Tutor Perini Corp (TPC) 2008 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Perini fourth quarter 2008 earnings conference call. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. Ken Burk, Chief Financial Officer, please proceed.

Good afternoon, everyone. Thanks for joining us on Perini's fourth quarter 2008 conference call. With us today are Ronald Tutor, Chairman and CEO, and our President, Robert Band.

For our agenda today, Ron Tutor will discuss the highlights of the quarter and Bob Band will share details about the prospects and status of our Management Services Operations. After that I will review the Company's fourth quarter financial results in detail and provide updated guidance for the fiscal year 2009. Ron is going to come back and make closing remarks and at that point we'll open up the call for questions.

Before we start, I'd like to remind our listeners that our comments today will contain forward-looking statements including statements about future guidance. Management may also 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 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 upon assumptions that the Company believes are reasonable but that are subject to wide range of risks and actual results may differ materially.

These risks and uncertainties are discussed in detail in our filings with the SEC including Perini's annual report on Form 10-K for the fiscal year ended December 31, 2007, our quarterly report on Form 10Q for the quarter ended September 30, 2008, our definitive proxy statement filed on August 6, 2008, as well as today's news release. Our statements on this call are made as of today, February 25, 2009. 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 Ron Tutor.

Thanks, Ken. Good afternoon, everyone, and thank you for joining us on the call today.

It's fair to say we in the construction industry are going through some interesting times. There has never been to my knowledge such a rapid decline in private nonresidential markets, followed by an acceleration of government spending and public building with particular emphasis on civil infrastructure work with a significant degree of magnitude.

Fortunately we are well positioned to deal with this dramatic shift in the construction markets. As one of the largest most diversified general contractors in the US, we believe that we will be able to be one of the leaders in the industry through even these, the most challenging of times.

During the fourth quarter we had a loss of $163 million and a diluted loss per share of $3.29. This was the result of the writeoff of $202.8 million after taxes of goodwill and other intangible assets associated with the current economic crisis and its associated impact on the carrying value of Tutor-Saliba. As a non-cash impairment charge, there is no impact on our liquidity or ability to pursue new business opportunities. Setting the impairment charge aside, this was another good quarter, with record revenues of $1.6 billion, and record net income of $39.9 million. Pro forma diluted earnings per share was $0.79 for the fourth quarter.

The back log of uncompleted construction work at December 31, 2008 was $6.7 billion. Currently we have approximately $2.3 billion of pending awards for which we have received letters of intent or notices from customers we are their preferred contractor.

Today many of our private customers are taking a wait and see attitude until the turbulence in the credit markets subside and consumer confidence is restored. For example, most of our gaming and hospitality customers in both the US and Dubai have suspended their plans to start work until they can better estimate demand for their product and see a more normalized and stable credit market. Therefore result of the delays in economic impacts we have reclassified approximately $3.6 million of pending awards we announced in the third quarter to longer term prospects.

On the other hand, where there has been a shift out in private building business, there are more attractive near-term market opportunities in public works for significant major civil works projects all over the country. These times highlight a core strength of our Company as one is that capable of rapidly deploying our skilled resources and equipment in response to changing market conditions for either private or public market opportunities.

With the addition of our latest acquisition, Keating Building Company, we have strengthened our Building operations in the eastern corridor with the ability to perform both private and public building work in that region. Keating has long history of performing outstanding work and we expect to add approximately $840 million of Keating work to our backlog in the first quarter of 2009.

Integration with Tutor-Saliba is well underway with specific emphasis now being placed on centralizing our back office functions through a shared service model. This model will support the integration of Perini business and all of the operating segments. Our objective is to become a more scalable organization with the ability to support operations on a national level through shared service from one of a number of primary locations. As a result, we expect to significantly reduce our run rate G&A starting fourth quarter of '9, first quarter of '10.

We continue to make progress with integrating our Civil business and see a number of opportunities to take advantage of our geographic presence in major areas such as New York, Washington, DC, California and Florida. We have established the key leadership team for each of our operating, estimating, and equipment management roles.

We have also begun to experience the benefits of our vertical integration strategy and our Building operations. For example, we will be self-performing more concrete work and bringing our customers the benefit the of our mechanical contracting operation as well as a growing electrical contracting operation. We expect to continue to improve our operating margins as we leverage our resources across all of our Building operation.

