Q2 2024 Tutor Perini Corp Earnings Call
Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Second Quarter 2024 Earnings Conference Call. My name is Latonya, and I will be your coordinator for today. Our participants are currently in a listen-only mode. Following management's prepared remarks, we will be opening the call for question-and-answer session.
As a reminder, this concert is being recorded for replay purposes. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance at that time, please press star zero on your telephone keypad.
Speaker Change: I would now like to turn the conference over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.
Speaker Change: Hello everyone and thank you for your time and participation today. With us on the call are Ronald Tutor, Chairman and CEO, Gary Smalley, President, and Ryan Soroka, Senior Vice President and CFO.
Jorge Casado: Before we discuss our results, I will remind everyone that during this 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 we filed on February 28, 2024, and in our Form 10-Q that we are filing today. The company assumes no obligation to update forward-looking statements, whether due to new information, future events, or otherwise, other than as required by law.
Speaker Change: Before we discuss our results...
Speaker Change: I will remind everyone that during this 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.
Speaker Change: You can find our disclosures about risk factors that could potentially contribute to such differences in our Form 10-K , which we filed on February 28, 2024, and in our Form 10-Q that we are filing today.
Speaker Change: The company assumes no obligation to update forward-looking statements, whether due to new information, future events, or otherwise, other than as required by law. Thank you, and with that, I will turn the call over to Ronald Tutor. Thanks, Jorge. Good afternoon, and thank you all for joining us.
Operator: And with that, I will turn the call over to Ronald Tutor. Thanks, Jorge.
Ronald Tutor: Good afternoon, and thank you all for joining us. Improved earnings with continued strong profitability for the civil sector, with backlog growth of 4% compared to the first quarter of 2024 and 53 million in operating cash. Our second quarter earnings were negatively impacted by 19 cents a share due to an increase in share-based compensation expense compared to the second quarter last year, primarily due to the substantial increase in our stock price during the second quarter of 2024, which affected the fair value of liability classified awards, and secondarily by an unfavorable project adjustment due to the fact I settled two completed highway projects, which impacted earnings in the settlement by $0.17 a share Ryan will review all the financial details in a moment. $144 million in additional funding for certain mass transit projects in California.
Ronald Tutor: Our second quarter results were highlighted by 10% consolidated revenue growth.
Ronald Tutor: improved earnings with continued strong profitability for the civil segment, which reported a segment operating margin of 13.8 percent.
Speaker Change: with backlog growth of 4% compared to the first quarter of 2024 and $53 million of operating cash flow.
Speaker Change: Our second quarter earnings were negatively impacted by 19 cents a share due to an increase in share-based compensation expense.
Speaker Change: compared to the second quarter last year primarily due to the substantial increase in our stock price during the second quarter of 2024 which affected the fair value of liability classified awards.
Speaker Change: We have continued to make substantial progress.
Speaker Change: in resolving various matters which contributed to strong operating cash that we generated in the second quarter of 2024. And as we've stated previously, I would expect to resolve most of the remaining legacy disputes.
Speaker Change: and collect substantial amounts of associated cash during the latter part of this year and the first part of next year, which should help drive operating cash flow for both years to be as strong, if not better, than last year's record cash performance.
Speaker Change: Our backlog was $10.4 billion at the end of the second quarter of 2024. The most significant new awards and contract adjustments in the second quarter
Speaker Change: The $216 million airport terminal connector project at Fort Lauderdale International Airport.
Speaker Change: A $127 million electrical project in New York at the Hillview Reservoir.
Speaker Change: the $74 million Child Development Center at Anderson Air Force Base in Guam for black construction and $71 million of additional funding for various health care projects in California with Rudolph and Slett.
Speaker Change: As we have discussed on previous calls, we have been and continue to be in a very busy period of significant bidding activity.
Speaker Change: with limited competition for many of these large megaproject opportunities, as I've mentioned in the past, and that has been consistent.
Speaker Change: This limited competition is the result of a supply-demand imbalance.
Ronald Tutor: Frankly, there are so many major project opportunities and a small pool of contractors with both the physical and financial resources to pre-qualify, successfully bid, bond, and execute these projects. This will continue to work extremely well for Tutor Perini, both in terms of the probabilities of winning new projects, as well as the encompassed margin potential.
Speaker Change: We're in active discussions and negotiation with the owner regarding the project's pricing and contractual terms, and the City of Inglewood anticipates that its City Council will be considering an award for the project this fall.
