Good day, ladies and gentlemen and welcome to the Tutor Perini Corporation First Quarter 2019 Earnings Conference Call. My name is Tim and I will be your coordinator for today. [Operator Instructions] 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. Joining us today on the 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 today’s call, we will be making forward-looking statements, which reflect management’s current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially.

You could find disclosures about risk factors that could potentially contribute to such differences in our most recent 10-K, which was filed on February 27, 2019. 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 turn the call over to Ronald Tutor..

Thanks, Jorge. Good afternoon and thank you for joining us. Our first quarter of 2019 featured $3.2 billion of new awards, the strongest quarterly volume of new awards ever which resulted in a new record backlog of $11.6 billion, an increase of 37% year-over-year. Our book-to-burn ratio for the quarter was 3.39.

Backlog growth was once again broad-based across all 3 segments and was particularly robust in the civil segment driven by the award of the $1.4 billion Purple Line Segment 3 Stations project in Los Angeles and the $253 million Culver Line for the New York Transit Authority in New York City.

Other major awards in the quarter that contributed to our backlog growth included the Choctaw Casino and Resort project in Oklahoma, the specific value of which is undisclosed, but well over $400 million; a new hospitality and gaming project in California, which is valued at well over $300 million; and the $200 million Southland Gaming Casino and Hotel in Arkansas.

For perspective, our Civil segment’s backlog now stands at an all-time high, while the Building segment’s backlog is the highest that’s been in 10 years, and Specialty’s backlog is approaching a record level. Importantly, nearly 3/4 of our total backlog is comprised of higher margin Civil and Specialty project.

In addition, the strong demand environment for our construction services continues as evidenced by the large pipeline of very significant project opportunities across all segments.

Accordingly, we believe that our backlog growth should continue later this year as we pursue various other large projects, and that are significant backlog combined with the sustained market demand will fuel strong revenue growth, continuingly improved operating margins and increase earnings over the next several years to come.

We are optimistic that the federal government will finally agree upon and implement their long-awaited infrastructure program, which is now being bandied about at a $2 trillion level. However, the creative manner in which they reach $2 trillion is by seeding federal money with private and public, and I don’t know that that’s completely accurate.

Summary, however, any significant investment by the federal government, which adds to the states, counties and local agencies currently forcing work out at record levels, will just add more pressure to an industry struggling to keep up, as we speak, with the amount of work to be built.

As I have mentioned previously, we are focusing our bidding efforts on pursuing larger, more complex civil projects simply because they present far fewer competitors and consequently much higher margins.

At the end of June, we will be bidding a $400 million, 8th Avenue Communications Train Control project in New York City, very similar to the Culver Line that we were recently awarded.

Other bids we are looking at this year is Los Angeles MTA and their $3.5 billion to $4 billion West Santa Ana line, which is in the format of a P3; the $2 billion Brooklyn-Queens Expressway in New York City, a triple cantilever bridge; and a $400 million Amtrak tunnel Phase 3 at Hudson Yards, wherein we built phases 1 and 2 already; in addition, $1.4 billion portal swing bridge replacement; and $450 million Raritan River Bridge Lift replacement both in New Jersey.

The Building segment’s larger opportunities include three large healthcare projects in California, the total of which exceeds $800 million; a $700 million airport cargo facility in Florida; a $300 million courthouse via P3 in Miami; and $150 million cruise ship terminal, all in Florida.

The Specialty Contractors segment is bidding on more than $600 million of mechanical and electrical projects, primarily in New York, but secondarily in Texas, California and Florida, in addition to already having booked $500 million of banding awards.

We continue to see very strong demand in both New York and Los Angeles on our specialty groups as well as our civil operations. Next, I will review certain key projects that contribute to our first quarter results, starting with the Civil segment.

Work is progressing on the Purple Line Section 2 extension in Los Angeles as we excavate the tunnel launch pit in Century City and begin construction of the tunnel shaft literally 1,000 feet east.

As the launch pit completes, which we expect by September, the two tunnel boring machines will be assembled, lowered into the launch shaft and would expect to begin to mine in November.

