivered an impressive 15.1% segment margin for the fourth quarter and a 12.7% margin for the year, for the entire year, our highest annual civil margin since 2014. The civil segment's full year margin increased 150 basis points compared to its 2020 margin, reflecting the continued shift we've talked about toward higher margin civil projects discussed previously. For the year, we achieved earnings per share of $1.79, which included 57 cents for the fourth quarter. Our full year EPS was in line with a revided guidance. It was also lower than last year's EPS, partly because we had a lower effective task rate in 2020 compared to 21 as a result of the significant tax benefits from the CARES Act. We booked $4.5 billion of new awards during 2021 compared to just $2.4 billion in 2020 and ended 21 with a backlog of 8.2 million. I would further add that that backlog increase was almost entirely in building work and specialty work, as our civil work and major awards and civils lagged significantly, not only in 2020, but even more so in 2021, because the sector was basically frozen by COVID and a lack of funding. so that our civil backlog and the impact of it went down significantly. Major new awards in 2021 included the Cedar Sinai Marina Del Rey Replacement Hospital in Los Angeles County, the $471 million LAX Airport Metro Connector for the Los Angeles Metropolitan Transit Authority, the $269 million Yonkville Veterans Home in California, the $220 million I-70 Missouri River Bridge, the $162 million Tinian International Airport parking apron and taxiway in the Northern Mariana Islands, $152 million courthouse in Santa Rosa, California, and both a $122 million military firing range project and a $98 million military housing project in Guam. As you can see, Guam continues to boom with new awards and significant backlog. Despite the significantly higher volume of new awards in 2021, the COVID-19 pandemic continued to limit bidding and proposal activity, particularly in our civil business. Our 2021 backlog was significantly and negatively impacted by the lack of civil work of substance to bid, as I said previously, both in 2020 and 2021. Although our backlog remained flat compared to 2020, a large amount of that higher margin civil and specialty work was replaced by lower margin building work. And because building projects convert to revenue much more quickly than design-build civil work, revenue in 2022 is expected to be strong, but the amount of profit we expect to recognize will be substantially reduced. We remain confident in our bidding approach and are targeting various large prospective opportunities this year, which I will detail in a moment. We have certain awards pending, including a tunnel contract for Frontier Kemper in British Columbia, Canada valued at over $260 million, and two gaming projects in California we expect to sign in the next 90 days at over $500 million. Demand for our services continues to be strong, and we expect it to further increase meaningfully now that not only the federal infrastructure bill has been signed into law, but a whole array of major civil work that's been frozen are finally coming into the marketplace. As you may know, with respect to that federal bill, it provides for $1.2 trillion of infrastructure funding, including $550 million in new spending for improvements to the country's service, transportation network and enhancements to its core infrastructure. The infrastructure bill marks the largest federal investment in public transit ever, the single largest dedicated bridge investment since the construction of the interstate highway system, and the largest investment in passenger rail since the creation of Amtrak. All in addition to providing for regular annual spending for numerous infrastructure projects. Significant incremental funding is anticipated to be spent over the next 10 years, and much of it will be invested in those major markets that directly align with Tudor Perini's market focus, namely rail, subway, and transportation work. Funding from the bill will begin to flow to our customers or owners in earnest around the middle of this year. However, even ahead of the bill's impact, we are already tracking tens of billions of dollars of prospective civil projects that are expected to be bid and awarded over the next two years. Next, I will discuss some of the major prospective projects we will be bidding over the coming months. The Newark Air Train Replacement Project will be bidding on April 8th, with team selection and subcontract award anticipated soon thereafter. We will submit our bids for projects A and B of the $2 billion-plus Maryland Express Lanes Project, also known as the American Legion Bridge I-270 to I-70, for Accelerate Maryland Partners, the consortium developing the project, for the Maryland Transportation Authority. We anticipate team selection shortly thereafter and contract awards for both projects by the third quarter. Other significant projects we plan to bid this year include the $1.8 billion South Jersey light rail project in New Jersey, the $1.6 billion Burroughs-based jail, and the $800 million JFK Roadways and Ground Transportation Center, both in New York City. The $1 billion East San Fernando Light Rail Project for the Los Angeles MTA and the $700 million Inglewood Automated People Mover, both in Los Angeles, and lastly, the $700 million Burbank Airport Replacement Terminal. Also, I forgot to mention the $600 million government facility project in Sonoma County. Black construction or subsidiary in Guam continues to be inundated with major project opportunities due to the U.S. military's refocus and positioning of its assets toward the Asia-Pacific region. We currently have a value of $470 million of bids in awaiting determinations. And as you can see, we had three major projects awarded on this call already. We are continuing to bid with another major project bidding in Tinian in the next quarter and an even more significant job on the isolated island of Palau. Black expects the Navy to release eight more projects worth over $300 million in the next 90 days. Altogether, the Navy is expected to award between $1.1 and $1.3 billion a year for the next three years in the islands, including Guam. For comparison, the Navy awarded a total of $1.1 billion in 2021, of which Black won four projects valued at $450 million. What that doesn't tell you is the $580 million bachelor enlisted men's quarters, which assumed almost the balance, we were second bidder by $5 million, or we would have almost had a sweep of all the awards.