Ronald Tutor: Some other significant near-term prospects include the Tracks South to Bridges Replacement Project, which we offered our proposal last week. The multi-million dollar Manhattan jail facility, which we will tender our proposal for, and the $3.8 billion Southeast Gateway Line project in Southern California, whose proposals and qualifications will be out in 2025. Because of these and many other significant project opportunities, we continue to anticipate that our backlog will grow substantially later this year and in 2025 as we bid on and capture our share of the available work.
Speaker Change: The multi-million dollar Manhattan jail facility, which we will tender our proposal.
Speaker Change: The $2 billion Midtown Bus Terminal replacement project in New York, bidding in December . The $2 billion Sites Reservoir project in Northern California, which likely will bid in two to three parts later this year and early next year.
Speaker Change: The $1.8 billion South Jersey Light Rail Glassboro-Camden line in New Jersey, which will be proposed next year.
Speaker Change: The $1.5 billion Newark Airtrain Replacement Project bidding in September , which I'll remind you we were the low bidder when it initially bid some two years ago.
Speaker Change: The $800 million Northern Bus Garage in New Jersey bidding next year.
Speaker Change: The $750 million Manhattan Tunnel Project in New York
Speaker Change: bidding in October . And finally, the $500 million Raritan Bridge Replacement Project in New Jersey, also bidding in October , and again, I'll remind you for which we were previously the low bidder.
Speaker Change: Because of these and very other significant project opportunities, we continue to anticipate that our backlog will grow substantially later this year and in 2025 as we bid and capture our share of the available work.
Speaker Change: Our previous record backlog was $11.6 billion back in the first quarter of 2019. I would expect that that backlog will climb to levels significantly beyond that prior record over the next six months.
Ronald Tutor: Based on our results to date and our assessment of the current market and business outlook, we are reaffirming our 2024 EPS guidance and still expecting EPS to be in the range of 85 cents to $1.10.
Speaker Change: Based on our results to date and our assessment of the current market and business outlook, we are reaffirming our 2024 EPS guidance and still expect the EPS to be in the range of 85 cents to $1.10.
Speaker Change: We anticipate stronger earnings in the second half of this year due to the timing of large project activities, as well as typical business seasonality. We also expect stronger earnings next year and in 2026 even greater.
Speaker Change: Thank you. And with that, I turn the call over to Ryan to review the financial results.
Ryan Soroka: Thank you, Ron. Good afternoon, everyone. We had good results overall for the second quarter of 2024, with improved earnings compared to the same quarter last year, despite two notable earnings impacts that Ron mentioned, which I will discuss in a moment.
Ryan Soroka: We are especially pleased with our strong second quarter operating cash flow of $53.1 million, as well as the fact that our first half 2024 operating cash flow of $151.4 million was our second best result since 2008.
Ryan Soroka: As Ron mentioned, we've already reduced our total debt by $223 million, or 25% since the end of last year. We plan to continue using any excess cash this year and next year to further reduce our debt, first by paying down and eventually paying off our Term Loan B. Building segment revenue for the second quarter of 2024 was $418 million, up 26% year-over-year, mostly driven by the increased activities I mentioned on certain healthcare and educational facility projects in California, as well as on the Brooklyn Jail Project in New York. This was due to the impact of a significant increase in our stock price during the second quarter of 2024 on the fair value of liability classified awards, as well as by an unfavorable adjustment of $12.4 Gary will provide some additional commentary about these liability-classified awards shortly.
Speaker Change: As Ron mentioned, we've already reduced our total debt by $223 million, or 25% since the end of last year.
Ron: We plan to continue using any excess cash this year and next year to further reduce our debt, first by paying down and eventually paying off our Term Loan B. Now let's discuss the P&L results.
Speaker Change: Revenue for the second quarter of 2024 was $1.13 billion, up 10% compared to $1.02 billion for the same quarter last year.
Ryan Soroka: The solid growth was primarily driven by increased activities on certain building segment projects.
Ryan Soroka: Civil segment revenue for the second quarter of 2024 was $546 million, essentially level compared to the second quarter last year. However, it's important to note that year-to-date, civil segment first-half revenue was up 13% compared to the first half of 2023.
Ryan Soroka: Building segment revenue for the second quarter of 2024 was $418 million, up 26% year-over-year, mostly driven by the increased activities I mentioned on certain health care and educational facility projects in California, as well as on the Brooklyn Jail Project in New York.
Ryan Soroka: as well as prior year adverse legal ruling on an educational facilities project in New York.