In Beverly Hills, we are preparing to relocate utilities on Wilshire Boulevard and are setting our staging sites preparing to start with soldier pilots the latter part of this year. In British Columbia, Frontier-Kemper is progressing significantly on the Kemano’s second tunnel project.

In the Midwest, Lunda remains active on their I-74 bridge project, and has just begin work on the $800 million Minneapolis Southwest Light Rail in the Northeast.

In New York City, our most active project is the CMO 7 Subway completion in New York City, coupled with the balance of the East Side Access a CS179 contract as well as the New Jersey Newark Airport Terminal 1, which has commenced steel framing, which should complete by October.

The Building segment’s most significant contributors included a large technology campus in Silicon Valley, the Rosewood Miramar Beach Resort in Montecito, California. The El Camino Hospital integrated medical office building in Mountain View and of course, the Newark Airport Terminal 1 in New Jersey.

Given the anticipated significant ramp-up activities later this year on many of our larger projects, including Purple Line 2 and the Purple Line 3 Stations segment, which we believe will be awarded at the end of May or by mid-June, we expect significant revenue growth and higher margins across all those segments for the year 2019.

Once again based on our current backlog and outlook, we are reaffirming 2019 earnings per share guidance of $2 to $2.30. As a reminder, because of the timing of the project ramp-up activities, our earnings are expected to be significantly weighted towards the second half.

With that, I turn the call over to Gary Smalley to present the details of our financial results..

Thank you, Ron. Good afternoon, everyone. I will start by discussing our results for the quarter, followed by some commentary on our balance sheet, cash flow and then the guidance assumptions.

Revenue for the first quarter was $958 million, down modestly compared to last year, primarily because revenue from certain newer buildings, especially projects, did not fully replace revenue from older products that have completed or are nearing completion. This is solely due to timing.

In particular, recall that we completed a very large confidential technology building project in Northern California during the first half of 2018. That project contributed significantly to our results last year, but represents a challenge to replace those results in the first half of this year.

Additionally, adverse weather in the first quarter of the year impacted some of our Building and Civil segment projects in California and the Midwest. The revenue decrease was partially offset by certain newer civil segment projects and another building segment technology project that are all ramping up.

Civil segment revenue for the first quarter was $333 million, up 27% year-over-year, reflecting favorable impacts from those newer projects that are accelerating and beginning to contribute more meaningfully.

Revenue for the Building and Specialty Contractors segments was $433 million and $192 million respectively, both down compared to the first quarter of 2018 due to the timing of revenue burn for newer work.

We anticipate larger favorable project contributions from various projects within these segments that are now starting and are accelerating over the course of the year. Gross profit for the first quarter of 2019 was $88 million, up 32% compared to the first quarter of last year, with a corresponding gross margin of 9.2%.

This was a relatively good gross margin compared to 6.5% for the same quarter of last year, especially since our first quarter typically is our weakest quarter of the year due to the impact of weather, as we have previously communicated to The Street and is the case every year.

G&A for the quarter was $66 million, down slightly compared to last year, mainly due to lower compensation-related expenses. Our income from construction operations for the first quarter was $23 million, up substantially compared to a loss of $1 million for the same quarter of last year.

Recall that last year’s first quarter results were impacted by unexpected adverse arbitration decision for completed civil segment project, which resulted in an unfavorable adjustment of about $18 million.

Civil segment income from construction operations for the first quarter of this year was a very strong $42 million compared to $3 million for the same quarter of last year, principally due to the prior year unfavorable adjustment I just mentioned as well as contributions associated with the higher volume.

The segment’s operating margin was 12.5% for the quarter compared to 1.1% for the first quarter of last year. This is a particularly strong margin for a first quarter and was driven by contributions from certain higher-margin projects that are ramping up and solid results on other civil projects that have already been underway for some time.

Building segment income from construction operations was $3 million compared to $6 million in last year’s first quarter, mainly due to the lower volumes so far this year as well as positive contributions in the first quarter of last year from the large technology project in California that I mentioned that completed last year and was nearing completion in the first quarter.

