Q3 2020 Tutor Perini Corp Earnings Call
Good day, ladies and gentlemen, and welcome to the tutor Perini Corporation third quarter 2020 earnings Conference call.
Name as Paul and I will be your coordinator for today.
At this time all participants are in a listen only mode. Following management's prepared remarks, well be opening the call for a question and answer session. As a reminder, this conference is being recorded for replay purposes. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
At this time I will turn the conference over to your host Mr. Jorge good thought up.
I don't know of Investor Relations. Please proceed.
Hello, everyone and thank you for joining us today with us on the call are Ronald tutor, our chairman and CEO and Gary Smalley Executive Vice President and CFO before.
Before discussing our results I will.
To 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.
There is an inherent risk that actual results could differ materially you can find our disclosures about risk factors that could potentially contribute to such differences.
Most recent form 10-K, which was filed on February 26, 2020, 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 and with that I will turn the call over to Ronald tutor.
Thanks, Jorge good afternoon, and thank you everyone for joining us.
As expected this year is continuing to progress to progress extremely well despite the impact of the COVID-19 that we have been experiencing during the entirety of the year in the third quarter coal, but 19 at a lessening impact on our business.
The vast majority of our project have been considered essential and are so working and I will try not to dwell on COVID-19 in another part of our life, but we are prospering despite.
This is allowed us to progress our work subject only to the timeliness of manpower reductions.
One of our workers context scope at 19 and had weak warranty those workers and work in this area or associated with those employees.
As a result, the impact on our workforce so far it's not insignificant as whenever we've been losing people to go bid we replace them from the unions and been able to work accordingly.
However, as.
As an aside most of our public agencies in particular, the transit authority agencies have recognized scope. It is a cost reimbursable event.
And are preparing to pay as the direct costs, namely layoffs.
Cost of sick leave itself so.
Don't know that we'll get reimbursed for impacts on schedule. It was sort of an avenue I doubt it out wherever we are being reversed or we are being paid some of the direct cost.
Thank God, we delivered another set of solid results this quarter with particularly strong performance from our civil and building segments.
Revenue grew 21% year over year in the third quarter, driven by double digit growth across all segments.
We continue to executing substantial work on several large civil projects.
Including Hot, California High speed rail Minneapolis, southwest Southwest Light rail transit.
Purple lines, two and three stations as well as Purple line three Tom will then what San Georgia, and the Newark Airport terminal one.
Well I was on large building projects such as the chalk dark casino in Oklahoma, and another large hospitality and gaming project.
In California.
The large technology building projects in California, I don't mention those specific names because they're under confidentiality, but they are what they are our revenue growth through the first nine months of this year as but equally strong at 21%.
Back we delivered the highest third quarter revenue growth since 2014, and the highest revenue growth for the first nine months of any year since the merger in 2008.
We generated 73 million up operating cash in the third quarter and up another great result that followed the 92 million of operating cash generated in the prior quarter.
More importantly, we generated 131 million of operating cash through the first nine months of 2020, which also set a new record since our merger in 2000 <unk>.
This was consistent with our expectations for continued strong cash flow in the second half of this year.
We anticipate that we will again produce a healthy cash result for the fourth quarter, concluding what not to be a record year of operating cash.
Our operating cash this quarter was largely driven by collections associated with major civil jobs and continued progress.
Made on certain settlements strong cash generation in the third quarter keeps us well ahead of expectations for operating cash flow for the first nine months of 2020.
Operating income of $83 million was another highlight of our third quarter results.
It was the high highest third quarter results again since the merger and 2008 and it was up 73% compared to the same quarter last year.
The significant increase was the result of continued progress on several high margin several jobs that I mentioned earlier as well as a favorable arbitration ruling that we announced a few weeks ago.
Our operating income this quarter would have been significantly higher had it not been for that 15 million dollar charge, we were required to take it in the specialty contractors segment due to an adverse legal ruling we received pertaining to a completed mechanical project in California.
It was concluded four to four and a half years ago and.
In a moment Gary will review all the financial results for the quarter, including specifics around the COVID-19 impact year to date, but I will reiterate that our results for the third quarter were very strong and particularly outstanding for operating income and operating cash.
Our major design build projects are all advancing well, which gives me confidence we'll continue to see strong growth and profitability this year and next.
Our backlog remains solid at 9.2 billion at the end of the third quarter and.
