Q2 2021 Tutor Perini Corp Earnings Call
Yeah.
[music].
Good day, ladies and gentlemen, and welcome to the tutor Perini Corp. 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 managements prepared remarks, we will be opening the call for a question and answer session. As a reminder, this conference is being recorded for replay purposes.
Anyone requires operator assistance during the conference. Please press star zero on yourself from keypad at.
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'll 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.
Current 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 our form 10-Q that we're filing today. The company assumes no obligation to update forward looking statements, whether as a result of new information future events.
Vince or otherwise other than as required by law.
With that I will now turn the call over to Ronald tutor. Thanks.
Thanks, Jorge and good afternoon, and thank you all of us for joining we are.
<unk> experienced 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 Corp, and tutors to lead that took place in 2000.
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We also produced our highest civil segment operating income of any quarters 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 <unk> 61.
Per share for the second quarter of <unk>.
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 multiyear 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 ex 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.
Progressing toward completion this year, whereas certain newer significant high margin civil projects would be advancing mostly offsetting the declining revenue and more than offset 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 24.
For the Los Angeles, MTA in Los Angeles, San from Cisco Central Subway project.
That is completing shortly and the Minneapolis southwest light rail.
As well as the new Port 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 day.
To occur Tomorrow August 5th.
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.
It's 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 declined over the past 3 to 4 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 were per.
Pairing the bid, which I will discuss momentarily we have we already have several pending new awards for significant projects that we expect to book in the backlog in the third quarter of this year.
Including the previously announced Lax Airport Metro connector for which we just received notice of intent to award and the amount of $471 million as well as a $220 million, Missouri River bridge debt.
That London was low bidder and announced an award shortly.
And Rudolph and sletten and last but not least a very significant hospital and 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, London added $88 million more of New awards and adjustments in the Midwest.
The balance of New awards and adjustments were smaller in spread throughout our various.
Business units now I 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 true.
Repeat the same multitude that I've spoken about.
Excuse me on past earnings calls I will focus on just the largest ones that are coming up.
Thanks again.
In the next 6 to 9 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.
With an expected award within 90 days thereafter.
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 a contract award we would expect within the 60 to 90 days thereafter.
The $1.5 billion Newark, Airtrain projects from the Port Authority of New York proposals would be due in mid January.
Additionally, the FAA.
Okay.
Yes.
Once again.
I guess I must be allergic to this call.
<unk> administration recently gave its approval for the Port Authority of New York, and New Jersey to proceed with the $2 billion.
Majority of Air train 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 exceeds $1 billion and its overall magnitude, including 1 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 U S Navy and in the Northern Mary honest and that continues to be a significant source of projects and revenue.
We continue monitoring develops 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 our package will soon be enacted in funding will flow quickly to major projects that have been long planned and.
But even without that infrastructure Bill I continue to remind everyone that there is 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 and 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 assumptions in our 2021 guidance.
Revenue for the second quarter of 2021 was 122 billion.
Down slightly compared to $128 billion for the same quarter of last year.
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.
Various locations largely offset the revenue decline related to certain other projects in the northeast that are completed or progressing towards completion this year.
Building segment revenue was 303.
$383 million compared to $473 million per the second quarter of last year the.
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 the technology project in California, and our hospitality and gaming project in Arkansas.
Specialty contractors segment revenue was $280 million up 20% compared to $234 million for the second quarter of last year, but 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 weakness 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 picture 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.
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 counterbalanced the projects that are wrapping up.
Okay.
Income from construction operations for the second quarter of 2021 was $69 million.
Second quarter operating income we have had since the merger in 2008.
And up a strong 19% compared to $58 million from 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.
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 from the second quarter of 2021.
Compared to income from construction operations of $18 million from 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 segments reduced volume.
Income from construction operations for the specialty contractor 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.
Largely offset by unfavorable adjustments related to the resolution of disputes on certain electrical 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 projects 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 <unk>, 7% per building.
And an improved 3 point.
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 contractor 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 the 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 15th 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 per second quarter of 2020.
The modest increase was the 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 61.
Up in an equally impressive 65% compared to 37.
For the second quarter of last year.
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 fourth quarter.
The use of $85 million of operating cash from 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.