The Building segment’s first quarter operating margin was 0.7% compared to 1.3% for the first quarter of 2018. As I mentioned earlier, we have several large new building projects that were recently awarded, which we expect will contribute more positively to our results later in the year.

Specialty Contractors reported a first quarter loss of $7 million from construction operations compared to $7 million of operating income in the same quarter of last year. The decrease in the segment’s income was primarily driven by unfavorable closeout adjustments on certain electrical and mechanical projects in New York.

Lower contributions related to the volume reduction mentioned earlier were mainly offset by favorable performance on other electrical and mechanical projects in New York.

We expect stronger contributions from the Specialty segment later this year as Five Star Electric and WDF, in particular, increase activity on some significant new projects, including work on the Newark Terminal, the Culver Line project and the various mechanical projects for the New York City Housing Authority and other public agencies.

Despite the weak performance this quarter, we are still targeting an operating margin range of 5% to 7% for the Specialty Contractors segment over the remainder of this year. Interest expense in the first quarter of 2019 was $16 million compared to $15 million in the same quarter of last year.

The increase was primarily because of a higher average revolver balance and interest rate during the year’s first quarter compared to the prior year period. Our effective tax rate for the first quarter is 31.7% % compared to 28.1% for the same period of 2018.

The higher rate in this year’s first quarter resulted from the recognition of some immaterial unfavorable nonrecurring items, which caused a fairly large increase in the effective rate due to the relatively small pretax income for the quarter.

Net loss attributable to Tutor Perini for the first quarter of 2019 was approximately $400,000 or loss of $0.01 per diluted share compared to the loss of $12 million or a loss of $0.24 per diluted share for the first quarter of 2018. I will now shift gears and discuss our balance sheet and operating cash.

Our project working capital grew 9% in the first quarter primarily because of an increase in accounts receivable due to the timing of collections on a handful of projects.

We continue to be focused on reducing our unbilled cost through negotiation and settlement, various claims and change order disputes, and we still expect to be in a position to report some substantial progress in this area later this year. We used $125 million of operating cash in the first quarter primarily due to investments in working capital.

Keep in mind that our first quarter operating cash is always lower than any of the other quarters. This is driven in part due to the lower revenue in the quarter.

It’s also because at the end of the year, a lot of our customers try to accelerate payments and we sometimes receive two payments in December instead of a single payment, and so there is somewhat of, let’s say, a shift in that cash and so we felt the pain of that in the first quarter this year.

Also keep in mind that our first quarter cash has the impact of incentive comp and also tax payments. And especially this year, we have a lot of positive operating cash contributors that will be accelerating or ramping up as I mentioned earlier.

And it’s because of these significant ramp-ups that we expect that we will have a positive cash flow for the rest of the year and that we will be improved compared to last year, and we still are targeting operating cash for the year to be in excess of net income as it was in both 2016 and 2017.

Our total debt as of March 31, 2019, was $899 million compared to $762 million at the end of 2018, reflecting an increase in our revolver balance that supported our working capital needs during the first quarter. Our debt compliance leverage ratio for the trailing 12 months ended March 31st was 2.87.

Note that earlier this week, we amended our credit agreement to set the maximum leverage ratio at 3.50 for the remainder of the credit facility term, thus eliminating the step down from 3.5 to 3.25 that would have otherwise occurred as of March 31.

As you can see, we did not amend the credit facility based on a need to do so in the current quarter, as we would have been comfortably below the previously required 3.2 leverage ratio without the change.

Instead the amendment allows us to reset the leverage ratio at a level which better represents typical terms in the credit facility market, while providing us a cushion, should it be needed later, for any short-term funding of the growth we’re expecting with our increased record backlog.

A handful of definitional adjustments were also made, but the amendment did not change any of the other covenants. Earlier, Ron reaffirmed guidance.

Note that none of our previous assumptions related to the guidance have changed, including the effective tax rate for the year, number of shares outstanding, interest expense, CapEx, depreciation and amortization expense, G&A and non-controlling interests. Lastly, I will reiterate what Ron mentioned regarding the quarterly pace of earnings this year.