Nobody is even aware.

close to being as strategically positioned in that part of the Pacific as Tudor Perini with its black construction subsidiary. We are the only major contractor with investment in significant people, engineers, and equipment to service this major program. All of our competitors attempt to come from the mainland U.S. to compete with us, and to say that's challenging is an understatement. I will reiterate that while our year-end backlog was level compared to last year's backlog, the reality is that there's been a noteworthy mix shift in the composition. In fact, our building segment backlog grew $607 million year over year, whereas our higher margin civil and specialty contractors backlog declined $230 and $487 million respectively. The decline in the civil backlog would be even more significant were it not for the added work we've continued to be awarded on some of our existing contracts. With this and other factors in mind, including our current market assessment and business outlook and the continued uncertainties in the timing of bids and new awards, we're taking a cautious approach in estimating our financial performance in 2022. We have established our earnings per share guidance for 2022 in the range of $1.15 to $1.60. We realize this range is considerably lower than investors' and analysts' expectations, but it is primarily due to the absolute change in backlog and the reduction of high-margin civil work that has occurred in the short term. And any breakdown and review of the components support the fact that the loss of two years of bidding major civil work is the reason behind the reduction. Also, contributing to the lower expected earnings per share is a more normalized tax rate. Our effective tax rates for both 2020 and 2021 were significantly lower than what we have budgeted for 2022 due to the one-time tax benefits in those years. I will also note that while we anticipate lower EPS in 2022 than 21, we expect a substantial improvement in our operating cash generation. Operating cash should far exceed our consolidated net income as a result of solid cash collections, not only from project execution, but a number of dispute resolutions and litigation settlements, as well as three and four current litigations in process that I expect to win, thereby significantly reducing our cost and excess balances. Thank you. And with that, I'll turn the call over to Gary to present the details of our financial results.

