Tutor Perini Corp (TPC) 2005 Q3 法說會逐字稿

Good afternoon. My name is Lindsay, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Perini third-quarter 2005 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Collinson, you may begin your conference.

Thanks, Lindsay. Good afternoon, everyone, and thanks for joining us on Perini's third-quarter fiscal 2005 conference call. With us today are Perini's President, Bob Band; the Company's Chief Financial Officer, Mike Ciskey; and we hope very shortly, Dick Rizzo, who is Chairman of Perini Building Company, the largest business unit of the Company.

Our agenda today follows our usual format. Bob Band is going to discuss the highlights of the third quarter, new contract wins and other successes and issues. And after that, Mike Ciskey will review the Company's Q3 financial results in detail. Then, Bob is going to come back and make some closing remarks. And at that point, we will open up the call up for your questions.

Before I start, I would like to remind our listeners that our comments today will contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These types of written and oral disclosures are made pursuant to the Safe Harbor provision contained in the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that such forward-looking statements do involve risks and uncertainties that could cause actual results to differ materially from anticipated results. The Company cautions that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but that are subject to a wide range of risks, and actual results may differ materially.

These types of statements and underlying factors related to the statements are listed in filed information with the SEC, including Perini's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as well as in today's news release. Our statements on this call are made as of today, November 3, 2005, and the Company undertakes no obligation to update any of these forward-looking statements contained in the call, whether as a result of new information, future events, changes in expectations or otherwise.

With those formalities out of the way, it's my pleasure to turn the call over to Bob Band.

Thank you, Mark, and good afternoon, everyone, and thank you for joining us on the call today. Our third-quarter and nine-month revenues were 380 million and 1.1 billion, respectively. Our third-quarter and nine-month net income were 6 million and 18 million, respectively. And I'm happy to report that all of our business segments were profitable and showed improvement in gross margin compared to last year.

Mike Ciskey will review our financial results in greater detail shortly, while I provide an overview of our business and outlook for growth.

Speaking of growth, to date in 2005, we've made good progress on a number of growth-related objectives. Number one, due to our strength in gaming and hospitality, our building segment helped Perini set a record backlog of $3.3 billion at September 30, 2005, with a chance to top 7 billion by year end. Our civil business segment continued its improvement and is well on the way to returning to historical margins.

Management services continued to acquire and execute work in Iraq, and in January of 2005, we acquired Cherry Hill Construction, a civil contractor in Maryland with operations in the Mid-Atlantic and Southeast regions. And in October of this year, as you know, we acquired Rudolph and Sletten, a California-based building contractor with major new markets that we will discuss shortly.

As we discussed in our last two conference calls, the U.S. building market has seen solid growth in 2005, and it is reflected in our business with the high level of preconstruction activity and now new awards. In the two areas that we focus on, hospitality and gaming, this positive industry environment combined with our strong reputation for on-time, within-budget, high-quality work, and our local market expertise, particularly in Las Vegas, have yielded an unprecedented amount of new building contract awards for Perini.

During the third quarter, we continued to convert pending awards and new work opportunities to contracts, and our backlog is now at a record 3.3 billion as of September 2005, up 189% from year end 2004.

New contract awards added to the backlog totaled 1.9 billion in the third quarter and (technical difficulty) 2.5 billion of hotel and casino work in Las Vegas. 185 million of work in Newark and (technical difficulty), 65 million of bridge rehabilitation work in New Jersey and 66 million in other civil projects in the Mid-Atlantic region.

The building segment -- new contract awards included a contract for the Cosmopolitan Resort and Casino in Las Vegas in excess of $1 billion. This contract includes the construction of two high-rise hotel and condo hotel towers 600 feet tall with a total of 3000 luxury hotel rooms and suites, as well as condo hotel residences.

The project site is located on the Las Vegas strip, adjacent to the Bellagio Hotel and Casino. We will also include 300,000 square feet of retail space, restaurants, convention and conference space, several nightclubs, (technical difficulty) theater and a 50,000-square-foot spa, salon and fitness center. We broke ground on this project in late October. In addition, the Cosmopolitan backlog includes the $360 million contract for the Trump International Hotel in Las Vegas. We broke ground on that project also in October.