While we expect to report improved results in the second quarter compared to the first quarter, we anticipate substantially better results for the third and fourth quarters, as we typically do, due to the previously discussed project ramp ups on various large projects. With that, Ron, I’ll turn the call back over to you..

Thanks, Gary. To recap, our record backlog and the continued awards of significant new projects in the first quarter obviously bolsters our outlook for revenue growth and increased earnings this year and longer term, especially with the vast majority of our backlog in the higher margin civil and specialty arena.

The margins in our backlog today are higher than they have been in the past and the trajectory is positive on future work due to the significant demand and limited competition, we have talked about literally for the last 2 to 3 years.

In addition, as we continue to pursue and win a significant share of our endeavors and execute effectively on our current backlog, we are continuing to diligently negotiate and settle various claims and change order disputes in order to collect the substantial cash we erode.

In addition, I can add that over the past 2 years, we have virtually added limited, if any, claims of substance or unbilled receivables to the enormous backlog we are dealing with. So we are making the kind of effective impacts that are necessary.

And as a result, we have just concluded one litigation, we are about to conclude another arbitration, both of which we think we will handedly win by summer. We are on our second mediation on our largest claim with one of our large state owners that has asked for a second mediation to try to settle.

We are in the midst of litigation, mediation and settlement discussions as we force these cases to either resolve or to try them in court. If the court dates hold and the mediations hold, a significant level of these cases will be concluded by the end of next year, and certainly on amount this year of consequence.

However, as I’ve said before, and unfortunately, with our current judicial system, we get a court date, any excuse to postpone it any excuse for all our public agencies who differ having to face the music, but sooner or later, they got to explain to a trier of fact why they haven’t paid us and what usually takes place on the courthouse steps the first time serious negotiations happen.

I am optimistic. As I’ve said previously, I can’t pinpoint, but give you the best of my knowledge of what’s happening. And with that, I will turn the call over to the operator for your questions to follow. Thank you..

Thank you. [Operator Instructions] Our first question comes from the line of Tahira Afzal of KeyBanc Capital Markets. Please proceed with your question..

Thank you. Hi, Ron. Obviously, you are seeing a lot of success on the backlog side and that is really a testament to your brand name and the momentum in the market. However, obviously, we have had a patchy start. The specialty group continues to have some execution issues.

At what point do you start looking at the company structurally and seeing if you need to make changes?.

I have made a number of changes.

What do you mean by structurally make changes?.

Well, the specialty group, for example, is not doing well.

And I would argue maybe you need to look at whether that should be part of your business and you can argue otherwise, but obviously your EV to backlog is exceptionally low, would suggest lost of investor credibility and that’s really what I wanted to get more of a sense of?.

I lost the last part.

You said something about investor credibility and leading up to that?.

Yes. I mean if you look at your EV to backlog, right, you would argue just based on....

What to backlog?.

Basically your valuation, Ron, does not seem to suggest that people have confidence that the backlog will translate into earnings. And I am currently....

Well, I won’t dignify that with an answer since all we have done is be successful in our backlog turning into profits, but of course if you don’t see it that way, that’s your prerogative..

Fair enough. I will hop back into the queue. Thank you..

Our next question comes from the line of Alex Rygiel of FBR & Company. Please proceed with your questions..

Ron and Gary, fantastic quarter. Congratulations..

Thank you..

The margin has grown or the backlog has grown tremendously.

Ron, can you talk a little bit about your perception of what the margin in backlog looks like today versus the margin that’s coming through your P&L? And give us some perspective on pricing in the marketplace today versus maybe pricing in the marketplace over the last 3 to 5 years?.

I’d say to be totally candid, and I probably shouldn’t be, all of our margins from 3 to 5 years ago were up 40% to 50%, and that’s all on the major work, the $1 billion plus jobs. As I said, we have no competition on the Newark Terminal. We had 2 bidders on Purple Line 3. We had 2 other bidders on Purple Line 2.