Thank you, Ron. Good afternoon, everyone. I will start by discussing our results for the year, after which I will review the fourth quarter. I'll then follow up with some comments on our cash flow and balance sheet, as well as our 2022 guidance assumptions. Revenue for 2021 was $4.6 billion, down 13% compared to 2020. The decrease was due to reduced project execution activities in the building segment, as various projects have completed or are nearing completion, while newer projects that have been recently awarded are yet to contribute meaningfully to revenue. Civil segment revenue declined a modest 5% year over year, primarily due to reduced activities on various completed or nearly completed projects, mostly offset by increased activities on various projects in California and Guam. Building segment revenue was down 28% year over year, mainly due to reduced activities on certain projects in California and Oklahoma that are completed or nearing completion. Specialty contractors' segment revenue was level compared to the prior year. Income from construction operations was $227 million, down 14% compared to $262 million in 2020. The decrease was in line with and primarily attributable to the lower revenue in 2021. There were also various favorable and unfavorable changes in certain project estimates, as well as a favorable adjustment related to a legal judgment, which were largely offsetting but contributed to the decline in 2021. These are discussed in greater detail in our 10-K, which, as Jorge mentioned, we are filing today. Civil segment income was $266 million, up 8% compared to $246 million in 2020 with a corresponding segment operating margin of 12.7% for the year, which was up 150 basis points compared to the prior year. As Ron mentioned, the civil segment delivered strong performance in 2021 with its highest annual segment operating margin since 2014, reflecting the continued shift toward higher margin projects that we've been pointing to for some time. Building segment income from construction operations was $29 million compared to $53 million in 2020. The reduction was due to the segment's lower volume in 2021, as well as the impact of a project charge we took on a transportation project earlier in the year. The specialty contractor segment had a loss from construction operations of $10 million in 2021 compared to income from construction operations of $17 million in 2020, clearly a disappointing result. The decrease was due to various negative impacts related to changes in estimates on certain transportation projects and a mass transit project, which reflected project charges under growth and unapproved change orders. The decrease was partially offset by a favorable adjustment related to a legal judgment on a completed electrical project in New York. Note that some of the negative impacts I mentioned, those that are due to the growth and unapproved change orders, are expected to reverse themselves as the projects progress toward completion. And the negotiation settlement of those unapproved change orders could result in additional profit for the incremental work in future periods. Other income in 2021 was $2 million compared to other expense of $12 million in 2020. The improvement in 2021 is primarily due to the absence of charges incurred in 2020 related to the unfavorable resolutions of certain disputes pertaining to past business acquisitions. Corporate G&A expense in 2021 was $58 million compared to $54 million in 2020, with the increase largely driven by higher travel-related expenses compared to 2020 when the COVID-19 impact, excuse me, when the COVID-19 pandemic caused significant travel reductions. Interest expense in 2021 was $69 million, down 9 percent compared to $76 million in 2020. The decrease was principally due to the absence of extinguishment costs incurred in 2020 related to debt refinancing. Income tax expense in 2021 was $26 million compared to $22 million in the prior year, and the corresponding effective tax rate for 2021 was 16 percent compared to 12.6 percent in 2020. The 2021 tax rate was favorably impacted by a one-time $8.2 million benefit related to a federal claim of right tax credit, which resulted in a tax rate adjustment associated with an adverse jury verdict in 2019 that rendered certain income recognized in 2016 to be uncollectible. So essentially, the 2016 income was taxed at a 35% federal tax rate, whereas when that income was deemed uncollectible in 2019, the federal tax rate was 21%. The claim of right credit allows us to recover the benefit of the 14% rate differential between the tax rates in 2016 and 2019. The even lower tax rate we had in 2020 was largely due to a one-time tax benefit that related to the CARES Act. Net income attributable to Tudor Verney in 2021 was $92 million, or $1.79 of earnings per share, and in line with our revised guidance for the year, compared to $108 million, or $2.12 of earnings per share in 2020. The EPS decline in 2021 was due to the factors I mentioned earlier that drove our lower operating income, as well as the higher effective tax rate compared to 2020. Now for the fourth quarter results. Revenue for the fourth quarter was $1 billion compared to $1.3 billion for the same quarter of last year. The decrease was due to reduced building segment volume with revenue of $277 million in the fourth quarter of 2021 compared to $522 million in the fourth quarter of 2020. The decrease was particularly due to various projects in California and Oklahoma that are completed or nearing completion. Keep in mind, however, as Ron mentioned, that because of the large volume of new building awards in 2021 and the corresponding change and backlog mix, we anticipate significantly larger revenue contributions in 2022 from the building segment, but at a lower margin compared to contributions from the civil and specialty contractor segments. Civil segment revenue for the fourth quarter was $519 million, down slightly compared to $532 million for the fourth quarter of 2020, due to reduced project execution activities on various projects in the Northeast that are either completed or nearing completion. Specialty contractor segment revenue was $241 million compared to $296 million for the same quarter of last year, with the reduction mostly driven by a decrease in project execution activities on certain mechanical and electrical projects in New York and California. Income from construction operations for the fourth quarter of 2021 was $56 million compared to $74 million for the same quarter last year. The decrease was largely due to underperformance in the specialty contractors segment associated with some project charges and growth in certain unapproved change orders, as well as the lower revenue in the building segment. The decrease was partially offset by strong civil segment performance due to contributions from certain higher margin projects. Civil segment operating income for the fourth quarter of 2021 was $78 million, up 22% compared to $64 million for the same quarter of last year. Building segment income was $9 million compared to $16 million for the fourth quarter of 2020, but the decrease primarily due to the segment's lower volume, including the impact of the Newark Airport Terminal 1 project that is winding down. The specialty contractor segment had a $16 million loss from construction operations in the fourth quarter of 2021 compared to $11 million of income from construction operations for the same quarter of 2020, which decreased due to the reasons I previously mentioned. Operating margins by segment for the fourth quarter of 2021 were 15.1% for civil, 3.3% for building, and a negative 6.5% for specialty. The civil segment margin was the highest fourth quarter civil margin since 2018. As mentioned earlier, our full year civil segment operating margin of 12.7% was up 150 basis points compared to 2020. I'll also add that the civil segment's 15.1% fourth quarter margin was up more than 300 basis points over the same quarter of last year. Corporate G&A expense for the fourth quarter of both 2021 and 2020 was $16 million. Interest expense for the fourth quarter was $17 million, slightly lower compared to $18 million for the same quarter of last year. Income tax benefit for the fourth quarter of 2021 was $1 million compared to income tax expense of $7 million for the fourth quarter of 2020, with a benefit in 21 largely due to the claim of right tax credit that I mentioned earlier. That income attributable to TutorPrinti for the fourth quarter of 2021 was $29 million compared to $35 million for the same quarter last year. Diluted EPS for the fourth quarter was 57 cents compared to 69 cents for the fourth quarter of 2020. Now let's discuss cash flow. We used $148 million of operating cash in 2021. The usage was primarily due to the significant growth we experienced during the year in our cost and estimated earnings in excess of billings, what we refer to as our CIE or unbilled costs. The CIE increase in 2021 was largely driven by lingering COVID-19 impacts, which continued to cause delays in the resolution of certain claims and unapproved change orders through most of the year. As we have discussed previously, COVID has constrained some of our owners' revenue and funding sources, thereby limiting their ability and budgetary discretion to pay us timely for certain in-scope work, as well as some out-of-scope work that we have performed at their direction. As a result, through 2021, we had to temporarily fund certain project costs that would normally be more promptly negotiated, billed to, and collected from these owners, which negatively impacted our operating cash flow and largely contributed to the increase in CIE for the year. The good news, however, is that during the fourth quarter of 2021, we began to see signs of improvement with a modestly positive operating cash result of $4 million for the quarter and a related $31 million sequential quarter-over-quarter decline in our CIE. We believe that we are turning the corner on CIE and operating cash as we were able to successfully negotiate and resettle certain claims and unapproved change orders in the latter part of 2021 and as a result are now expecting to collect a substantial amount of associated cash in the first and second quarters of 2022. We're also continuing discussions with owners to negotiate other amounts we are owed on various projects and anticipate that we will resolve and collect significant additional amounts of cash we are owed later this year and in 2023. Because of what we have recently accomplished in resolving claims and change orders, what is currently being negotiated, arbitrated or litigated, and our outlook regarding the anticipated conclusion of various other resolutions and collections, We're highly confident that we will have a very strong year of operating cash in 2022. Operating cash in 2022 is expected to be well in excess of our consolidated net income. Now let's briefly turn to our balance sheet. Our total debt as of December 31st, 2021 was $994 million, down 3% compared to the end of 2020. We remain well within our debt covenant compliance limits, anticipate that we will continue that this will continue to be the case in the foreseeable future. As Ron mentioned earlier, our 2022 EPS guidance of $1.15 to $1.60 is lower than our 2021 EPS for the various reasons previously mentioned. Now let me provide you some key assumptions factoring into our 2022 guidance. G&A expense for 2022 is expected to be between $250 million and $260 million. Depreciation amortization expense is anticipated to be approximately $76 million, with depreciation at $61 million and amortization at $15 million. The lower depreciation expense for 2022 is due to reduced depreciation expected on certain tunneling projects, and the lower amortization expense will result from reduced intangible amortization expense associated with our acquisition of additional 25% interest in joint venture a couple of years ago which will be fully amortized by the second quarter of 2022. Interest expense is expected to be approximately $65 million, of which about $4 million will be non-cash. As Ron mentioned, our effective income tax rate for 2022 is expected to normalize, and it should be between 22% and 24%. We expect non-controlling interest to be between $40 million and $45 million, similar to 2021. We're forecasting approximately 52 million weighted average diluted shares outstanding for 2022. Lastly, capital expenditures are expected to be approximately $70 million to $80 million, of which about $57 million will be owner-funded and project-specific. The increase in CapEx for 2022 is due to project-specific equipment that we plan to purchase for the new tunneling project in British Columbia that Ron mentioned a little while ago. Thank you. And with that, Ron, I'll turn the call back over to you.

