Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation's Second Quarter 2021 Earnings Conference Call. My name is Joe, 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’ll be opening the call for question-and-answer session.

As a reminder, this conference is being recorded for replay purposes. [Operator Instructions] 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. Thank you for your participation today. With us on the call are Ronald Tutor, Chairman and CEO; and Gary Smalley, Executive Vice President and CFO.

Before discussing 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 was filed on February 24, 2021, and in the Form 10-Q that 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, I will now turn the call over to Ronald Tutor..

Thanks, Jorge. Good afternoon, and thank you all of those for joining. We are continuing to experience a strong year having delivered second quarter and year-to-date results that once again were ahead of expectations.

In particular, we generated the highest operating income of any quarter since the merger between Perini Corporation and Tutor-Saliba that took place in 2008.

We also produced the highest Civil segment operating income of any quarter since the merger and the highest Civil segment operating margin since the fourth quarter of 2018, all of which contributed to very solid EPS results of $0.61 per share for the second quarter, a 65% increase against the comparable quarter last year.

We are in the midst, as I've said previously, of the strongest business environment we have seen, which continues to give me confidence in our business outlook over the next several years, especially considering the even greater opportunities currently being created by the multi-year federal infrastructure spending program that is on the very horizon.

With the solid results, we have delivered to-date this year, combined with our expectations, for the rest of the year we again affirm our EPS guidance for 2021.

Just like we experienced in the first quarter, despite a modest revenue decline in the second quarter, our operating income actually grew 19% as a result of the continued favorable shift toward higher margin projects within our Civil segment.

As I've stated previously, we had anticipated this mix shift at the start of the year, because we knew that certain large civil projects in the Northeast would be completed or progressing toward completion this year whereas certain newer significant high margin civil projects would be advancing mostly offsetting the declining revenue and more than offsetting the reduction in profit contributions from the completing projects.

We performed substantial work on several of our major design-build projects that have contributed to our second quarter revenue, including California High-Speed Rail; Purple Lines 2 and 3 including Division 20 for the Los Angeles MTA in Los Angeles; the San Francisco Central Subway project that is completing shortly; and the Minneapolis Southwest Light Rail; as well as the Newark Airport Terminal 1 and the Andersen Air Force Base Housing project in Guam.

In addition, our Building group is currently preparing for the grand opening of the Choctaw Casino & Resort in Durant Oklahoma, which has been a very outstanding project with a dedication and opening to occur tomorrow August 5.

Our backlog is $7.5 billion at the end of the second quarter and remains at a solid level, although we expect to build substantially on that backlog later this year and in the first half of next year, given the numerous large bids we are preparing to submit and upcoming new awards that are pending.

As a reminder, the COVID-19 pandemic has had a significant impact on the volume of work available and the timing of new awards as well as the backlog and so far this year as the pandemic resulted in and could continue to cause, impacts to our revenue sources and consequently temporary funding uncertainty.

So our backlog decline over the past three to four quarters should come as no surprise, as the work was simply not available to replace the runoff. However, we are once again extremely optimistic that our backlog growth will be significant over the next 12 months with the obvious opportunities that we face.

As mentioned, in addition to several new large projects we are preparing to bid, which I will discuss momentarily, we have -- we already have several pending new awards for significant projects that we expect to book into backlog in the third quarter of this year, including the previously announced LAX Airport Metro Connector, for which we just received notice of an intent to award in the amount of $471 million; as well as a $220 million Missouri River Bridge that Lunda was low bidder and announced an award shortly; and Rudolph and Sletten last but not least, a very significant hospital in the health care facilities in Southern California that we hope to conclude and enter into a contract within the next 30 to 45 days.

The cumulative value of these projects should go into our third quarter backlog and have a significant impact. We added $643 million of new awards and contract adjustments during the second quarter of 2021, which of course was significantly below the norm given the frozen aspects of new projects.

The largest award was to Rudolph and Sletten for the $152 million Santa Rosa Courthouse in California. Also in our Civil segment, Lunda added $88 million more of new awards and adjustments in the Midwest. The balance of new awards and adjustments were smaller and spread throughout our various business units.