Increase was primarily driven by the follow on impacts of the COVID-19, pandemic, which has continued to cause delays in the negotiation and the resolution of certain claims and unapproved change orders, including the postponement or deferral of certain legal and arbitration proceedings in settlement discussions.
<unk> is also cost constraints to revenue and funding sources for 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 1 project.
We're continuing our dialogue with the New York MTA to address amounts that were owed on the east side access projects. In addition, a change order on the Newark Airport project has been drafted which once approved should address this project 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 for the last 5 years that.
So 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 32021 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 is.
As mentioned earlier, we repaid the remaining outstanding balance of our convertible notes in June we're still well within our debt covenant compliance limits 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.
So 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 variance 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 to $260 million, which is $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 noncash.
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 runoff from 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.
Healthy backlog hopefully increasing substantially.
And a favorable outlook as we go forward.
As I mentioned earlier, we are.
Enjoying as excellent 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 from 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.
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Yeah.
Our first question is free.
Steven Fisher with UBS. Please proceed.
Hi, good afternoon guys.
Steve I wanted to just wanted to ask starting off about the Newark terminal 1 project.
Think this is the first net orders hearing about a need for a change orders. So can you just.
Talk a little bit about whats going on with that project.
Got.
It's progressing right now.
And how.
How much of that was a factor in the building segment profit.
Profitability.
Negatively this quarter.
Well this is Ron.
Yeah.
Steve 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 4 months ago that.
It's 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 would expect we will have that change order executed.
Before the end of August and that will eliminate a very significant.
Construction costs in excess of Newark, new.
<unk> is a very successful job that will bring it back to it.
These are really have owner change orders and have disputed issues. It was much owner changes it was anything else.
However, there are wonderful louder, but to say there is slow and the processing of extra work would be it would be nice.
So thats Newark in a nutshell.
Okay. So.
It sounds like whats the risk that some of this turns into a claim.
On <unk> to debt.
Yeah I.
I don't think theres any risk.
Personally handle Newark, and ideal with report on it every week and their principles they've been excellent.
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 as up within 2 within current times and I'm not aware of any dispute. Some consequence, we have other than just finalizing change orders.
So I don't think Newark <unk> in anyway.
Okay. That's good.
But I guess I'm 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.
A variety of.
Small changes in that add up to.
Loss from the aggregate, but does the.
I guess, the absence of profitability and.
In the Newark project in the quarter, because it into the non unapproved change order.
Much of that was a factor and I guess, just trying to understand I think building projects historically tended to be more cost reimbursable. So.
Whats driving the.
It's very simple, it's very simple Steven and I will take responsibility for it I manage Newark, which the majority of which profit funnels into our building group.
It's a building job and I wrote the job down.
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 in the building business had to absorb it I made a judgment, even though there are still issues.
Yet to be resolved.
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 were roughly 85% to 90% complete.
So they took the burden of my write down of new 1 so.
<unk> raised some day showed so poorly in the quarter.
Yes, that's helpful.
Which you have to play is our first our JV percentage to that we're 80%.
Lead JV partner than the percent complete to that.
And then.
So.
And then you can figure out what they would have made had I not done then.
And then there are some odds and ends just adjustments.
Adjustments closeout type adjustments on a few minor price.
Great.
Got it and then just bigger picture on sort of a timing dynamic here, how should we think about.
What's rolling off and where is it.
The whole projects that we're talking about or the Newark for example, which is I guess, a hybrid building and civil and when do you need the bigger bid really get started but there's not sort of an error.
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 turn in Maryland Purple line.
September.
It is contemplating a start in January and and it is essentially designed ready to go to work there is 1 other bidder.
And let's call that in round numbers 2 billion plus.
And we have the.
JFK Airport job, which let's just say has very limited competition at $4 billion.
We turned on our first proposal guaranteeing a limited amount of the work in September. The owner is has said they will make a commitment and an 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 Jan first week of January its design bid build so there is no lag.
<unk>.
Isn't any major projects bidding the $1 billion plus other than that before the air train at Newark, which bids mid January at approximately 1.5 billion.
So.
Any good fortune and it's our belief that our backlog by year end will be significantly increase most of which will start new first quarter next year.
The only really major billion.