Thanks, Gary. To recap, we overall had a good year in 2021, despite what you heard on the call, a tremendous reversal in the fourth quarter by our specialty group, which dramatically reduced the earnings, not only for the fourth quarter, but for the entire year. We had specifically strong profit contributions from our civil segment, which operated on the highest segment margins since 2014. And our new awards were solid in 2021, resulting in a backlog at year end that was comparable to the prior year, even though as we discussed, civil went down and building went up. As previously discussed, we are looking at a very significant level of billion dollar plus projects to bid. Those bids will be tendered starting in April and virtually one a month or two a month until the end of the year. We expect that bidding pipeline to grow on a national scale even more substantially as this funding from the infrastructure bill flows to our public owners. Of course, we're optimistic our backlog will grow with the growth in opportunities in civil work. and we expect to capture our share of that new work. And ending, we still anticipate limited competition for many of our largest projects, which should lead to strong operating margins and growth for our civil segment over the next several years as the bidding markets finally open. I might add, we bid four projects in the fourth quarter of 2021, all in excess of a billion dollars up to three billion dollars and we were second on all four projects those seconds with continued work coming out we expect to become awards thank you and with that i'll turn the call over to the operator for questions at this time we will be conducting a question and answer session if you would like to ask a question please press star 1 on your telephone keypad