In our last call, I discussed our view that the anticipated pending contracts in preconstruction activities would generate between 5 and 6 billion of new contracts that move into backlog in the last half of 2005 and early 2006. And as of today, I'm happy to say that we have exceeded those previous expectations.

In addition to the work mentioned above, we have also been designated on a $3 billion contract with the MGM Mirage Project CityCenter, a multibillion dollar complex (technical difficulty) 66 acres located between the Bellagio and the Monte Carlo casino resorts in Las Vegas, Nevada. The construction contract includes a 4000-room hotel tower, casino, convention center, a showroom, approximately 500,000 square feet of retail and restaurants, three branded boutique hotels and numerous residential towers.

We're working with MGM Mirage to have the construction plans and contracts finalized soon. We have already broken ground on the 5000-car garage and expect to begin work on the casino in April or May of 2006.

Following the close of the quarter, we signed a $463 million contract for the expansion of the Foxwoods Resort and Casino in southeastern Connecticut, and with the closing of the Rudolph and Sletten acquisition, we will have that company's estimated 945 million in firm backlog as of the closing date. Taken together with our September 30, 2005, firm backlog of 3.3 billion, these new awards and the Rudolph and Sletten acquisition provide us with an adjusted backlog of 7.7 billion.

These new and pending awards have provided Perini with an unprecedented level of visibility into our future flow of revenue-generating activity and has also given us the ability to be selective about new assignments that are in an excellent fit with our core capability, capable of supporting our target margins. We feel very confident that this sets the stage for positive trends in both top-line and bottom-line performance for the foreseeable future. While scaling into these volumes will require intensive focus, I feel very good about our ability to execute in a controlled manner.

With regard to resources, we have added nearly 100 new employees to our staff this year and plan to add 200 more over the next several years. And in addition, Rudolph and Sletten brings 600 skilled professionals onto our team. And if necessary, we're prepared to supplement the local craft labor market in Las Vegas with travelers.

We believe that as a proven and preferred performer in the Las Vegas market, we will be able to attract sufficient subcontractors for our projects and have already largely formed our subcontract teams for the projects awarded or pending at this time. Financially, we have carefully structured these contracts so as to insulate Perini from swings in materials or labor costs that may occur due to the building surge in that location.

All in all, we believe we're well-prepared to handle this substantial volume of work. This is truly a unique situation in that Perini is at the top of a very short list of contractors that have a proven ability to deliver these types of large, fast-track gaming and hospitality projects on schedule, within budget and at tremendous quality. Our capabilities and specific expertise certainly qualify us for that position. As a result, our participation has become an important confidence factor for owners in getting these ambitious projects financed.

In October, we completed the acquisition of Rudolph and Sletten Inc., a building and construction management company located in Redwood City, California, that specializes in corporate campuses, health care, biotech, pharmaceutical and high-tech projects.

Rudolph and Sletten is a strong niche construction company, and we believe it will complement our core business. We also believe it would allow us to take advantage of the recent resurgence in the Native American gaming market in California, as that market comes back into force later in 2006.

This acquisition is another great example of our ability to broaden our end markets and capacity by acquiring companies that already share the Perini reputation for high-quality, on-time, on-budget project delivery.

Our civil business continues to improve, due largely to synergies that we've been able to achieve from the integration of Cherry Hill with our traditional civil operations. While we believe that there will be some opportunities for projects related to reconstruction following the devastation caused by this hurricane season, the large-scale infra projects are still in the early planning stages, and it is not yet clear which contracting authority will play the primary role in this work. We will selectively pursue these projects, assuming they meet our margin requirements.

In management services, we continue to make good progress in Iraq and Afghanistan. We're also working on a communications project for General Dynamics at U.S. military bases in Iraq. While this contract is small, it offers growth potential. In addition, we were recently awarded $185 million worth of work under our CENTCOM II contract in Iraq from the U.S. Army Corps of Engineers to perform work at existing U.S. military bases. In Afghanistan, we are finishing our work on two Afghan national army bases, due to conclude in early '06.

In sum, the third quarter of 2005 was a very active quarter for our Company. In the year 2005, a high level of backlog, visibility into future revenue and earnings streams that far exceed any point in our corporate history and is exceptional for our industry. Our revenues picked up from the second quarter, but were slower than the third quarter of 2004, primarily due to the shift in timing of new work in gaming and hospitality into later 2005 than originally anticipated.