And importantly, the backlog as of longer duration than what you might expect as it includes certain very large design build projects such as all of those on the purple line out of Los Angeles as well as even the residue of high speed rail that are expected to continue advancing for another four years it.
He should come as no surprise to anyone that our backlog has decreased this year given our strong revenue growth.
Combined with a relatively low volume of New awards during the first six months of the year compared to last year.
That lack of award just simply up projects being stopped work not going out to bid while all our agencies try to determine how they're going to fund all of their growth.
Desires.
They're all delayed until I believe after the election, and there's a direction going forward and at the very least rescue packages by the federal government.
We booked $625 million of New awards and contract adjustments in the third quarter of 2020.
The most significant of these included a $121 million for our share of the South Coast Light rail project in Massachusetts, where in where in a joint venture with Middlesex a local contractor in the area 75 million of additional funding at Rudolph and sletten for various building projects.
In California.
$54 million mixed use building projects in California, and a $47 million military facility for black construction.
Speaking of Black they are not only have any extraordinarily successful year, but the future bodes extremely well because all of the discussions for many years of the brains moving from Okinawa to Guam is absolutely taking take place with bidding opportunities in the range of over.
$2 billion over the next 18 months on the island of Guam sponsored by the U.S. Navy.
Blacks revenue and profits are growing at nearly double any prior previous years.
With an extraordinary increase in all the construction on Guam, where weve been dominant for the last 40 years.
We believe that our backlog still has the potential to grow over the next few quarters as we have already submitted several bids for new large projects that are pending customers' decisions and contract awards in the coming months.
For example, we are awaiting the outcome and next steps related to the bid our team submitted for the Honolulu Rail transit. The three projects. We are also awaiting decisions regarding our submitted bid for the early stage work on what will eventually be the $8 billion the ball, but a transit corridor the three project.
In Los Angeles in.
In addition, we anticipate bidding in early December the L.A.M.T.A.S $450 million L.A.X. Airport Metro Connector project with an award expected by the first quarter of 2021.
As well as bidding on several large civil segment projects during the first half of 2021.
As we noted last quarter several major bid opportunities over the next year have been deferred what public agencies await federal supplemental funding and budgetary certainty.
Once we move past the election results, we are optimistic that the sorely needed federal funding for infrastructure will be authorized sooner than later most in our industry continue to expect that the federal government will <unk> will approve it substantial supplemental funding package aimed at support.
State and local transportation agencies critical infrastructure needs as well as their tremendous revenue shortfalls necessary for them to continue to function.
Although large forthcoming beds include the 2 billion dollar Newark Airport Air Port Air train.
2 billion dollar JFK Airport land way development project.
$1.4 billion portal beds replacement in New Jersey, which we now expect a bit in the third quarter next year and the $1.2 billion Metro North Penn station access in New York.
It also appears that on the third quarter of 2021, we expect the bid the 2 billion dollar Bay area Rapid transit Silicone Valley Phase two extension, which is a very large tunnel and the and the excavation and supportive to station.
Further out on the horizon, we're looking forward to the 4 billion dollar West Santa Ana Transit corridor, and a 1.5 billion dollar East San Fernando Valley Corridor, both for Los Angeles Metropolitan Transit Authority.
In New York, we have been following us weve spoken to previously to $3.5 million Port Authority bus terminal and of course, the 2 billion dollar Laguardia Eritrea.
Our building segment is larger perspective opportunities include approximately $2.1 billion for six large hospitality and gaming projects in Virginia, California, Louisiana, and North Carolina.
800 million dollar New hospital in Northern California, the $500 million Burbank Airport terminal replacement.
In a $265 million veterans home facility and Northern California.
In fact, we were provided a notice of intent within the last few days by confidential customer for one of those six hospitality projects with a value of approximately 350 million. The construction of which is expected to begin in the second quarter of 2021.
In all we are tracking approximately $30 billion of project opportunities literally 20 billion of which our civil bidding over the next 18 months in more than 10 billion a building projects build bidding or proposing over the next 12 months.
Significant work envisioned to be formed on many of them by our specialty contractors units.
As you can tell as we have been asserting for some time the volume of prospective projects remains unprecedented despite the funding challenges presented by Cove at 90.
Our large civil opportunities are likely to grow even more once the federal government finally authorizes the long anticipated infrastructure program.
Finally throat, although our year to date earnings per share results are ahead of budget expectations.