Ryan Soroka: The increase was partially offset by reduced project execution activities in the second quarter of 2024 on an industrial facility project in Arizona and various electrical and mechanical projects in New York, all of which are complete or are nearing completion.
Ryan Soroka: Income from construction operations was $40 million for the second quarter of 2024, compared to $2 million for the same quarter of last year.
Ryan Soroka: The significant increase was mostly due to contributions related to the increased project execution activities I mentioned, as well as the absence of certain prior year net unfavorable adjustments. The increase was partially offset by $14.3 million of additional share-based compensation expense.
Ryan Soroka: that was due to the impact of a significant increase in our stock price during the second quarter of 2024 on the fair value of liability classified awards, as well as by an unfavorable adjustment of $12.4 million due to a settlement on two completed civil segment highway projects in the Northeast.
Ryan Soroka: Gary will provide some additional commentary about these liability classified awards shortly.
Gary Smalley: Civil segment income from construction operations for the second quarter of 2024, 76 million, with a strong corresponding segment operating margin of 13.8%, even after the impact of the 12.4 million charge I mentioned.
Ryan Soroka: The building segment income from construction operations was $5 million, a notable improvement compared to the loss of $14 million we recorded in the second quarter of 2023. The specialty contractor segment posted a loss from construction operations of $8 million in the second quarter of 2024, compared to a much larger loss of $70 million for the second quarter last year. The improvement was primarily due to the absence of some significant prior-year unfavorable adjustments.
Ryan Soroka: Building segment income from construction operations was $5 million, a notable improvement compared to the loss of $14 million we recorded in the second quarter of 2023.
Ryan Soroka: Building segment operating margin was 1.2% in the second quarter of 2024 due to some immaterial, unfavorable adjustments that impacted the segment's results this quarter.
Ryan Soroka: The improvement was primarily due to the absence of some significant prior year unfavorable adjustments.
Ryan Soroka: Other income was $6 million compared to $3 million last year. Interest expense for the second quarter was $23 million this year compared to $22 million last year.
Ryan Soroka: The net operating losses we generated in 2022 and 2023 are helping to reduce our cash outlays for income taxes this year and will continue to help in future years. Now, I will again touch upon the balance sheet. Our total debt as of June 30, 2024 was $676 million, down $223 million, or 25%, compared to $900 million as of December 31, 2023, mostly because of our $91 million paydown on Term Loan B and our recent refinancing, in which we replaced $500 million of 2017 senior notes with $400 million of new 2024 senior notes.
Ryan Soroka: We continue to anticipate double-digit revenue growth and solid earnings for the full year of 2024, with substantially stronger earnings expected in 2025 and 2026.
Ryan Soroka: Ron pointed to many of the large perspective projects we have recently bid or will be bidding this year and next year. We are optimistic about our prospects for substantial backlog growth over the next several quarters and strong revenue growth and earnings in the coming years.
Speaker Change: Now, I will again touch upon the balance sheet.
Ryan Soroka: Our total debt as of June 30th, 2024.
Ryan Soroka: was $676 million, down $223 million, or 25%, compared to $900 million as of December 31, 2023.
Ryan Soroka: mostly because of our $91 million pay down on the Term Loan B and our recent refinancing in which we replaced $500 million of 2017 senior notes with $400 million of new 2024 senior notes.
Ryan Soroka: As of June 30, 2024, we are in compliance with the covenants under the credit agreement and expect to continue to be in compliance in the future. Finally, as Ron indicated, we're affirming our 2024 EPS guidance in the range of $0.85 to $1.10. Our updated assumptions regarding our guidance are as follows.
Ryan Soroka: As of June 30, 2024, we are in compliance with the covenants under the credit agreement and expect to continue to be in compliance in the future.
Gary Smalley: G&A expense for 2024 is now expected to be between $280 million and $300 million, with the increase due to the higher share base compensation expense mentioned earlier. Depreciation and amortization expense is still anticipated to be approximately $54 million in 2024, with depreciation at $52 million and amortization at $2 million. Interest expense for 2024 is still expected to be approximately $83 million, of which about $10 million will be non-cash. Our effective income tax rate for 2024 is still expected to be approximately 22% to 24%. We now anticipate the non-controlling interest to be between $50 million and $60 million. Thank you. And with that, I will turn the call over to Gary.
Ryan Soroka: G&A expense for 2024 is now expected to be between 280 million and 300 million with the increase due to the higher share base compensation expense I mentioned earlier.
Speaker Change: 2 million.