Now we will update you on some of the major projects we are preparing to bid in the balance of this year and during the first half of next year. Rather than repeat the same multitude that I have spoken about on past earnings calls, I will focus on just the largest ones that are coming up in the next six to nine months.

In early September, we will be bidding on the $1.8 billion Portal Bridge project in New Jersey, for the New Jersey Transit Group with an expected award within 90 days thereafter. In mid-September, our updated price proposal for the $4 billion JFK Terminal is due and we expect the owner to make a decision and award during the month of September.

The proposal for the $2 billion-plus Maryland Purple Line project will now be submitted in the latter part of September with the contract award we would expect within the 60 to 90 days thereafter. The $1.5 billion Newark Airtrain project for the Port Authority of New York proposals would be due in mid-January.

Additionally, the FAA -- excuse me, once again. I guess, I must be allergic to this call. The FAA administration recently gave its approval for the Port Authority of New York and New Jersey to proceed with the $2 billion LaGuardia AirTrain project.

As a result, we now expect to bid that project in the spring of next year, and we believe the Port Authority will act quickly and accordingly.

And last but certainly not least, Black Construction, our subsidiary in Guam is awaiting the outcome of recent bids for major military projects that exceed $1 billion in its overall magnitude, including one single large military bid exceeding $600 million on the island of Guam.

We have also bid on numerous projects on the island of Tinian for the US Navy and in the Northern Marianas and that continues to be a significant source of projects and revenue. We continue monitoring developments in Washington D.C.

and their efforts to pass a major federal infrastructure spending bill, which of course, would further bolster our already long-term business outlook.

We believe that a package will soon be enacted and funding will flow quickly to major projects that have been long planned, but even without that infrastructure bill, I continue to remind everyone that there's a flood of major infrastructure contracts in the marketplace continuing to be offered taxing our capacity.

Based on our results to-date through the second quarter and our outlook for the remainder of the year, we are still affirming our earnings per share at $1.80 to $2.20. And with that, I'll turn the call over to Gary Smalley, our CFO..

Thank you, Ron. Good afternoon, everyone. As we usually do, I will begin with a discussion of our results for the second quarter, including cash flow followed by some commentary on our balance sheet, and then some updates regarding the assumptions in our 2021 guidance.

Revenue for the second quarter of 2021 was $1.22 billion, down slightly compared to $1.28 billion for the same quarter of last year. Civil segment revenue for the second quarter was $555 million compared to $569 million for the second quarter of 2020.

Increased volume on certain civil projects in various locations largely offset the revenue decline related to certain other projects in the Northeast that are completed or progressing toward completion this year. Building segment revenue was $383 million compared to $473 million for the second quarter of last year.

The decrease was primarily due to reduced project execution activities on certain projects that are completed or nearing completion partially offset by increased activity in the current year related to work that had been deferred by the COVID-19 pandemic in 2020 on a technology project in California and a hospitality and gaming project in Arkansas.

Specialty Contractors segment revenue was $280 million [ph], up 20% compared to $234 million for the second quarter of last year with the growth mostly driven by increased activities on certain projects in the Northeast.

As Ron mentioned earlier, we have some notable pending awards in the Civil and Building segments that are expected to enter backlog over the coming months, as well as new and major bids that we will be submitting with anticipation of capturing our fair share.

As these and other new projects are awarded to us and begin to contribute significantly, they should start to, and eventually more than offset declining revenue contributions from projects that are completing and nearing completion. So we do believe that revenue growth is on the horizon.

It is simply a matter of timing, as to when the new projects are awarded and start to contribute meaningfully to our results and counterbalance the projects that are wrapping up.

Income from construction operations for the second quarter of 2021 was $69 million, the highest second quarter operating income we have had since the merger in 2008, and up a strong 19% compared to $58 million for the same quarter of last year.

As Ron indicated earlier, the strong growth in operating income was driven by a favorable shift in project mix, including strong contributions from certain higher-margin civil projects. Civil segment operating income was $75 million, the highest Civil segment result of any quarter since the merger and up 15% year-over-year.

The Building segment reported a slight loss from construction operations of $2 million for the second quarter of 2021 compared to income from construction operations of $18 million for the same quarter of last year, primarily due to unfavorable adjustments on certain projects, which were immaterial individually and in the aggregate, as well as the segment's reduced volume.