And frankly, our successes in the subway business have been ongoing for 30 years. So, we don’t think we have any competition in belowground subway tunnels and stations. And as they continue to grow in both New York City and New York, we’re the beneficiary of that. And very candidly, we’ve significantly raised our margins.

And I don’t think anybody in our industry with the capacity and the qualifications to do these large jobs hasn’t raised their fees significantly. Ours is minimum of 40%.

It is just now beginning to come into play because although our California High-Speed Rail has been very successful, it’s been stymied by delays and as they finally release, the next $ 1 billion worth of work, those margins will come out because we’ll be able to go to work Purple Line 2, Purple Line 3 tunnels, Purple Line 3 stations, which equates to over $4 billion worth of work is ramping up and beginning to take hold.

So those higher margins should begin to hit our balance sheet. In addition, on these jobs, we have a very significant Specialty contractor presence. And those margins exceed 15% and 20% because we simply bid them as a team. And this is where the additional profit will be achieved.

So one other question I might respond to over the last lady’s comments, our Specialty group has been a problem and has been headaches, but virtually all of its management have been replaced and they are an integral part of our success and our bidding strategies, wherein they take very significant roles in our $1 billion and $2 billion projects, in supporting our prime contracts and at margins that are higher than the north.

So, although, yes, they haven’t met our projections, they have caused less cash flow drains the worst is behind us.

And the most foolish thing we can to since we’ve weathered all the negative, replaced all the people and are doing extremely well today as we try to resolve all the issues of the past, most foolish thing we could do now that they are finally in position would be to get rid of them or spin them off. So that isn’t going to happen.

And we will continue to execute the way we are. And at the same time, there is a tremendous push for me to resolve claims.

Part of the reason we took the write-downs in the first quarter was because I resolved a number of claims and took the write-downs figures, because in my opinion, those claims, even though they didn’t settle it what I felt they should have, it was worth putting them behind us as we commit to eliminating these unbilled receivables.

So, we continue to make progress, albeit much slower than any of us would like. We are getting there and sorry, for the diatribe.

Next question?.

Ron, and we have a very tight labor market broadly. You have record backlog. Clearly, you’re going to be adding to your workforce pretty substantial size.

How should we think about the risk associated with increasing labor workforce cost structure?.

Well, interestingly enough, we operate on the theory that the bigger we get, we do not get more cost effective on these $1 billion and $2 billion and $3 billion jobs.

So we think we intelligently hedge our labor cost as the jobs get bigger, and frankly, less efficient than $100 million and $200 million jobs because instead of 100 men on the payroll, you have 1,000 men. And since I’ve ran all our biggest work, anybody thinks he can manage 1,000 men as effectively as 100 men is naive.

So, I believe we address that and the only thing I can say to you in all honesty, my entire life, as we’ve grown, people always ask me, where are you going to get the additional workmen? The truth of it is, we’re a union contractor everywhere in this country, with the exception of our Mississippi office and our Florida office, neither one of which have any impact on Tutor Perini.

They’re nice, small building operations, they don’t hire many people and as such don’t need many people. But as a union contractor, one of this country’s largest, we’ve always got the men trained out of our unions. In every union present I talk to continues to train and ramp up through their apprenticeship programs the people to do the work.

So, the one thing we’ve never experienced is the inability to get people. We have from time-to-time in certain locations had less qualified and less capable crafts when they get very busy. But the way we’ve adjusted to that is very simple, we hedge our labor accordingly. So, I don’t see that as a problem, certainly not now.

Could it be in the future? It’s possible. More realistically, our biggest problem will be, as I’ve said before, we are finishing our San Francisco subway job in San Francisco. We’ll have $1 billion staff available sometime next year.

We are hopefully, by the end of next year, will have made strides in high-speed rail to where I could be into peel certain people out. Same thing with certain subway jobs in New York.

So, we have some capacity, but to continue to train and recruit and hire the people to do this new work that we’re fully capable of qualifying for and being contracted with, that’s our biggest issue and my biggest single worry.

The only difference is once I’m convinced, we don’t have the people to do the work, regardless of the margin we can achieve, we’ll simply stop bidding..