And we have been able to offset all of the impacts of COVID-19 to date.
We remain cognizant of the uncertainties and as such based on our current assessment of market conditions and our forecast for the remainder of the year. We will maintain our 2020 earnings per share guidance in the range of $1.80 to 210 with that I turn the call over to Gary small.
I need to present, the details of our financial results. Thank you.
Thank you Ron good afternoon, everyone.
I will start with a discussion of our results for the third quarter, including cash flow.
Followed by some commentary on our balance sheet and then our latest 2020 guidance assumptions.
Revenue for the third quarter was $1.4 billion up 253 million or 21% compared to $1.2 billion for the same quarter last year and as Ron mentioned it was our highest quarterly revenue more than 10 years and featured double digit growth across all segments.
The strong growth was driven by increased activities on the large infrastructure projects that Ron referred to earlier.
As well as on certain building projects in California, and Oklahoma.
The COVID-19 pandemic only had a minor impact to revenue of approximately $40 million in the third quarter, well under the $130 million revenue impact.
In the second quarter.
The impact in the third quarter was largely associated with the single building project, where a customer requested that we slow our pace of progress probably until the beginning of 2021.
Civil segment revenue for the quarter was 612 million.
I'll be strong 17% year over year, driven by contributions from the same larger infrastructure projects.
Revenue for the building segment increased significantly to $508 million, which is up 22% compared to the same quarter of 2019 also predominantly due to the California, Oklahoma building projects I just referred to.
Specialty contractor segment revenue was 322 million up an impressive 29% year over year, primarily due to increased activities on the Newark Airport project in the hospitality hospitality and gaming project in California.
Income from construction operations for the third quarter was $83 million, an increase of 73% compared to $48 million for the same quarter of last year.
The significant increase was due to contributions associated with the significant volume growth, we experienced this quarter across all segments.
Along with reduced DNA expense due to the impact of the favorable arbitration decision that we announced recently.
The third quarter COVID-19 impact income from construction operations was only approximately $3 million compared to $9 million in the second quarter with about 2 million of the $3 million, a third quarter impact being in the building segment.
We are hopeful that barring any significant worsening of the pandemics effects upon our operations the largest impacts are behind us.
As Ron mentioned earlier.
We took a charge of $15 million in the specialty contractor segment.
Due to an adverse legal ruling on mechanical project in California.
So our income this quarter included approximately $5 million of net positive impact, resulting from the favorable arbitration ruling and the adverse legal really.
Civil segment income from construction operations was $170 million compared to $51 million for the same quarter of last year.
The segment's income grew 39% year over year, primarily because of strong contributions from our large mass transit projects in California.
This growth in the civil segment's income was even more impressive when considering that it was reduced by $8.4 million of incremental noncash non noncash amortization expense in the quarter related to the increased equity interest in the joint venture that we acquired in the fourth quarter of last year.
Even with this additional amortization expense the civil segment's operating margin was once again strong at 11.5% for the third quarter of 2020.
Compared to 9.7% for the same quarter of last year.
So civil segment operating margin remains at the high end of the 10% to 12% margin range, we have historically seen for the segment.
Building segment income from construction operations was $16 million more than doubled the results.
For the third quarter of last year.
The strong increase was mostly driven by contributions from certain projects in California and Oklahoma.
The building segment's third quarter operating margin was 3.1% compared.
Compared to 1.8% for the same quarter last year with the increased margin, reflecting contributions from certain higher margin projects.
Building segment operating margin for the full year of 2020 is still expected to be in the 2% to 3% range.
Specialty contractors income from construction operations for the third quarter was $10 million up 34% compared to $7 million for the same quarter of last year.
The increase was primarily due to the segment's volume growth as well as the net positive impact mentioned earlier that resulted from the favorable arbitration decision and adverse legal ruling partially offset by various other immaterial adjustments to project estimates.
We remain optimistic that as the specialty segments newer higher margin projects continue to advance its operating results will improve significantly.
Other expense in the third quarter was $8 million compared to other income of $2 million in the third quarter of 2019.
The other expense for this year's third quarter included a charge related to the resolution of a dispute pertaining to a past business acquisition.
Interest expense for the third quarter of 2020 was $26 million compared to $17 million.
For the same quarter of last year with the increase primarily due to noncash debt extinguishment cost related to our debt restructuring transactions in August of this year, the majority of which we had budgeted for the fourth quarter.