We affirm our guidance for projected 2005 revenues of 1.5 to 1.6 billion, narrow our diluted EPS guidance from $0.95 to $1.05. Diluted (technical difficulty) EPS excludes temporal impact of approximately $0.09 per share from the settlement with certain holders of our 2125 preferred.

With regard to our longer-term prospects, we are now prepared to provide guidance for fiscal 2006 based on the revenue and earnings visibility resulting from the recent and pending awards, as well as the acquisition of Rudolph and Sletten. Our initial guidance for 2006 revenues (technical difficulty) 6 to 2.8 billion (technical difficulty).

Now let me turn the discussion over to Mike Ciskey, who'll give you the financial details for the quarter.

Thanks, Bob. (technical difficulty) financial results. Second-quarter revenues were 380 million, a decline of 19% from the 468 million reported in the third quarter of 2004. On a reportable segment basis, revenues from our building segment were 247 million, a decrease of 29% from the 347 million in the third quarter of 2004. This decrease was primarily due to a shift in the timing of new work awards in the hospitality and gaming markets (technical difficulty) in late 2005.

Revenues from our civil segment were 78 million, an increase of 67% from the 47 million reported in the second quarter of 2004, primarily due to the addition of Cherry Hill Construction to our consolidated results, effective January 1, 2005.

Management services revenues were 55 million, down 26% from 74 million a year ago, due to a decrease in the volume of work related to the rebuilding in Iraq.

Our total gross profit increased by 1.3 million or 5% to 24.9 million from 23.6 million in the third quarter of 2004. Overall gross margin percentage for the quarter increased to 6.5%, as compared to 5.1% a year ago. Gross margin percentage in all three segments improved during the third quarter of 2005 compared to the third quarter of 2004.

General and administrative expenses were 14.7 million or 3.9% of revenue in the third quarter, compared to 12.9 million or 2.8% of revenues in the third quarter of 2004. This increase was primarily due to the additional G&A expenses incurred by Cherry Hill Construction and increased compensation expense related to the amortization of certain restricted stock awards granted in the second half of 2004.

Income from construction operations before corporate G&A was 13.8 million in the quarter, a slight increase from the 13.5 million reported in the third quarter of 2004, reflecting improved operating margins of 3.6% in the quarter, compared to 2.9% a year ago.

Breaking down income from construction operations by segments, the building segment income from construction operations for the quarter was 6.7 million, a decline of 4% from 7 million in the third quarter of 2004. The negative profit impact from the decrease in the building revenues was largely offset by an improvement in gross margin, primarily due to profit increases realized upon the completion of several hospitality and gaming projects. Building segment operating margin improved to 2.7% from 2% in the third quarter of last year.

Civil segment income from construction operations increased to 3.4 million in the second quarter of 2005 from 900,000 a year ago, primarily due to improved performance in our core civil operation and the addition of Cherry Hill in 2005. Operating margin in the civil segment improved to 4.4% for the second quarter of 2005 versus 1.9% last year.

Management services income from construction operations was 3.7 million, compared to 5.6 million a year ago, again, due to the previously mentioned decrease in revenues associated with the rebuilding in Iraq. Management services operating margin showed a slight decline to 6.7% versus 7.5% a year ago, primarily due to the decline in revenues.

Other income was zero in the third quarter of 2005, compared to other expenses of 700,000 in the same quarter last year. This reflects a $200,000 decrease in expenses related to the secondary offering in the third quarter of 2004, as well as a $200,000 decline in amortization of intangible assets related to the acquisition of James A. Cummings in January of 2003, which is now fully amortized.

Interest expense was 400,000, an increase of 200,000, due to interest expense on mortgage debt and equipment financing debt assumed in connection with the Cherry Hill acquisition. The provision for income taxes was 3.8 million, compared to 3.4 million in the third quarter of 2004, reflecting a higher effective tax rate in 2005.

Net income was 6 million for the third quarter of 2005, compared to 6.4 million in the same quarter a year ago. Diluted earnings per share were $0.22 for the quarter, as compared to $0.25 for the same period of 2004.

Now, just a few comments on our balance sheet. At September 30, 2005, our working capital stood at 183 million, compared to 178 million at December 31, 2004. This represents a current ratio of 1.5, compared to 1.41 to 1 at December 31, 2004.