A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Stephen Fisher with UBS. You may proceed with your question.

Thanks. Good afternoon. Nice to see some of the progress being made on the cash flow. Resolutions, wondering if you could maybe just frame for us how much has been resolved already that you talked about, I guess, late in the fourth quarter that just really needs to be collected from here.

Well, I don't know that I... How far can I go?

Yeah, I think not project names, but just... All right, I won't... I agree.

Okay, to give you a sense... There is a project that we have been suing over retention of $35 million. It's all our money. I expect that money to be collected in the second quarter. There is another project where we settled a public agency and they're paying a 6% interest on some $48 million they owe us. I expect that to be collected this summer. We just Settled or excuse me. We want a $41 million litigation award against a certain other contractor. They're appealing it. The appeal was just heard. I expect them to lose that appeal and we expect that to be paid by this summer. Uh, we just settled a major project with the city of New York, the DEP on a treatment plant. That's over 30 million of cash. We expect to collect that money in the second quarter. We have two major insurance litigations that are completing in the next month or two. We expect to get decisions on both of those, which we think are classic. They owe us all the money, which should exceed $45 million. So you can begin to add these up. There's an enormous amount of cash deed up right now, and that stream continues right through the end of the year into next summer.

And if I could add this, Ron, also, there are two projects that were not in dispute resolution mode, but really just in normal change order resolution. And those two projects, we build the CIE and we expect some amount of about $100, $110 million to flow in the first quarter and some of that to flow in the second quarter.

And I might add another transportation project in New Jersey. I settled all of our pre- The job's not quite done, but I settled a whole series of issues for $53 million. It was agreed last summer. The change order was settled and signed in December, and the money will come to us in three equal payments in January, February, and March. So there's just a lot of settlements that time has finally brought to the forefront. Steve, that $53 million is in the 110 that I mentioned.

Okay, got it. That's quite a bit of progress. Maybe moving on to the specialty segment, can you just talk about how much were the charges in that segment in the quarter, and what would the profit have been excluding that?

Well, the quarter went from a $27 million reversal from the year prior, Gary?

Yeah, I think that's right, Ron. But I think, yeah. Let's see. Yeah, if you look at just the fourth quarter, we're looking at charges of about, I think it was about $14 million, $13, $14 million, Steve, versus the gain we had last year.

Yeah.

Okay. Okay. So I guess maybe the bigger picture here on specialty is when are we going to be through with these projects that are really kind of ongoing challenges? And is there any other? I think there was some discussion last time maybe about thinking bigger picture, about commitment to this business. When can we get back to a normalized margin run rate there? And are you committed to kind of that whole business?