We had a very nominal income tax expense of $37000 for the third quarter of 2020 compared to income tax expense of $5.6 million for the third quarter of 2019.
The nominal expense in this year's third quarter, primarily resulted from benefits associated with the cares Act, which was enacted in March of this year.
Under the cares act the net operating loss or in a while that we generated in 2019 may be carried back up to five years. That's under previous rules Noel's were only allowed to be carried forward.
This allowed us to realize the benefit of the tax rate differential by carrying back to in a well to tax years when the federal tax statutory tax rate was 35% rather than the current rate of 21%.
The majority of the NFL benefit was recorded in the third quarter of 2020, when the final tax return information we received from our joint venture partners.
Net income attributable to tutor perini for the third quarter of 2020 was $36.8 million or 72 cents per diluted share compared to $19.3 million or 38 cents per diluted share for the same quarter of last year.
This near doubling of net income and EPS in this year's third quarter was due to the facts I mentioned that drove the increases.
In revenue and income from construction operations as well as the tax benefits I discussed.
As Ron indicated earlier on a year to date basis, our EPS of $1.43 is ahead of budget.
And this is even after a 21 cents per year to date EPS on favorable impact from COVID-19, as well 12 cents of net unfavorable impacts that resulted from a couple of adverse ruling is one of the second quarter one of the third quarter, which were partially offset by the favorable arbitration decision in the third quarter.
Next lets discuss operating cash which was definitely one of the major highlights of our third quarter.
Our operating cash generation for the quarter was $73 million, a very solid result for us here.
Even more impressive is.
Is that our operating cash generation year to date through September Thirtyth, 2020 was $131 million, which as Ron mentioned was the highest result for the first nine months of any year since our merger in 2008.
Strong cash contributions associated with increased project execution activities on certain higher margin projects driven by our near record backlog at the end of last year were enhanced by progress made on the resolution and collection of certain disputed balances.
Our year to date operating cash is well ahead of our budgeted expectations and 18% better than the operating cash performance through the first nine months of last year.
As Ron mentioned, we expect to finish the year strongly and anticipate that we will set a new record for operating cash in 2020.
Lastly, we anticipate operating cash to comfortably exceed net income for 2020, which will mark the fourth time in the last five years that we have accomplished this goal.
Our net debt as of September 32020, with 673 million.
Modestly compared with 641 million at the end of 2019.
During the third quarter, we refinanced our debt, replacing our former $350 million credit facility with a new $175 million revolver, and securing a $425 million term loan b.
The financial markets were favorable at the time, we executed refinancing and then as a result demand for our term loan B was robust this enabled us to upsize the term loan b and at the same time drive more favorable interest rates and other terms than expected.
We used a portion of the proceeds from the term loan b.
To repurchase $130.1 million of our convertible notes.
And placed 69.9 million of the proceeds into restricted account, which will be drawn upon to repurchase and retire a remaining outstanding convertible notes at or before the maturity date in June of next year.
As a result, we're a strong cash generation in the third quarter.
Our new revolver had a zero balance as of September 32020, So we had ample liquidity for anticipated business need as.
As many as you may know our previous credit facility included spring forward maturity provision.
Whereby it would have matured on December 17th 2024 convertible notes were still outstanding at that time.
We're very pleased with the outcome of a refinancing which eliminated this issue that had been a source of concern for some investors.
In addition, our refinancing enabled us to extend our debt maturities and provided us with increased liquidity under more favorable terms compared to our prior debt facility.
We are well within the limits of and in compliance with our debt covenants at the end of the third quarter and we anticipate that we will continue to be comfortably within our covenant limits in the future.
As Ron stated earlier, we are maintaining our 2020 EPS guidance range at $1.80 to $2.10 per share based on our strong year to date results.
And our expectations for continued solid performance for the remainder of the year.
Now, let me provide an update of some of the assumptions in our guidance do.
Genie expense for 2020 is now expected to be approximately 230 to 235 million, which is lower than previously anticipated, mostly due to the impact of the favorable arbitration decision in the third quarter.
Interest expense is now expected to be about $76 million of which 20 million will still be noncash and includes approximately $8 million of debt extinguishment costs.
Our effective income tax rate for 2020 is now anticipated to be approximately 15% to 16%.
Degree reduced tax rate driven by the tax benefits, we realized in the third quarter.
Finally capital expenditures for the year are now expected to be approximately $55 million to $60 million.
