Tutor Perini Corporation (PCR)
Q1 2010 Earnings Call
May 6, 2010 4:30 PM EST
Ken Burk – EVP and CFO
Ronald Tutor – Chairman and CEO
Robert Band – President
Richard Paget – Morgan Joseph
Steven Fisher – UBS
John Rogers – D.A. Davidson
Richard Rossi – Wunderlich
Avi Fisher – BMO Capital Markets
Kalpesh Patel – Jefferies
Previous Statements by PCR
» Tutor Perini Corporation Q4 2009 Earnings Call Transcript
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» Perini Corporation Q1 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the Q1 2010 Tutor Perini Corporation earnings conference call. My name is Kiana and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.
I will now like to turn the conference over to your host for today, Mr. Ken Burk, Executive Vice President and Chief Financial Officer. You may proceed.
Good afternoon, everyone. Thank you for joining us on Tutor Perini’s first quarter 2010 conference call. With us today is our Chairman and CEO Ronald Tutor, and our President Robert Band.
Before we start, I would like to remind our listeners that our comments today will contain forward-looking statements, including statements about future guidance.
Management may also make additional forward-looking statements in response to your questions. Types of written and oral disclosures are made pursuant to the Safe Harbor provision contained in the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from anticipated results.
The company cautions that any such forward-looking statements are based upon assumptions that the company believes are reasonable, but that are subject to wide range of risk and actual results may differ materially. These risks and uncertainties are discussed in detail in our filings with the SEC, including Tutor Perini’s annual report on Form 10-K for the fiscal year ended December 31, 2009 our definitive proxy statement filed on April 28, 2010 as well as in today’s news release.
Our statements on this call are made as of today, May 6, 2010 and the company undertakes no obligation to update any of these forward-looking statements contained in the call, whether as a result of new information, future events, changes in expectations or otherwise.
With those formalities out of the way, it is my pleasure to turn the call over to Ronald Tutor.
Thanks Ken, and good afternoon, everyone, and thank you for joining us on the call today. With the completion of MGM’s project CityCenter in December of 2009, we have moved forward with the new set of challenges and opportunities. Bidding activity in our civil group is at all time high and we continue to compete for our share of the available work.
During the months of March and April 2010, we were identified as the low bidder on four civil projects in California, New Jersey, New York and Maryland, totaling approximately $366 million in contract value. In our building group, we have pending awards in the amount of $969 million, consisting primarily of healthcare, education, and hospitality, and gaming projects.
We expect these and other promising new work opportunities to bolster our $3.8 billion backlog in the coming quarters. As we look ahead to the remainder of 2010, our civil business continues to provide us with the best growth opportunities in terms of new awards as well as higher margins.
With the first quarter behind us, we still look for our civil group to provide more than 40% of our operating income this year. We estimate the size of prospective opportunities in our civil infrastructure target market to be $16.5 billion for 2010. The breakdown is $5.7 million in bridgework, $5.2 billion in highway, $3 billion in mass transit, and $2.6 billion of other civil work including power, rail, and water projects.
In the non-residential markets, there are some signs of economic recovery. Our customers are seeing an improvement in the financial markets. And in the building group, we have identified and are tracking approximately $11 billion in targeted projects that we could bid this year. A significant portion of this market is the public sector, including corrections, education, municipal office, and transportation buildings.
With respect to MGM CityCenter, approximately $491 million is due and owed to us and our subcontractors, which consist primarily of contract, receivables, and subcontractor change or a request for additional work, requested by the owner. Amounts dues include pass through subcontractor billings for contract work, including their retention in the amount of $299 million and subcontractor change orders for extra work of approximately $81 million.
In March of this year, we filed a lawsuit against MGM alleging breach of contract among other allegations and subsequently filed a $491 million (inaudible) against the project. Needless to say we are very disappointed with the manner in which MGM has handled the closeout and final payments of this project.
The Fontainebleau property has been sold through bankruptcy proceedings through a development team led by Carl Icahn and approximately $105 million has been set aside from this sale and is available for distribution to satisfy creditor claims, based on seniority as will be determined by the courts. It essentially boils down to the banks disputing the creditors for who goes first.
Terminal 3 at McCarran Airport is approximately 51% complete and continues to be significantly ahead of schedule with what we hope to have a successful completion occur in 2011.