Speaker Change: Interest expense for 2024 is still expected to be approximately $83 million, of which about $10 million will be non-cash. Our effective income tax rate is...
Speaker Change: for 2024 is still expected to be approximately 22% to 24%. We now anticipate non-controlling interest to be between $50 million and $60 million.
Ryan Soroka: We still expect approximately 53 million weighted average diluted shares outstanding for 2024.
Gary Smalley: With where our stock price has been for the last few years, our compensation committee and board, working with an independent compensation consultant, correctly decided to increase the weighting of certain performance-based awards that are designed to help drive share price improvement. When you combine this focus on driving share price improvement with a somewhat depleted share pool, some new awards were issued as cash settled performance stock units or CPSUs. So the use of CPSUs was really a short-term solution to deal with the depleted share pool and a low stock price because a low stock price causes dollar-based equity awards to eat into the share pool at a faster clip.
Ryan Soroka: When you combine this focus on driving share price improvement with a somewhat depleted share pool, some new awards were issued as Cash Settled Performance Stock Units, or CPSUs.
Ryan Soroka: Because these awards will be paid out in cash, they are accounted for as liability awards and therefore require quarterly remeasurement to fair value with any changes in fair value reflected in earnings.
Ryan Soroka: Future equity awards to management, when we have a less constrained share pool and can issue restricted stock units instead of CPSUs, are expected to be settled in stock, not cash.
Gary Smalley: This will eventually eliminate the earnings volatility that we saw this quarter from the significant improvement in our share price. But this was the first quarter in which there was such a large impact on earnings, either positive or negative. Thanks, Gary.
Ryan Soroka: The silver lining in this is that it is a result of significant positive share price movement and accordingly shareholder value creation.
Ryan Soroka: With that, I'll turn the call back over to Ron.
Ronald Tutor: improved earnings with strong profitability for the civil segment for the first quarter of 2024 and $53 million of operating cash flow in the second quarter. Although disappointed in our earnings per share, I think we explained the events that were unanticipated that caused the reduction in earnings. We also still expect solid revenue growth and earnings in 2024, with significantly higher earnings respectively in each of 2025 and 2026. Thank you, and with that, I turn the call to the operator for your questions.
Ryan Soroka: backlog
Ron: Our year-to-date operating cash flow of $151 million was the second highest result of any first half since the 2008 merger.
Speaker Change: associated cash along with generating healthy cash from normal project execution activities.
Ron: Our backlog should grow substantially by the end of the year and into next.
Speaker Change: projects available with limited competition anticipated for the very large megaprojects. Thank you, and with that I turn the call to the operator for your questions.
Speaker Change: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Operator: Thanks, good afternoon, and congratulations on the continued progress here. You know, relative to the guidance that you have for the full year, still a fair bit of a ramp up in the second half to hit that. So can you just give us a sense of what the cadence you expect of, say, Q3 versus Q4? I'm assuming Q3 is seasonally a much bigger quarter than Q4 from an earnings perspective, but maybe you can clarify that a little bit. And to what extent does that earnings ramp up? more driven by revenues that you expect to ramp up or not having any sort of charges going on.
Speaker Change: Thanks, good afternoon and congratulations on the continued progress here. You know, relative to the guidance that you have for the full year, still a fair bit of a ramp up in the second half to hit that. So can you just give us a sense of...
Speaker Change: what the cadence you expect of, say, Q3 versus Q4. I'm assuming Q3 is seasonally a much bigger quarter than Q4 from an earnings perspective. Maybe you can clarify that a little bit. And to what extent is that earnings ramp up?
Gary Smalley: Yes, Steve, this is Gary. I think it's going to be a combination of things. First of all, to your question about when we expect the larger impact in Q3 or Q4, you know, if you look back historically over time, you could almost flip a coin as far as whether Q3 is stronger or Q4. So in this case, they're both going to be stronger. I would say this year, we're probably looking at Q4 to be a little stronger than Q3. And certainly, some of it will be driven by continued improvements in, say, specialty. So there are fewer losses and
Operator: That's very helpful. Thanks, Gary.
Speaker Change: And then I think also that, you know, we're looking at, you know, some of the larger projects to start to continue to generate higher volume of earnings, which will certainly help drive improvement as well.
Speaker Change: and you've correctly...
Speaker Change: You know, I guess indirectly alluded to, you know, the strength in the latter part of the year for us is because the first quarter is always the weakest, second quarter is almost always the second weakest, so we do always expect the second half to be stronger and that's certainly the case this year. That's what we have planned for the rest of the year at this point.