Income from construction operations for the Specialty Contractors segment was $10 million compared to a loss of $11 million for the same quarter of 2020.

The increase was primarily due to a $20 million favorable adjustment in the second quarter of 2021 related to a legal judgment on a completed electrical project in New York, partially offset by unfavorable adjustments related to the resolution of disputes on certain electrical and mechanical projects in New York, totaling approximately $11 million.

The current quarter increase was also driven by the absence of a $13 million impact from an adverse arbitration ruling related to another electrical project in New York in the second quarter of last year. Operating margins by segment for the second quarter of 2021 were 13.5% for Civil.

This is the highest Civil segment operating margin since the fourth quarter of 2018 and up 200 basis points year-over-year. It was a negative 0.7% for Building and an improved 3.5% for Specialty.

We expect the Building segment's margin to return to the 2% to 3% range in the short term and we will continue to work through certain legacy challenges in the Specialty Contractors segment, so that we can eventually deliver the improved consistent profitability we aim to achieve.

Corporate G&A expense for the second quarter was $14 million, essentially level when compared to the same quarter of 2020. Interest expense for the second quarter of 2021 was $18 million, modestly higher compared to $16 million for the same quarter of last year.

Just like last quarter, the increase was primarily due to a higher average debt balance as a result of our new term loan B, offset somewhat by lower interest expense associated with a reduction in the beginning -- excuse me with a reduction in the balance of the convertible notes.

As expected we repaid the remaining $69.9 million principal balance of our convertible notes at maturity on June 15, 2021. So going forward, our quarterly interest expense will be reduced by approximately $1.5 million from what it has been earlier this year.

Income tax expense for the second quarter was $11 million, compared to $10 million for the second quarter of 2020. The modest increase was a result of significantly higher pretax income, but a lower effective income tax rate in the current year period.

The lower effective tax rate was favorably impacted by reduced state income taxes compared to the same period in 2020. Net income attributable to Tutor Perini for the second quarter of 2021 was $31 million, up a strong 67% compared to $19 million for the same quarter of last year.

Diluted EPS for the second quarter was $0.61, up an equally impressive 65% compared to $0.37 for the second quarter of last year. These strong increases were mostly driven by the higher income from construction operations that I mentioned earlier.

Now, let's shift gears and discuss operating cash, which was considerably weaker than what we had forecasted for the quarter. The use of $85 million of operating cash in the second quarter was largely due to an increase in our cost and estimated earnings in excess of billings what we refer to as our CIE.

The CIE increase was primarily driven by the follow-on impacts of the COVID-19 pandemic, which has continued to cause delays in the negotiation and resolution of certain claims and unapproved change orders, including the postponement or deferral of certain legal and arbitration proceedings and settlement discussions.

COVID has also caused constraints to revenue and funding sources for our owners, thereby limiting their budgetary discretion to pay us for out-of-scope work that we have performed at their direction. The vast majority of the CIE buildup this quarter occurred on several East Side Access projects in New York and the Newark Airport Terminal One project.

We're continuing our dialogue with the New York MTA to address amounts that we are owed on the East Side Access projects. In addition, the change order on the Newark Airport project has been drafted, which once approved, should address this project's CIE buildup.

Due to larger-than-expected cash usage in the second quarter, we are less optimistic about our ability to generate annual operating cash for 2021 in excess of net income, as we have done for four of the last five years. But we do expect considerably stronger operating cash generation for the balance of the year. Now, let's turn to our balance sheet.

Our total debt as of June 30, 2021 was $970 million, down 5% compared to the end of 2020. Our credit facility once again had a zero balance at the end of the second quarter of this year. As mentioned earlier, we repaid the remaining outstanding balance of our convertible notes in June.

We are still well within our debt covenant compliance limits and anticipate that this will continue to be the case in the foreseeable future. As Ron mentioned earlier, we are affirming our 2021 EPS guidance range of $1.80 to $2.20 per diluted share, based on our assessment of current market conditions and our outlook for the remainder of the year.

