Tutor Perini Corporation

Good day ladies and gentlemen and welcome to the Tudor Perini Corporation second quarter 2023 earnings conference call. My name is Doug and I will be your coordinator for today. All participants are currently in a list 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 a conference, please press star zero on your telephone keypad. I will now 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 participation 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 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-Q, which we will be filing tomorrow, and in our most recent Form 10-K, which we filed on March 15, 2023. assumes no obligation to update forward-looking statements, whether due to new information, future events, or otherwise, other than as required by law. Thank you, and I will now turn the call over to Ronald Tudor.

Thanks, Jorge. Good day, and thank you all for joining us. Our second quarter results were highlighted by strong revenue and backlog growth, as well as solid operating cash flow. Our consolidated revenue is up 19% year over year due to contributions from certain civil segment mass transit projects in California that have significant work remaining. Our revenue growth this quarter followed more than two years of quarterly year over year declines attributable to COVID, and we believe our revenue has reached an inflection point now that our business is beginning to normalize and we are beyond most major COVID impacts. As we have discussed in the past, COVID temporarily halted major bids and awards of large civil projects. We're in the range of two plus years and prevented the award of four large projects valued at almost $11 billion, which we had been the lower preferred bidder. Most of these projects that were not awarded us, if not all of them, are now expected to be rebid in 2024 and in the first half of 2025. So we will have another opportunity to capture the same contracts. We believe we will continue to see modest revenue growth over the remainder of this year, with higher growth expected next year. and much stronger in 2025 as we should be entering the construction phase of multiple large projects beginning in mid-2024. Our second quarter operating cash flow was a solid 56 million, bringing our operating cash flow for the first six months of 2023 to 78 million, the second highest result for the six months of any year. since the merger of Tudor, Saliba, and Perini Corporation in 2008. We remain confident that our cash generation in the second half of this year will be even stronger as we expect to resolve various long-standing disputes, be it either by negotiation or litigation, and collect significant amounts of cash and that our operating cash flow for 23 will exceed the record 207 million we generated last year. As we mentioned last quarter, depending on the timing and magnitude of dispute resolutions this year, our cash generation could be much stronger. We plan to use this anticipated cash to reduce our debt and position ourselves favorably for refinancing early next year. Our second quarter backlog increased to $10.9 billion, up 27%, compared to $8.5 billion for the same quarter last year. The strong backlog growth was driven by the large award of the $3 billion Brooklyn Jail design-build project, which includes more than $600 million of electrical and mechanical work that is expected to be performed by our specialty contractors segment. And we also booked nearly $1 billion of other new awards and contract adjustments, including Black Construction's new $222 million Indian International Airport project in the Northern Mariana Islands, and $102 million of additional funding at a Rudolph and Sletten health care project in California. From an earnings perspective, we had a very strong performance and contributions in the second quarter from our civil segment, but experienced some continuous challenges, particularly in our specialty contractors group, which Gary will address further in a moment. Overall, we reported a consolidated pre-tax loss of $17 million and ended the second quarter of a loss of $0.72 for diluted share after adjusting for non-controlling interest. We continue to have a full bidding pipeline with numerous large project opportunities across various locations, including Guam and the Western Pacific. Some of our more significant opportunities include the estimated $3 billion Queens facility on a decision of which will be made in January. with all proposals in. The owner has indicated that as a timeline for award. In October, we will be busy bidding on numerous projects, including the $1-plus billion Frederick Douglas Tunnel in Maryland, as well as the $500 million Fulton Line Communications train control project in New York. and the $500 million Amtrak-Connecticut River bridge replacement. We also expect a decision in the fourth quarter on Frontier Kemper's proposal for the $500 million Great Lakes dump. Other larger near-term opportunities include the $1.5 billion Englewood PeopleMover project in Southern California, and the $500 million Amtrak East River Tunnel Rehab in New York, both bidding later this year. To follow will be the $2 billion Honolulu Rail Transit project, which is now expected to bid in the first quarter of 2024, which I'd remind you all we were low bidder two years ago on that project. We anticipate that once again, we will capture a significant share of these projects and continue to grow our backlog substantially over the next 12 to 18 months, providing that foundation for significant future revenue growth and improved profitability. Recent data supports our projections that the US economy continues to be strong and resilient despite the effects of inflation and higher interest rates, particularly in the area of public works, with diminishing concerns about the threats of a recession. Some of this strength can be attributed to funding toward investments in infrastructure by the bipartisan infrastructure law. Demand for our services remains extremely strong, and is expected to increase its substantial funding flows to our public owners over the next period of years. I will reiterate that we are focused on successfully growing our civil business, which will continue to be the driver of our future growth and profitability. Based on our year-to-date financial results combined with various uncertainties in the second Half of the year we have decided to not provide new guidance for 2023. Various risks exist both with respect to dispute resolution negotiation and the result of major litigation decisions which are in play to conclude in the fourth quarter. There is also a wide range of potential outcomes related to our effective income tax rate that give us cause to pause. There are several additional positive events that could transpire later this year, which could offset to some degree any negative that might occur. Needless to say, we don't feel it appropriate to make a statement for the balance of the year. Thank you, and with that, I will turn the call over to Gary to review the financial results.