Tutor Perini Corporation

Good day, ladies and gentlemen, and welcome to the Tudor Perini Corporation fourth quarter 2023 earnings conference call. My name is Camilla and I will be your coordinator for today. All participants are currently 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. anyone to require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the conference call over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

Hello, everyone, and thank you for joining us. With us today are Ronald Tudor, Chairman and CEO, Gary Smalley, President, and Ryan Soroka, Senior 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 we are filing today. The company 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.

Thank you, Jorge. Good day, and thank you all for joining us. Please pardon my raspy voice. I've had a head cold for a couple of days, but I'll survive. Before I discuss our results for the year, I'd like to mention, for those of you that may not have heard or recalled, that last November we announced that our board of directors approved the appointment of Gary Smalley, our former CFO as president of Tudor Perini, and that Gary is expected to succeed me as CEO effective January 1st of next year. Turning now to our results, we had another year of mixed results in 2023, highlighted by record operating cash flow that was nearly 50% better than last year, as well as backlog that grew 28% year over year to a $10.2 billion figure. We generated $308 million of operating cash in 2023 compared to $207 million in 2022, with both years setting records as the highest results of any year since the 2008 merger between Tudor Saliba and Perini Corporation. Our earnings in 2023 were challenged to certain adverse legal judgments or decisions throughout the year, primarily in the Northeast, and write downs that resulted from the expedited settlement or resolution of various disputed matters. Our consolidated revenue was up slightly in 2023 compared to 2022, still dramatically reduced from our typical years prior to the pandemic. We sustained modest revenue growth in the civil and building segments, mostly offset by lower revenue in the specialty contractor segments. Ryan will discuss the financials in more detail a bit later. We made excellent progress on claims and dispute settlements in 2023, which helped us to deliver our record cash flow and reduce our unbilled receivables or costs in excess by 17% for $234 million. We expect to continue continue resolving most of our remaining legacy disputes in 2024 with only a handful going into 2025, and thereby collecting substantial amounts of associated cash throughout this year and a certain amount in next year before all of our legacy issues will be resolved and brought current. Last week we began to utilize some of our excess cash generated since the latter part of 2023 to deleverage our balance sheet by paying down our term loan B by approximately $91 million bringing its balance to $276 million compared to its original $425 million. This pay down was not required until the first week in April but we decided to pay it down early to capture interest savings over the next few months. Following this pay down, we still have significant cash on hand, which is anticipated to be used for further debt reduction as part of the current refinancing underway. We expect to successfully conclude this refinancing sometime between the middle and end of April. As I mentioned, our year-end backlog stood at $10.2 billion, up 28%, with strong growth largely driven by the award of the $2.95 billion Brooklyn Jail Project in New York. Other significant new awards and contract adjustments in 2023 included $788 million of additional funding for certain mass transit projects in California, $287 million of additional funding for two large healthcare projects in California, a $222 million military facilities project at Tinian International Airport in the Northern Mariana Islands, and $127 million of additional funding for a light rail project in Minnesota. We expect our backlog to grow substantially in 2024 and again in 2025 as we pursue and capture our share of a tremendous volume of available project opportunities, many of which are supported by strong funding that is put in place at the state and local levels, as well as the $1.2 trillion bipartisan infrastructure law. that was passed in 2021 for which funding is now flowing. We are tracking more than $75 billion of opportunities over the next three to four years, and $32 billion of which are expected this year and next. Some of the most significant near-term prospects include the $6 billion dry dock at Puget Sound Naval Shipyard in the state of Washington. the $2.6 billion DTX Transpay Transit Center project in downtown San Francisco, the $2 billion Honolulu Rail Transit project, which we had previously been the low bidder in 2020, the $2 billion Sites Reservoir project in Northern California, the $1.8 billion South Jersey Light Rail in New Jersey, And again, the $1.5 billion Newark Air Train, for which we had also been low bidder some two years ago. And the $1 billion Inglewood Transit Connector Project in Southern California, which bids this summer. Regarding our prospective jail projects in New York City, the owner has just made a formal announcement that the Queens facility was awarded to one of our competitors. So we were also shortlisted with one other team on the Manhattan Jail, which would be the most costly endeavor of all the facilities, which will bid an award in the third or fourth quarter. I could go on and on, and I'm only talking about the megaprojects. However, others worth note are an $800 million Kensico Tunnel, the $800 million Amtrak East River Tunnel Rehab, which we've already bid and should hear the results any day, the $500 million Palisades Tunnel in New York, and the $750 million Manhattan Tunnel in New York. That and a number of projects in that size, too many to mention. We are anticipating significant double-digit revenue growth in 2024 with 80% of which sourced by our existing backlog. We are expecting a return to positive earnings in 2024 and significantly higher earnings in 2025 and again in 2026. Based on our assessment of the current market and business outlook, we are establishing our initial EPS guidance for 2024 in the range of $0.85 to $1.10. As in prior years, our earnings are expected to be weighted more heavily in the second half of the year due to the anticipated timing of large activities as well as the typical business seasonality that is affected by the weather. Thank you, and with that, I'll turn the call over to Ryan to review the financial results.