Though our earnings are above our expectations for the first half of the year, we remain cautious as to how quickly new projects will be awarded and ramp up. And we continue to monitor the uncertainty of any potential impact of new variants of COVID-19 on new awards and operations.

Finally, let me update you on some of the assumptions factoring into our 2021 guidance. G&A expense for 2021 is now expected to be between $250 million and $260 million, which was $5 million less than previously anticipated.

Depreciation and amortization for the year is now expected to be approximately $115 million to $120 million, compared to the $110 million previously anticipated. Interest expense for 2021 is now expected to be approximately $69 million, of which $6 million will be non-cash.

Our effective income tax rate for the year is now expected to be between 23% and 25% improved by 1%, at both the top and bottom ends of the range. All other assumptions remain unchanged from what we provided during our earnings call back on February 24, of this year. Thank you. And with that, Ron I'll turn the call back over to you. .

Thanks, Gary.

In summary, we are continuing to deliver good results this year highlighted by disciplined project execution, strong second quarter and year-to-date operating income, and earnings per share that are ahead of expectations, as well as solid Civil segment operating margins a healthy backlog, hopefully, increasing substantially and a favorable outlook as we go forward.

As I mentioned earlier, we are enjoying as excellent a marketplace that is certainly very positive that I have ever seen. We continue searching for and recruiting new talent to join our organization to help manage that growth and the significant opportunities we see ahead.

I expect, we will continue to face very limited competition for many of the larger projects that we are pursuing, which should of course lead to strong sustained increases in our backlog and the margins and growth to follow, particularly over the next several years. Thank you. And with that, I'll turn the call over to the operator for questions..

Thank you. [Operator Instructions] Our first question is from Steven Fisher with UBS. Please proceed..

Hi. Good afternoon, guys. Wanted to – just wanted to ask starting off about the Newark Terminal One project. I think, this is the first that we're hearing about a need for a change order.

So can you just talk a little bit about what's going on with that project? How it's progressing right now? And how much of that was a factor in the Building segment's profitability negativity this quarter?.

Well, this is Ron, Steven. Newark is a very successful job that is completing probably January 1, or thereabouts, with an opening to the public in April, at least that's what we anticipate. We've had a number of changes and/or issues with the port that, I settled maybe four months ago.

That has taken much longer to document than it should have, but it is what it is. I got the first draft of a change order last week. We're going through the terms and conditions. I'd expect, we'll have that change order executed before the end of August, and that will eliminate a very significant construction cost in excess on Newark.

Newark is a very successful job that will bring it back to it. These were really half owner change orders and half disputed issues. It was much owner change, as it was anything else. However, they're a wonderful owner, but to say, they're slow in the processing of extra work would be to be nice. So that's Newark in a nutshell. .

Okay. So it sounds like – what's the risk that some of this turns into a claim and how much of that –.

On Newark?.

Yeah. .

I don't think there's any risk. I personally handle Newark, and I deal with the port on it every week and their principals. They've been excellent. I have no reason to believe that there'll be any claim at the end of Newark. They've been settling everything to date. That cleans us up within – to within current times.

And I'm not aware of any disputes of consequence we have other than just finalizing change orders. So I don't think Newark is a problem in any way..

Okay. That's good. But I guess, trying to understand then what is – what else is going on in the Building segment that led to the slight operating loss. I know Gary you said, it's sort of a variety of small changes in – that add up to a loss in the aggregate.

But does the – I guess, the absence of profitability in the Newark project in the quarter, because it was an unapproved change order how much of that was a factor? And I guess, just trying to understand, I think building projects historically tend to be more cost reimbursable.

So what's driving the losses there?.

It's very simple. It's very simple, Steven, and I'll take responsibility for it. I manage Newark, which the majority of which profit funnels into our Building group, because it's a building job, and I wrote the job down. It's an extremely successful project that, we've had issues with design changes, settlements.

And I wrote the job down from where it is approximately $12 million to where it now is. And the Building business had to absorb it. I made a judgment even though, there's still issues yet to be resolved. If that was the prudent thing to do the job is still extremely profitable.

However, the Building business took the brunt of that write-down, because we're roughly 85% to 90% complete. So they took the burden of my write-down of Newark. So, that's the reason, they showed so poorly in the quarter..