Gary, one quick question on the pacing of revenue growth over the next three quarters, how should we think about it? Does it look to be smooth in accelerating growth in 2Q, 3Q and 4Q? Is it lumpier in one quarter versus the other? And then by segments, is it fairly smoothly kind of a step function across segments as well?.

Yes. So, to your first question, Alex, I would look at Q2 being up, but Q3 and 4 being more dramatically up. That is on pace with the acceleration or the ramping of these larger projects that Ron had mentioned. With respect to the segment breakdown by segment, Building is going to be more gradual, if you well.

And what I described for the company is going to be really more reflective of Civil and Specialty..

Thank you very much. Congratulations..

Well thank you..

[Operator Instructions] Our next question comes from the line of Zane Karimi of D.A. Davidson. Please proceed with your question..

Hi good afternoon. This is Zane, on for Brent..

Zane, we can’t hear you really well.

If you could talk a little louder, maybe get a little closer to the phone, please?.

Okay.

How about this?.

Much better..

That’s great. That’s great. Thank you..

Okay. God, I got that one done. Zane, on for Brent this afternoon.

First off, has the time line changed a little on some of the big projects that you’re expecting to drive earnings later this year? And any better visibility on the start-up of those than a couple of months ago when you guys last reported?.

I don’t think so. I think that Purple Line 2, the $1.3 billion station in tunnels is fairly close to the initial schedule and ramping up dramatically with the tunnel drive starting by somewhere between December this year and January next year.

We’re starting with our work in Wilshire Boulevard at the Beverly station, that’s starting over the next 60 days. High-speed rail is beginning to get back to work, again, after basically being stalled for months of delays. I think it’s all coming together.

I think Newark, the terminal we’re erecting steel across the entire terminal, which should be erected by October, November.

So, it’s all building up to where with a significant revenue associated with the size of those contract and the costs that ensue and follow that revenue should be going full tilt on most of these projects within if they’re not already going within the next 3 months..

Great.

And then following up, with good Civil margins, not spanning the weather in the west, are you guys ramping on some of that work now with the weather subsiding? And how has weather really impacted you guys this last quarter? And how are you looking at it through this March and April?.

Did you say renting, I didn’t quite hear you?.

The weather and with regards to ramping up on some of that projects....

Ramping.

In the west, the weather always has a marginal impact, but realistically, as you might guess, bad weather in California is 8, 10 inches of rain, so it’s not really bad weather as it is in New York, New Jersey and even more so in our Midwest bridge operations, where it snows and gets to freezing temperatures in both Minnesota and Wisconsin where our with our highway operation.

So, I don’t think it’s any different than the norm this winter. And we don’t see any weather impact other than typical. If that’s an answer for what you’re looking at, and we’re already in the May and it’s sunny, and believe it or not, back east it’s relatively sunny and the bad weather is ceased.

So, we’re going full tilt on all New York City and New Jersey work. So, I can’t really say weather is an issue and I don’t expect it to be for the rest of this year unless somehow, we get hit between Thanksgiving and New Year..

Thank you. I appreciate the time..

Sure..

Our next question comes from the line of Steven Fisher of UBS. Please proceed with your question..

Thanks. Good afternoon guys..

Hi Steven..

Hi, Ron.

Wondering, Gary, maybe if you could just clarify the profitability in the Specialty statement in the quarter, how much was that closeout adjustment and what would the profit and margin be without that in the quarter?.

Yes, Steve. I would look at it this way, the margin for the quarter would’ve gone up about 1.5% and it’s more than one closeout, it was a couple of them. But the margin would have gone up about 1.5%.

So, I think you can determine that most of difference between our income from construction operations, comparing last year’s first quarter with this which gives you the first quarter....

It’s over $10 million..

Is that Delta is mostly that. So, we had $15 million delta, $14 million delta year-over-year and most of that difference is due to that..

Essentially, the loss would have been the same amount of profit within give or take. The $7 million loss in the Specialty group without the adverse settlements of claims would’ve been a gain of approximately $7 million. So, it was $14 million swing..