Gary Smalley: And in terms of the specialty segment, you mentioned less losses. What is still generating losses there at the moment? And it sounds like it's maybe not expected to turn to profitability quite yet. What's going on there? And can you kind of give us the outlook there? Well, we just have a number of legacy losses. We're working through the preponderance of which is in Five Star Electric.
Thanks, Gary: That's very helpful. Thanks, Gary. And in terms of the specialty segment, you mentioned less losses. What is still generating the losses there at the moment?
Speaker Change: And it sounds like it's...
Speaker Change: may be not expected to turn to profitability quite yet. What's happening there and can you just kind of give us the outlook there? We just have a number of legacy losses. We're working through the preponderance of which is in 5 Star Electric.
Speaker Change: But it's hard to get your arms around it since many of them are in litigation and or negotiations and mediations and they just have historically not done as well as we have in the civil business.
Speaker Change: Yeah, Steve, if I could just add on to that. You know, a year ago we were talking about, you know, being hopefully out from under this at this point in time.
Speaker Change: segment and the business units within that segment as we secure a lot more of this work up in New York.
Speaker Change: and that will give us some more volume that will...
Speaker Change: will help us. So a lot of what you saw this quarter is volume-related.
Speaker Change: And then, look, if you, you know, to the part of your question about the timing, you know, look, you know, we had hoped that by the end of this year we'd be out under from, you know, these charges, and we had very few in specialty this time, so that's
Speaker Change: That's positive.
Speaker Change: We're making progress, as Ron alluded to, in resolving these things.
Speaker Change: you know, a year from now, we think this will be behind us, be behind us.
Speaker Change: We think that we'll have the new project signed up that will be generating the volume and the profitable work in specialty, primarily in New York. So just appreciate your patience, give us a little bit more time. We're almost there, but not quite, obviously.
Gary Smalley: That's helpful. And then just lastly, did I understand correctly from the press release that you have perhaps a settlement this quarter, in Q2, rather, that hit the P&L, but you didn't collect the cash yet? And so basically, you already have, you know, awareness of some collection of cash for Q3. And if that's right, can you share how much that cash settlement that's coming in Q3 is?
Speaker Change: That's helpful, and then just lastly, did I understand this correctly from the press release that you have perhaps a settlement this quarter, in Q2 rather, that hit the P&L but you didn't collect the cash yet?
Speaker Change: and so basically you already have you know awareness of some collection of cash for Q3 and if that's right can you share how much that that cash settlement that's coming in Q3 is?
Gary Smalley: Well, I can't really give you too many specifics on the collection, but it wasn't, we'll say it was more than inconsequential. It was a fairly significant amount, and we've already collected about 60 percent of it, and the rest of it will come in in Q3. So 100 percent of this amount will be in Q3. Certainly, with the improvement that we usually have in cash flow in the latter part of the year and this large amount that will be helping cash flow for the quarter, that certainly bodes well for what Q3 cash looks like.
Speaker Change: Yeah, well, I can't really give you too much specifics on the collection, but it wasn't, we'll say it was more than inconsequential. It was a fairly significant amount, and we've already collected about 60% of it.
Speaker Change: and the rest of it will come in in Q3, so 100% of this amount.
Speaker Change: will be in Q3.
Speaker Change: Certainly with the improvement that we usually have in cash flow in the latter part of the year, and this large amount that will be helping cash flow for the quarter, that certainly bodes well for what Q3 cash looks like.
Speaker Change: Terrific. Sounds good. Thanks a lot.
Speaker Change: Thank you.
Speaker Change: The next question comes from Alex Rygiel with Be Riley. Please proceed.
Operator: Hi, good evening. This is Ashley Min on for Alex.
Operator: Congratulations on the quarter and the slight increase in backlog here. My question is around your civil business. Obviously, the margins are really good, even with the issue this quarter.
Ashley Min: Hi, good evening. This is Ashley Min on for Alex. Congratulations on the quarter and the slight increase in backlog here. My question is around your civil business. Obviously the margins are really good, even with the issue this quarter.
Speaker Change: Given the expected ramp up in projects, should we look at the second half of the year margins to be stronger than the first half, the operating margins for the civil segment?
Ronald Tutor: I don't think they'll be stronger because all these civil projects take a while to get going, and many of these high-margin projects we got in the last two years are coming online. However, most of our civil operation, even from three years ago, is high-margin. So I think it'll be better, but I don't think it's just because of the new projects. I think the civil margin will just continue to improve.