Yes. Steven, yeah, what you have to apply is our – first our JV percentage to that. We're 80% lead JV partner, then the percent complete to that. And then -- so in a way... .

You can figure out, what they would have made had I not done it..

Then there are some odds and ends just adjustments closeout-type adjustments on a few minor projects. .

Got it. And then just the bigger picture on sort of the timing dynamic here.

How should we think about what's rolling off, and when? Is this civil projects that we're talking about, or is it in Newark for example, which is I guess a hybrid of building and civil? And when do you need these bigger bids to really get started so there's not sort of an air -- a bigger air pocket in between?.

Well there could be an air pocket by the nature of design-build. But to give you a for instance, we turned in Maryland Purple Line in September. It is contemplating a start in January and it is essentially designed ready to go to work. There's one other bidder and let's call that in round numbers $2 billion-plus.

Then we have the JFK Airport job, which let's just say, has very limited competition at $4 billion. We turned in our first proposal guaranteeing a limited amount of the work in September. The owner has said they will make a commitment and award by the end of September, with a start in March of next year.

So that should begin to generate revenue by the first quarter next year. And last but not least is the Portal Bridge which is $1.8 billion, which does bid the first week of September. That in fact would probably be awarded before the first -- before the end of the year with a job start first week of January. It's design-bid-build so there's no lag.

There isn't any major projects bidding the $1 billion-plus other than that before the Airtrain at Newark, which bids mid-January at approximately $1.5 billion. So any good fortune it's our belief that our backlog by year-end will be significantly increased most of, which will start in the first quarter next year.

The only really major $1 billion-plus job that's finishing up this year is Newark. Purple Line two, has four more years to go as does Purple Line three. Purple Line three tunnels, probably has 18 months to two years to go with a majority of its backlog. High-speed Rail never ends. It's got three more years to go and more revenue being pushed through it.

And SFMTA will wrap up over the next three to four months. We're in the final stages of change orders and additional work but we're 99%-plus complete.

So -- the only ones that are really dropping off are SFMTA, which has been at best diminished revenue in the last six months as it's completed and Newark, which will be finished as I said, first week or two of January.

And the only remaining work at Newark will be a final phase of $40 million to $50 million worth of apron paving and the final fixed bridges being set. So most of our big work is still going, Steven, and will continue to go for probably the next three years..

Okay. Terrific, I’ll leave it there. Thanks guys..

Our next question is from Alex Rygiel with B. Riley FBR. .

Alex you still breathing?.

Sorry. I sure am. Sorry that mute button got me this time. Apologize for that. Ron, the company's revenue has sort of been in that $4.5 billion to $5 billion range now for about six years.

Do you think the federal infrastructure bill can materially change that revenue level that Tutor Perini has been delivering for a handful of years here?.

Well we've been talking about it ad nauseam here. What can we do? What should we do? What is available? I think setting aside the infrastructure bill there's an enormous amount of work put in front of us and at best a very limited competitive environment.

So we think we can significantly increase our revenue probably starting toward the latter part of 2022 and certainly by 2023. And we've talked about, what that target revenue might be over the next couple of years.

And probably shouldn't project it, but our target and belief is that we can grow to about $7 billion a year primarily through the civil and certainly none of the other components of our work. And that will be directly in line with work we see out there, our role in the industry.

And if the best thing happens that that infrastructure bill finally goes through, which has been bounced around for the last five years and all indications from our political leaders that we speak to is that it will then there really isn't any doubt about it. It's going to be an extraordinary, few years..

That's great. And then you mentioned, Guam and a few other islands.

What does the competitive environment over there look like?.

That's a good question. We have the only major presence or only presence period to be blunt on the island. Our only competitors come from the mainland US. They continue to compete with us on a one-off basis. We don't think they can sustain it, with the billions of dollars of work.

Our revenue at Guam is up 100% of what it was three years ago and we continue to grow it. We think we're the only player on the island for major work and that our peers that come from off-island with no people, no equipment and no staff are going to find out how difficult it is when they beat us.

We've invested a great deal of capital in our operation of Guam in plant, equipment, facilities and people. And we're prepared to absorb a significant amount of this new work. And we think that's where it's all going to go. It's not a matter of bidding work like you would anywhere in the US.