Billion dollar plus job, that's finishing up this year is Newark Purple line..2 has 4 more years to go as does purple line 3 purple line 3 tunnels, probably is 18 months to 2 years to go with a majority of its backlog.
High speed rail never ends it's.
Got 3 more years to go and more revenue being pushed through it.
And Saf MTA will excuse me wrap ups over the next 3 to 4 months, we're in the final stages of change orders and.
And additional work, but we're 99% plus complete.
So the only ones that are really dropping off for SF MTA, which has been at best diminished revenue the last 6 months.
As it's completed.
The new work, which will be finished as I said first week or 2 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 fix bridges being set so most of our big work is still going Steven and will continue to go from probably the next 3 years.
Okay, perfect I'll leave it there thanks guys.
Yes.
Our next question is from Alex Rygiel with B Riley FBR. Please proceed.
[noise] Alex from Allison.
Alex you're still breathing sorry.
I share I'm, 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 6 years do you think the federal infrastructure Bill.
Can materially change that revenue level, a tutor perini has been delivering for the handful of years here.
Well, we've been we've been talking about it AD nauseum here, what can we do what should we do what what is available.
I think setting aside the infrastructure bill there's an enormous amount of work flow.
Put in front of us and at best a very limited competitive environment. So we think we can significantly increase our revenue probably starting towards the latter part of 'twenty, 2 and certainly by 'twenty 3 and we've talked about what debt target revenue might be over the next couple of years.
And.
Probably shouldn't projected but our 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 the amount of work, we see out there our role in the industry.
And if.
The best thing happens the debt infrastructure Bill finally goes through which has been bounced around for the last 5 years and all indications from our political leaders that we speak to is that it will then 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's the competitive environment over there looks like.
That's a good question.
We have the only major presence broadly presence period to be blunt on the island.
Our only competitors come from the mainland U S.
They continue to compete with us on a 1 off basis, we don't think they can sustain it with the billions of dollars of work.
Our revenue at Guam is up a 100% of what it was 3 years ago, and we continue to grow it.
We think we're the only player on the island for major work.
Our peers did 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 and 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 U S is the idea of Gotta go to Guam.
On an island that pays $20 to $22 an hour for skilled craft people.
And we've been there 50 years trading those craft people that we recruit in the Philippines move to Guam under the government directions.
And train and teach and coming from the U S, 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'll just have to see as it plays out we have significantly increased our revenue in Guam and will continue to.
Yeah.
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.
Hey, Ron.
The strong civil quarterly profit margin I mean, it sounds like all the jobs are most of the job that you executed on during the quarter.
Generally continuing here into the second half of the year. So.
The question just becomes what would prevent you from putting up this level of margin that you did in the second quarter and what usually the seasonally stronger second half of the shuttle business.
Yeah.
We don't think there is any particular challenges with maintaining margins.
On the civil work in all our major work that we have we think it will just continue to get better and there's no reason I can think of it as.
Vigilant in my review of all the major civil jobs. There is any reason to believe that 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 gotten any reason to believe anything can causes any major hiccups.
Yes.
A lot of discussion out there about supply chain inflation labor constraints, all that good stuff I mean house tutor perini approaching that.
Can you you've already been won and I guess on new job from the forthcoming.
While we hear a lot about it from some of our subcontractors and suppliers.
We just caution them to be more pessimistic in their bids.
So far yes steel has gone up dramatically.
And some of our contingencies, we've overrun but when we've overrun that may be 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.
There is no reason for us to take material risk.
In a marketplace that is as the way it is to put it bluntly.
Labor I keep hearing about labor shortages, we've got 1500 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 have.
An 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 of quarters that are contractors seem to be getting debt net.
Segment of the market.
Yes.
And you look at the landscape what's out there what's out there to bid.
Just look like sort of an inflection year, where maybe we find a bottom in that business starts to build off debt 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 as such is 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.
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 coke sales of the civil business and writing our civil operations to success.
Building business is still very competitive low fee structure relatively low earnings and its dominated by private companies, who are very pleased to make 30 or $40 million a year on the equity investment manage it well and continue on net 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 is they're lower margin like Ron said, but there are a lot of opportunities out there.
Thank you.
Yeah.
Ladies and gentlemen, wherever you see another 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 great day.