Of which about 40% to 40 to 45 million will be for owner funded project specific equipment.
Apart from these all are the assumptions remain unchanged from last quarter.
With that Ron I will turn the call back over to you.
Thanks, Gary.
In summary, we delivered a very strong quarter underscored by double digit revenue growth across all segments.
Obviously excellent operating income, particularly good margins in the civil and building segments.
And most importantly, very strong operating cash flow all of which were within line or exceeded our expectations.
As we said before and over and over we are hopeful that the impacts of Cove at 19, we'll continue to diminish and we will continue to monitor the developments and any potential impact of Cove at 19 on our business.
Furthermore, I believe our business will continue to grow into 2021 and beyond not only based on our solid backlog, but not the number of large project opportunities ahead.
We have been monitoring some of which we've already bid and others.
We expect to submit bids over the next 12 to 18 months.
As a reminder, we are still seeing limited competition for many of the larger projects that we are pursuing and expect that this will continue to be the case well into the future.
Our marketplace continues to be the largest and most complex infrastructure projects in the country, where we believe we have the best opportunity to succeed.
We continue to believe we are in a multi year period of solid growth and increasing profits and more importantly, the collection of our unbilled receivables and.
Importantly, we are delivering on our goal to significantly improve cash generation some.
Something which we will sustain in the future. Thank you and with that I'll turn the call over to the operator for questions.
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One moment, please while we poll for questions.
[noise] [noise]. Thank you our first question is from.
Steven Fisher with EUV, Yes. Please proceed with your question.
Good afternoon guys.
Payment.
Hi, guys I'm, just <unk>, Gary Thanks for some of the input on the Q4 guidance, maybe just a few other points there.
Just curious how you approached that guidance I think it's about a 36 to 66 cents range I have that right. What are the key swing factors operationally for that.
How should we think about the the margins is it the same kind of proportion of profitability you expect from the segments in Q4 as you achieved in in Q3.
There really shouldn't be any change.
We had a number of legal.
Legal settlements in the third quarter and some good some bad.
We continue to resolve issues that are non litigation and the fourth quarter.
I believe the fourth quarter will be very consistent along the lines of the operating results of the third quarter, that's where I remain confident will it confident we'll achieve our target goals for earnings.
Okay. That's helpful and then in terms of the cash flow.
What do you guys have on the docket for potential resolution and collections from that process in the fourth quarter versus just ongoing operational cash flow.
I am confident that we've got a two or three ongoing resolves on projects, we've been settling everything amicably with no lawyers.
We expect fourth quarter to be another positive.
Cash flow result, I'm reluctant to.
To say to what extent, but it will not be small we will have a very positive cash flow fourth quarter.
Okay fair enough and.
And I guess it will wondering if you can maybe weigh in on a bit of a debate that we observe in the market place as we're hearing mixed messages about.
The I would say maybe as it relates to you guys that the building construction market, where things kind of been picking up.
Over the summer and it's hard to tell but just kind of peak construction season, along with some pickup following shutdowns a.
During the pandemic versus other folks that are saying theres just not a lot of visibility, we're seeing project deferrals and cancellations.
And I'm curious, where you guys stand in that I know you mentioned $10 billion in building opportunities I'm, just kind of curious if you're.
Seeing enough momentum positive momentum to call that.
Start of the next cycle or I.
He is just sort of a lot of inquiry activity and just not clear about what's actually going to move forward. Just curious for your perspectives on that based on your customer discussions.
Well as you know Steve on the building business is hardly our focus however, we do have a large building operations Mike.
My feelings about the building business are that it's been decent there continues to be new work. We continue to have many public sector opportunities on the building business that continue to grow.
I don't see it as a growth sector.
Hard for me to get confident that it has even <unk>.
Smidgen of the of the potential that the civil group has.
However, our people have shared with me they believe they will be able to sustain our levels of revenue and since we have no aspirations of growing the building business.
I don't see it as an issue, but I don't see it as the potential for growth that has to take place and infrastructure Civil War.
Okay, and then maybe just shifting to the civil side since the large projects were a nice meaningful contribution year, how do we think about.
What is the timing of peak.
Often ability on those projects.
And then when do you buy when do you need to replace that backlog and how smoothly do you think that process is going to go and just kind of curious since we haven't resolved the election, yet hard to know the timing of when those studio team.
Bailouts or support.