Well, the one subsidiary I've replaced all the management over the last six months, and I've cut their volume in half from what they previously done and reduced them to purely a support group to tutor Perini civil. The other one I've got their operation in half, which is our New York electrical arm. And they're primarily reduced to supporting New York civil and certain prime contract work. So. The work that has caused this god-awful CIE and claims and negative cash flow that have been created by, frankly, our two firms in New York that are specialty, that work is about over. There's one contract that's got six months to go, and it's at the 95% category. The other one is at 98% and will finish in March or April. So I can't tell you. They may not have any more write-downs. but I don't believe there'll be anything significant in the large work that has cost us, which is frankly transit work that we've been on for 10 years that we've just taken the appropriate write downs is just about over. The worst it can last is until this summer with one minor exception. So I don't see the level of write downs in front of us. But to say we've had a difficult time controlling our specialty group has been an understate.

Okay, then just lastly, maybe Gary, I don't know if there's any way to kind of frame what your margin ranges and potential outcomes could be by segment for this year.

Yes, Steve, similar to what we have forecasted in the past, we're looking at building margins to be about 2% to 3% of revenue, again, an increased revenue contribution. We're looking at segment margins now. We think we're somewhere up around 12% and north of that. I'm sorry. On specialty, we're hoping for the year that it stabilizes somewhere, we'll say, around the 4%, 3% to 4% range. Got it.

Okay.

Thanks very much. That's lower than what the new work is contributing, and that's lower than what we think that specialty will contribute over time. But we think this is, you know, turning the ship in the right direction. That will happen this year.

Got it. Thanks very much.

Our next question comes from the line of Brent Thielman with DA Davidson. You may proceed with your question.

Great. Thank you. Hey, Ron, just with the list of projects you named off for the civil business and then assume there's a lot of other opportunities out there you didn't mention, I'm wondering if you think we could see a situation where the backlog starts to build back to something like the levels you saw in 2019, call it early 2020, that $5 billion, $6 billion level. Is there that level of work out there for you to bid?

Well, I think there's a tremendous amount of work, and frankly, the four jobs that we were second bidder on, to give you a sense of it, one was $3 billion. That was a building job. A bridge job was $1.7 billion. $2.3 billion was the Purple Line in Maryland. That's $4 billion. And Penn Station Access was $1.9 billion. We were second bidder on everything. $5.9 billion in civil work, which just as easily could have all been awarded to us, and a $3 billion building job, all in a period, believe it or not, of 90 days. So there's that level of work out there. And God in the marketplace willing, we could literally sign up that level of backlog in any 90-day period as we go forward in 2022, because starting in April, that level of work is out there to bid.

Yeah, Brent, I'll just add that at the end of 2021, our civil backlog was 4.5 billion. So we're not too far off of the number that you mentioned already.

Right. Ron, I mean, just given this sort of short-term lull we've seen in the civil market, which seems to be reversing, I know a lot of capacity has come out of the system in terms of competition, but has that caused some of the folks that are still out there to bid a little more aggressively?

Well, you know, we're only getting two and three bids on these very large jobs. I have to say that we've taken the position that the marketplace deserves significantly higher margins than we bid in the past. We're resolute toward that end, and that may be one of the reasons we're second bidder and not low bidder. But we think the risks are such And we've been fortunate while many others have been hurt badly and we've raised it and make no bones about it. And I see no reason with this lack of competition to change that approach. Everybody has physical limitations and including us. And if we're going to add five or $6 billion worth of civil work to our backlog, and it takes five to six years to build it, nothing would be more foolish than us to cut our margins in order to acquire it. It'd be exciting when you got it, and then you'd live with it for the next five, six years.

Got it. Maybe just last one might be for Gary, but the payables came down quite a bit this quarter. Any specific color around that?

Yeah, Brent, they came down for the year, they came down for the quarter, and there's nothing really in there other than us paying our bills on time. You know, it's just a timing-related thing. And, you know, that bodes well for 2021, excuse me, 2022 also, right? The payables are down, and we expect them to build back up with new work, but there's nothing interesting in there other than just timing.

Yep. Perfect. Okay. Thank you. Best of luck.

Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Tudor for closing remarks.

Thank you, everybody, for our call regarding the end of the year results. And until the next time, thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.