Got you.

And then again, that’s basically the right line you’ve taken to be able to collect cash on that settlement?.

Well, there were a number of, what I’d call, smaller claims that I had no intention of litigating. So, when I looked at them, it made no sense to litigate them. They just didn’t work investing that kind of capital and lawyers. Typically, to get $5 million, I don’t want to spend $5 million. So, we settled and closed out with certain owners.

And I wouldn’t have called them good settlements, but we put them behind us as we focused on the larger ones..

Okay. And then maybe just, again, Gary clarifying the commentary on the cash flow, it sounded like you were saying there was a bit of a pull forward into Q4 of last year. But the fourth quarter was also kind of disappointing on cash flow. So, I guess I’m trying to figure out what’s really going on here in the cash flow.

And I know you said it’s going to get better as the year goes on, but really just trying to figure out why it isn’t better?.

Well, the fourth quarter last year, we had $56 million of cash flow. So, for the year, we’re slightly positive. And we are disappointed with that because we wanted higher cash flow in the fourth quarter, but still was a solid $56 million..

Okay. And maybe just framing the year on guidance, just kind of wondering, how are you weighing the puts and takes of the quarter and the confidence in the guidance? Because it seems like it was maybe a bit weaker than expected on the quarter, but the bookings were better.

So, would you say you’re sort of now net more confident in the guidance, or you would have been basically at the upper end or beating had it not been sort of for this slower than expected start?.

I think our confidence is the same as it was before, Steve. There are always puts and takes. And we had some puts on and some takes. And we feel the same as we did, going into the year..

Also, I might add, I always try to be blunt and direct even though sometimes I am not supposed to be. Some of these write-downs that we took in the first quarter that adversely affected the first quarter, had they been not taken, of course we would have exceeded our first quarter budget.

But the reality of those, those were contained within the allowances I made when I set the earnings per share assuming that I would take certain settlement write-downs in order to achieve and collect the money necessary. So even though we took a significant level of hits in the first quarter, we’re still within what we’ve allowed in our earnings.

And there’s nothing that’s taken place that would lead me to believe we won’t still finish in that area..

Got it. And then if you could just frame the 12.5% Civil margin in the quarter? I mean is that something that’s based on the margins and backlog, you expect to build on from here? Just obviously even for not for Q1, that’s a pretty healthy margin..

We should do better because the 12.5% is weighed down by a significant amount of work back east in Lunda, our highway Company and New York Civil. In the very large work, I think, I explained earlier, how significant the margin is in our $1 billion plus contract.

However, in our bread and butter $50 million to $100 million, the $200 million, we’re still laboring in the high-single digit, maybe up to 10% as we compete, and what we would call the bread and butter $80 million, $100 million, $200 million jobs.

However, as we move much more significant in the larger jobs, it will go up because there will be more of it. For example, we have high-speed rail right now at $1.5 billion and growing significantly, with added work and change orders being added every day. We’ve Purple Line 2 at $1.373 billion, which is well into its start and ramping up.

We’ve Purple Line 3 tunnels at $410 million, Purple Line 3 stations at $1,360 million. We then have Newark Terminal at $1,400 million. So, we have 1, 2, 3, 4 jobs over $1 billion with significant margins.

That total is 1.4 it’s almost $6 billion of our $12 billion backlog, or better yet, 6 $5 billion of our Civil backlogs in $1 billion plus, you do the math. Our backlog is contained within the $1 billion jobs. That’s where it is and that’s where the margins are. Because all of this is transitions, remember, over the last 2 years.

The only $1 billion job we had 2 years ago was high-speed rail. And as profitable as it’s been, it suffered with constant delays the owners caused by lack of right-of-way and lack of easements and permits. So, all of this new work, which is beginning to just ramp up and effect revenue, is all new and just beginning to have the impact so necessary..

Terrific thanks Ron.

At this time, there are no further questions over the audio portion of the conference. I would like to turn the conference back over to management for closing remarks..

Thank you, everybody. Enjoyed the call. Talk to you the next time..

This concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful rest of your day..