It's the idea you got to go to Guam, on an island that pays $20 to $22 an hour for skilled craft people. And we've been there 50 years training those craft people that we recruit in the Philippines move to Guam under the government directions and train and teach.

And coming from the US where those kind of wage rates are impossible to achieve and somehow moving people to Guam so they can compete with us. How they do it escapes me, but none of them ever sustain it for an extended period of time. So we just have to see as it plays out. We have significantly increased our revenue in Guam and we'll continue to..

That’s helpful. Thank you very much..

Thank you. Our next question is from Brent Thielman with D.A. Davidson. Please proceed..

Hi. Thank you. Ron, the strong Civil quarterly profit margins, I mean, it sounds like all the jobs or most of the jobs that you executed on during the quarter are generally continuing here into the second half of the year.

So, I guess, the question just becomes what would prevent you from putting up this level of margins that you did in the second quarter in what usually is a seasonally stronger second half for the Civil business?.

We don't think there's any particular challenges with maintaining margins on the civil work and all the major work that we have. We think it will just continue to get better and there's no reason I can think of -- as I'm vigilant in my review of all the major civil jobs there's any reason to believe that it won't continue.

We think we've got a great market. The existing major civil program, we have is doing very well and I haven't got any reason to believe anything can cause us any major hiccups. .

Yes. And a lot of discussion out there about supply chain, inflation, labor constraints all that good stuff.

I mean how is Tutor Perini approaching that on the work that you've already bid and won and I guess on new jobs that are forthcoming?.

Well, we hear a lot about it from some of our subcontractors and suppliers and we just caution them to be more pessimistic in their bids. So far, yes, steel has gone up dramatically. In some of our contingencies we've overrun.

But when we've overrun them maybe on steel procurement, which we're a big steel buyer maybe on $30 million worth of steel, we lost $1 million. It was minor in the overall scope of things. We've had enough positive help in purchasing to more than offset it. So we really haven't felt any of the material.

And because the material markets are at best tenuous we just allow a contingency level that we've been able to cover virtually any increase the idea of being there is no reason for us to take material risk in a marketplace that is the way it is to put it bluntly. Labor, I keep hearing about labor shortages.

We've got 1,500 people working on the Newark Terminal, probably 500 of which are on our payroll. We haven't experienced that in any of our union areas of California and New York and even in the Midwest. I keep hearing about it. But we haven't experienced it.

And the only thing I can say is until we actually have that issue, we don't see it as an issue at least for the time being..

Okay. And bookings in the Building segment seem to be getting better here in the last couple quarters. Other contractors seem to be getting busier in that segment of the market.

I guess you look at the landscape what's out there and what's out there to bid does this look like sort of an inflection year where maybe we find the bottom and that business starts to build off that into 2022?.

I don't know, how best to answer this. As you can see, our Building business is hardly a significant part of our income although it's a significant part of our revenue. The nature of it is such it's just not a big money earner at least with Tutor Perini.

Yes, we are increasing our awards, I mentioned just a few of them which totaled over $1 billion and it was predominantly buildings. There'll be more Building business.

But our revenue growth and our net income growth will be in the, Civil business with some increased growth and additional profits from the Specialty business frankly just hanging on to the coattails of the Civil business and riding our civil operation to success.

The Building business is still very competitive, low fee structure, relatively low earnings. And it's dominated by private companies, who are very pleased to make $30 million or $40 million a year on the equity investment, manage it well and continue on that basis.

Because we are such a big civil player and we make many times that margin, as you can see in our own reports it's not an area we intend to grow. We like our Building business to complement our Civil business, but to put it bluntly it will be relatively flat, hopefully more profitable, but it is what it is..

If I could just add this Brent, there are significant opportunities for us out there not just the ones that Ron talked about earlier, that we're going to bid -- or excuse me, we're going to put into backlog into the third quarter. There's -- they're lower margin like Ron said, but there are a lot of opportunities out there..

Thank you..

Thank you..

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn it back to Ron, for closing remarks..

Thank you everybody for joining us today and until we meet again. Have a good afternoon..

This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation. And have a [Abrupt End].