Speaker Change: I don't think they'll be stronger because all these civil projects take a while to get going and many of these high margin projects.
Speaker Change: We got, in the last two years, are coming online. However, most of our civil operation, even from three years ago, is high margin. So, I think it'll be better, but I don't think it's just because of the new projects. I think the civil margin will just continue to improve.
Operator: It will continue to improve. Okay, excellent.
Speaker Change: It will continue to improve. Okay, excellent.
Speaker Change: That is actually all I had for the time being. I'll get back. Thank you.
Operator: The next question comes from Adam Thalmere with Thompson Davis. Please proceed. Hey, good after-
Speaker Change: Thanks, men.
Speaker Change: The next question comes from Adam Thalmier with Thompson Davis. Please proceed.
Adam Thalmier: Hey, good afternoon guys, nice quarter.
Operator: Um, what percent of the Q2 cash from operations was from settled claims?
Speaker Change: Good afternoon. Thanks, Adam.
Adam Thalmier: What percent of the Q2 cash from ops was from settled claims?
Speaker Change: Yeah, you know, the best way to look at that is, you know, it's roughly 50-50, you know, half and half. We don't, you know, disclose precise numbers, but that's a pretty good ballpark estimate.
Adam Thalmier: Okay.
Speaker Change: I think most, I think I'm thinking like men, most of these were, were done stuff. Oh, um, just a modeling question. You know, the inner segment revenue has been higher.
Speaker Change: Really for the last three quarters, do you see that continuing?
Operator: Just as a point of clarification, when we propose these projects and we subcontract to our subsidiaries, they're handled just like an arm's length subsidiary as if they had no relationship to the company. They get a lump sum contract with whatever rate of profit the market will bear, and it's up to them to earn it. And then Adam, just to add to what Ryan's saying, right, in the short term, it's going to be flat. But as we continue to add more work up in the Northeast, then we're going to get a little bit more of the intercompany or intersegment revenue that you speak of.
Speaker Change: Just as a point of clarity.
Speaker Change: When we propose on these projects and we subcontract to our subsidiaries
Operator: One of the questions I had, just modeling it out... And it sounds like on this call, you're saying there's a potential for specialty...
Speaker Change: One of the questions I had, just modeling it out,
Speaker Change: And it sounds like on this call, you're saying there's a potential for specialty...
Speaker Change: construction revenue to grow, maybe.
Ronald Tutor: Yeah, Adam, the way to look at it is a lot of the work that Ron talked through as far as prospects that are out there. A lot of them are in the Northeast, and our Civil East business unit will be pursuing those. And then when we get our fair share of those, a lot of those projects will have content from Five Star Electric, our electrical subsidiary, or our mechanical subsidiary, WWDF.
Speaker Change: I have modeled that down. Okay, clearly that was wrong.
Speaker Change: then a lot of those projects will have...
Ronald Tutor: So that will be additional work that Tutor Perini has but those business units do, so you should expect that to ramp up. Well, typically, as you can see, as we try to close the Englewood Connector Project, our electrical and mechanical group has $200 million of our cost in that job. So they really trail us with a percentage of our work. So as our backlog goes up, typically, theirs goes with it, and it's fairly consistent.
Speaker Change: So you should expect that to ramp up. Well, typically, if you look as we try to close the Englewood Connector Project, our electrical and mechanical group has $200 million of our cost in that job.
Operator: And Ron, can you just give, uh, last thing, just a high-level update on... You know, you said there were fewer bidders per job.
Speaker Change: Got it, okay.
Speaker Change: Well, we don't accept anything, 5% is the maximum retainage we agree to anywhere and we've been able to hold the line.
Ronald Tutor: We've been able to force them to recognize the need for mobilization on the theory that we work off their dollars and not ours, and with almost rarely more than one other bidder. They've seen the light, and it's been consistent across the board, whoever they are.
Operator: Sounds good. Good quarter. Thank you.
Speaker Change: Sounds good. Good quarter. Thank you.
Operator: Thank you. At this time, I would like to turn the floor back over to Mr. Ronald Tutor for closing comments.
Adam Thalmier: Thanks, Adam.
Speaker Change: Thank you. At this time, I would like to turn the floor back over to Mr. Ronald Tutor for closing comments.
Ronald Tutor: Well thank you everyone for your continued patience as we continue to get to where we need to be. We're pleased with where we are and where we're going and thank you again.
Ronald Tutor: [inaudible]
Ronald Tutor: [inaudible]