As of September 30, 2005, we had 100.1 million in cash and cash equivalents, compared to the December 31, 2004, balance of 136.3 million. The 36.2 million reduction in cash was the result of 10 million in cash used in operations, primarily for working capital requirements; 21.7 million in cash used in investing activities related to the purchase of Cherry Hill Construction; and 4.5 million in cash used in financing activities resulting from paying down debt assumed in conjunction with the Cherry Hill acquisition.

Long-term debt stood at 17.4 million, excluding current -- the current portion, compared to 8.6 million at December 31, 2004. The long-term debt is comprised of mortgage debt on properties and equipment financing used in our construction operations.

At September 30, 2005, we had 47.2 million available under our revolving credit facility. In October, we amended our credit agreement to extend our revolving credit facility by one year to June 30, 2008, and to increase the aggregate letter of credit amount from 7.5 million to 15 million. In addition, the amended agreement provides for a new 30 million secured term loan, which was used to refinance a portion of the Rudolph and Sletten acquisition. We believe that the financial strength of the Company's balance sheet and availability under the amended credit agreement gives sufficient resources to support the anticipated growth.

Shareholders' equity increased by 13% to 196 million, compared to 174 million at December 31, 2004.

As Bob mentioned earlier, our backlog at September 30, 2005, improved to a record 3.3 billion, a 189% increase compared to our year-end backlog of 1.15 billion. Backlog by segment is building segment backlog of 2.5 billion, civil segment backlog of 511 million and management services backlog of 319 million. As stated, our reported backlog does not include the MGM Project CityCenter, the Foxwoods Resort and Casino or backlog associated with Rudolph and Sletten. Including these items, our adjusted estimated backlog at September 30, 2005, would have been 7.7 billion.

For those individuals who are on the call and tendered their shares of 2125 preferred stock in the settlement agreement, the transfer agent has informed us they have begun making the distribution, and the process should be concluded within a week.

This concludes my portion of the call. I would like to thank all those who joined today, and now turn the call back over to Bob for his closing comments.

Thanks, Mark. Overall, as you can see, we are extremely pleased with our performance this quarter. We were awarded unprecedented amounts of new business, particularly in our business -- our building segment. This was a result of a strong market, as well as our solid reputation for delivering consistently on-time and on-budget performance on complex, large-scale, fast-track projects. We also made a strategic acquisition that will expand our building segment's core business.

In our civil segment, we continue to integrate the Cherry Hill operations and have improved our margins. In management services, we were awarded new work in Iraq with the potential for additional growth. Our outlook for the future remains positive, and we look forward to reporting further progress in all segments (ph) next quarter.

And that ends our prepared remarks. Mike Ciskey and Dick Rizzo and I are happy to take your questions.

(Operator Instructions). Steve Mead, Anchor Capital.

I have to ask this question as a fiduciary. Anchor Capital represents clients that own 50,000 shares of the preferred. And I would just like to get a sense of given the financial resources of the Company, why you didn't retire the preferred or resume the dividend on the preferred versus the approach that you took?

Well, we had a piece of litigation that we sought to settle. It took somewhat longer than we had anticipated. So we went with the settlement direction, Steve. And I can assure you that there isn't a Board meeting that goes by that we don't discuss the continuing future of the preferred issue.

I mean, given that, do you have any intention of resuming the dividend on the preferred shares?

Well, the preferred shareholders continue to be represented by two positions on the Board. We will always entertain any of their motions and we'll discuss this, I assure you, at every meeting. And that's as much as I can say now. Hopefully, this process of the settlement will be done within a week or so, and we will go forward on that basis.

And then the election of someone to replace Mr. Doppelt, do you plan to hold a special election for that?

Steve, we've not planned a special election. At the outside, we have the May election at the shareholders' meeting. But we did discuss a special election. We entertained a motion that was not voted favorably, but we did discuss it at the last meeting, and we will do so again, I'm sure, in November -- the second week in November.

Yes, because I'm aware that if -- underneath the certificate of vote on the preferred shares, that we can -- if we put forth the letter requesting a special meeting and get 25% of the preferred shareholders to ask for that special election, we can actually get a special election held. And I just was wondering what process I should go through to get that done?

Well, Steve, off-line I will look you up with our attorney, and you guys can discuss that. And whatever the procedures are, he will pass them on to you.