So how do we think about when we might peak on the profitability contribution of the current backlog that you're seeing nicely now versus the need to replace that well. The reality is if you take purple line two three the purple line three tunnels.
And high speed rail, which which probably constitutes.
4 billion of our backlog all high margin.
Those are just beginning to beacon revenue as you as you all know we earned from costs and that work is speaking we will see peak revenue over the next three years and then it'll wind down toward completion on your four so I think we have a very solid high margin revenue package in civil.
Over the next three years.
One of the obvious things is of course, the civil bidding pipeline can't be shutdown indefinitely.
I anticipate from all of the agencies I talked to on their principles that we're not going to see any heavy activity until the second or third quarter next year.
Once they're assured there are going to have a rescue package from the government. There revenues have stabilized. Then then we can have a better handle on how and when we replace our major works backlog in the civil business.
As I pointed out also.
Our competition continues to be minimal.
There's a handful of contractors willing to bid the large work that we do so we continue to see that as a great future. However.
Before we can replace backlog, we got to get the owners to get them out into the marketplace and I feel all over the next six months.
Okay. Thanks, a lot Ron Threeshape assurance.
Thank you. Our next question comes from Brent Thielman with D.A. Davidson. Please proceed with your question.
Yes. Thanks.
And the civil business lot of growth. This year, we still have a pretty large.
Backlog at the end of the third quarter grinding you need some more key win in that segment over the next couple of quarters in order for that business to grow next year do you still feel like you have.
Which we need to grow go into 21, well as I said earlier the existing work will ramp up in revenue. The only one we still continue to struggle with delays as of course high speed rail, but that is just what it is but the balance of them will increase in revenue. So I think we'll be able to sustain a level of.
Growth over the next couple of years, but Mike Big No answer, but we've got to start replacing that backlog for for the year 2022, and three and that's why I'm hopeful and assuming that the government will release funds so that all.
All of that.
Dozen major projects that we've been talking to owners about for years and telling you about that are ready to go out on the marketplace will in fact go into that marketplace, but what I would say that with our existing backlog and run rate. The next two years look good, but we need obviously to replace that backlog with new work.
Yes, Okay, and then on the maybe one on the building segment from a different perspective.
Great levels of profitability that we.
Any other opportunities like New York out there you're going after that they can do with that that business or that projects done for the.
The segment, yes, there's another large project actually larger than new work that we're looking at and I'm talking about there are periodic very large building projects that.
We happen to have a particular appetite or skill for it and there seems to be a couple of those on a national basis, but there are the exception there not the rule. The building business is what you typically see 2% to 3% margin business, where we generate a relatively consistent level of revenue.
And with a few ups and downs, that's where it falls the secret is when we get those large opportunities that are profitable because of their size and risk.
And those do happen, but not too often.
Okay.
You mentioned Guam at $2 billion in where you go after over the next I think next mid teen mom mentioned, you're the dominant player. There I mean any any sense. What you think is realistic and we can expect for your bromine double we've doubled our revenues this year and doubled our profits the highest revenue we ever had the highest profits we haven't.
Yes, I'm missing my own numbers, we doubled up.
And next year should be bigger.
Literally flooded with the work the bid there and we are the only construction company with a major presence on the island of Guam, we have dominated that since Mr. Black founded the operation a 1960 I bought black and 1995.
It's an extraordinary operation and were overwhelmed with work and there is a limit but how much more can we do what we.
We are already sitting with 600 million and proposals and waiting for the the Navy to make a decision our backlog in Guam between Guam.
And in the Philippines, and Diego-garcia <unk> Garcia sits at 490 million.
It's it it's the operation is just dramatically increased size revenue profitability and will probably continue to do until we just reach a limit to our own capacity.
Yes, and then in that 600 million Ron that net net net.
Did they are staggered over the next or award your stack no. Those those are bids that were sitting that we've turned down and God forbid They award them all to us.
And one of our biggest complaints with the Navy is the bid these projects and they sit on them and look at him for six months, we have no idea, whether we're going to get overwhelmed with a whole slew of new work or we'll get one or two of them.
So that's the challenge to try to manage the amount of work, we do there, but right now it's just been.
Phenomenally successful and we continue to support them and move people there to help execute the work.
That's great. Thanks for taking the question I'm not sure.
Thank you there are no further questions at this time I would like to turn the floor back over to Ronald tutor for any closing comments.
Thank you everybody and we'll see you next quarter.
That concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.