Thank you. Bob, if I just could, I don't -- I mean, I really think that if you'll recall, the Forbes article -- are you there?

I'm here, yes.

I will just quote your press release back in January '05 pertaining to that Forbes article on your designation as one of the better-run companies. And it said among the financial matrix considered by Forbes for growth in sales and earnings, leverage, stock market returns and earnings forecasts, the companies were also evaluated for their accounting and governance practices, financial condition and earnings quality. And you know, I just would put in two bits, that I would hope that you guys would live up to that sort of recognition.

I think we've lived up to a great part of that, Steve, in terms of achieving the growth in profits in cash flow that the Company has generated, especially looking back since the recapitalization in 2000.

John Rogers, D.A. Davidson.

A couple of specific financial questions, and Mike, I apologize -- you were breaking up when I heard it. What was depreciation and amortization in the quarter? Did you give us that number?

I did not give you depreciation, but I can. John, I will have to give it to you -- I don't have the six-month data here, so I can't do the subtraction to get you the number, but --

Okay. Well, if you could, or if you give me the nine-month number, I can probably back into it, too.

Nine month, the depreciation and amortization is 4.2 million.

Okay. And then, in terms of the -- was it the option expense in the third quarter, or there was -- excuse me, the restricted stock awards. How much was that?

For the third quarter, it was $200,000.

$200,000 -- okay. Pretax, right?

Correct.

And in terms of your guidance, the 1.5 to $1.6 billion in revenue for 2005, does that include Rudolph and Sletten, I guess, for two months?

For three months.

Or three months?

Yes.

It does. Okay. And then I guess the other things are just given the amount of bookings that you've done, and Bob, you mentioned the hiring of several hundred people, is there anything else that you need at this point to take all this work on, or are there any capacity constraint issues, either internally, financially, whatever?

Well, we've committed significant senior management to the effort and have effectively the President and Senior Vice Presidents and Chairman of our building company almost full-time in Vegas, together with the project staffs. I think we've put the right focus on it early. The Chairman of the Company, Ron Tutor, is heavily involved in Vegas a couple of days a week assisting.

And I think we've got all the focus on it we need. I mean, certainly, the hiring of the management staff is well under way. The trade label will come as the projects move into more of the structures rather than just the excavations. We've identified any shortfall in trade labor that we might anticipate where we would go to travelers. So, I mean, we spent a lot of time planning the ramp-up, John. So I think we've got a good handle on it, including the equipment resources.

Okay. And then if you could characterize it a little bit in terms of 2006, my impression is a lot of this work builds up through the year -- in other words, revenue levels, and especially on the building segment, are going to build pretty substantially through the year. Is that correct, or--?

Yes, I mean (multiple speakers)

I mean, heavily weighted towards the back end?

Well, it certainly builds each quarter, okay, I mean, as we would expect. Yes, that's why we say this business is lumpy. It's not a straight-line business. So as we come out of the ground and into the structures on these projects, certainly the revenues will ramp up quite sharply. And remember, these projects stretch not only 2006 and '07, but also into 2008 and '09, they are so significant.

But I mean that's I guess sort of exactly my thought, is that with the visibility that you have, and I know it's too early to talk about it, but presumably, you have pretty good visibility in terms of revenue growth into '08 at this point.

Right. We think so. Absolutely.

Ben Warman, Bishop, Rosen & Co.

Very excited about the progress the Company has made in the last several years especially. I remember some years ago, the stock was selling for about 3 or $4.00, and it's now over 21. I want to congratulate you on a job well done.

Now, let me ask you this. With the hurricanes in the Gulf and the damage that was done, and the state of Mississippi now has passed a new law that the casinos can be built on land -- I think there are about 11 of them. Do you have a shot at that?

Well, I mean, we've talked to our existing client base, and in one case in particular, we provided backup pricing for a client who was negotiating with another contractor. Yes, if we had capacity, we would certainly be a player in that market, but that's the key question in hospitality and gaming. And you know, we are right there in Vegas where all these large projects are. Would we go to Gulfport? It would have to be a fairly special deal with a very strong margin to take us to Gulfport.

That having been said, the devastation of the hurricane season provides other opportunities in the building and civil infrastructure markets that we're looking at closely. But remember, a lot of what's going on up to date is the urgent response, debris removal, dry-ins, cleanups, and the big work, we think the major improvements in infrastructure, has yet to come.

In Florida, the Cummings subsidiary, are they in line to be able to do some of that reconstruction work that will be needed there?

Absolutely. In fact, they did some from prior hurricanes, and they're well-situated and greatly respected in that marketplace. So we would hope that as the work comes out, they would get a nice piece of it.

Well, the next question is whether or not if you do apply for some of the work in the Gulf area, would you be capable of using either the Cummings or the Sletten subsidiary to do some of that work?

Absolutely. That's really been the focus of acquiring profitable companies with strong management teams, is to bring resources into the overall Perini Corporation. And for instance, Rudolph and Sletten, we expect great synergies there, and when the California gaming market heats up, we've already made introductions to Rudolph and Sletten and with our client base. So we expect to be able to use Rudolph and Sletten and then to a lesser degree Cummings in all of the building work.

Last statement I'd like to make is you have settled with most of the preferred shareholders, including myself. I believe there's still about 150,000 or so preferred shares that opted out. Why don't you clean that up, even if you have to pay off whatever accrued dividends there are and the $25 they're entitled to? The stock is now over 21. It's almost at the price where the preferred actually came out in the beginning at $25. So once you clean it up, you've got a clean balance sheet. I think it's worth looking into.

Well, we discuss that at every Board meeting, and Ben, it receives a lot of attention, as you can imagine.

Gary Laken, private investor.

I have three short questions for you. First question is a follow-up to John Rogers' question. You are projecting 2006, in 2006 revenues are going to be up approximately 80% over 2005, but projected earnings are only, in quotes, up 30%. Why the lag there? Why aren't earnings projected much more in line with the projected increase in revenue?

Well, baked into our forecast is also the additional cost of ramping up and hiring staff in anticipation of the start of work. That is simply the extension of our staff into Vegas and creating a larger presence in Vegas than we've ever had, Gary. Obviously, the payoff comes in in the out years -- '07 through '09.

So at some point after you start covering fixed costs, you'll see those revenues start to accelerate?

Exactly, exactly.

Second question is again on the preferred shareholders, you got a lot of questions today about the preferred shareholders.

It's a very special group.

Right. Question is when will Perini advise its transfer agent, which I understand is EquiServe, to advise the nation's brokerage houses that it's okay to release the restrictions on trading the shares that opted out of the settlement?

That's a technical question, Gary. I have to get an answer for you.

Okay. If you would, that would be appreciated, because I know my shares are at -- my preferred shares are at -- some of them are at Fidelity and they won't do anything until they hear from the transfer agent, and the transfer agent won't do anything until it hears from Perini.

Very good. We'll take care of that.

I would like to get that cleared up. And third item, which is also short, in your prepared remarks, you said that the preferred shareholders continue to be represented by two members on the Board, elected by the preferred shareholders.

That's true today.

Today, but it's not true -- hopefully not -- not hopefully, but it's projected not to be true in another week or so.

Well, only by virtue of Mr. Doppelt’s resignation.

Right, and that is a subject of some concern to preferred, shareholders. And again, this was mentioned in the last speaker's comments that it would be nice to clean this whole thing up. At this point, from what I gather, with less than 200,000 shares of preferred outstanding, the less -- approximately $400,000 in required dividends is slightly over 1% of your projected annual earnings in '06. It's less than 2% of what you'll take into earnings because of the settlement. So, it's a relatively minor, minor point.

I agree.

Okay. We're making progress. Thank you very much, gentlemen. I appreciate your good efforts. I hope to -- as you know, I'm a much bigger common shareholder than preferred shareholder. I don't know if you know that or not. So I'm very enthusiastic about seeing your earnings accelerate well into the future.

Well, thanks a lot, Gary, and I know you have concerns about the preferred, but remember, we align management, doing a fabulous job managing the profits and generation of cash flow here. So we're working as hard as we can.

Right. I understand that, and that's why I'm puzzled why you don't just get rid of these preferred -- the thorn in your side.

It's not so much of a thorn. Thanks, Gary.

(Operator Instructions). At this time, there are no further questions.

Well, I want to thank everybody for joining us today and bearing with us through the prepared remarks and Q&A, and looking forward to greatly improved activities and continued additions (technical difficulty) Thank you very much. Bye-bye.

This concludes today's Perini third-quarter 2005 earnings release conference call. You may now disconnect.