Now I would like Bob Band to share more details of prospects and Management Services.

Thanks, Ron. I will cover an update on pending work prospects and our international opportunities.

Pending projects of $2.3 billion mentioned earlier by Ron include $2 billion in Building work and $300 million in civil work. The Building work includes $900 million of gaming hospitality and condominium projects, $800 million of education and health care and $300 million of industrial and government work. The pending Civil work is transit system related.

Our targeted private negotiated prospects are largely dependent on economic recovery and availability of financing and in addition, as Ron mentioned, the construction markets in Dubai and Abu Dhabi are undergoing their own economic slowdowns. Projects in that region that we were awarded for preconstruction services are now on hold.

However, domestic spending on education, health care, industrial and government building projects is expected to dramatically increase in 2009. For example, we have identified and are tracking approximately $10 billion in targeted projects in these markets that could be bid and proposed on in 2009 and early 2010. The stimulus package should be additive to what we see now.

The market for public civil infrastructure projects should continue to open up over the course of 2009. Several funding initiatives from the stimulus plan should give way to additional bidding opportunities in our target markets. We estimate the size of our market and Civil infrastructure to be in excess of $30 billion in the regions we are now working in. The question is not if, but when the projects will be put on the street to be bid.

We expect significant contributions from our Civil work to increase in the second half of 2009. The estimates range from $10 to $15 billion in construction spending over the next several years for the relocation of the US Marines from Okinawa, Japan, to Guam. We continue to believe the process is proceeding under the agreement between the two countries and includes work in both Guam and Okinawa to be finally completed in 2014.

The business outlook for projects in Iraq and especially Afghanistan continues to be attractive for Perini Management Services. And the US has recently announced a surge of additional troops targeted for Afghanistan. Major projects in Iraq are progressing on schedule and include overhead cover, construction projects, hardened housing and other facilities for the US Military and US Department of State. Our runway and taxiway projects in Guam under the US Air Force SATOC program are under construction and on schedule.

With that, I'm going to turn the call back to Ken who will give you the financial details for the quarter.

Thank you, Bob. We completed the merger with Tutor-Saliba in the third quarter accordingly. Our fourth quarter 2008 results include Tutor-Saliba for the full quarter and are included in each of our reporting segments. Our mechanical and electrical businesses are included in our Building segment and Black Construction, Tutor-Saliba subsidiary in Guam is included in our Management Services segment.

As noted in our press release today our fourth quarter and full year 2008 operating results were significantly impacted by the $202.8 million after tax impairment charge related to good will and certain tangible assets recorded in connection with our merger with Tutor-Saliba. Impairment is specifically related to the current economic crisis and significant changes in our markets which we experienced during the fourth quarter and estimated to continue through 2009. Impairment charge is non-cash and therefore does not affect our cash position or prospects for new business opportunities. On a pro forma basis, excluding the impairment charge or net income would have been $39.9 million for the fourth quarter of '08 and $127.7 million for the full year 2008.

We ended 2008 with a backlog of $6.7 billion. The break down by segment: Building, $5.7 billion, Civil, $528 million and Management Services $416 million. The fourth quarter of '08 revenues were $1.6 billion, an increase of 29% from $1.25 billion reported in the fourth quarter of '07. Most of the revenue increase was due to the addition of Tutor-Saliba.

On a reportable segment basis revenues from our Building segment were $1.39 billion, an increase of 19% from $1.16 billion in the fourth quarter of '07. Revenues from our Civil segment were $118 million, up 129% from $52 million reported in the fourth quarter of 2007. Management Services were $95 million for the quarter, up 207% from $31 million a year ago primarily as a result of higher work, higher volume of work in Iraq and the addition of Black Construction.

Our total gross profit increased 77% to $110.2 million from $62.2 million in the fourth quarter of '07. This increase is primarily due to the increase in revenues noted before in our improved operating performance by our Civil segment. General administrative expenses were $44.8 million, up 59% from $28.2 million in the fourth quarter of '07. This was primarily due to the addition of Tutor-Saliba. Total G&A expenses were 2.8% of revenues compared with 2.3% in the fourth quarter of '07.

After a $224.5 million pre-tax impairment charge, we had a loss from construction operations of $159.1 million in the fourth quarter of '08. The pre-tax impairment charge is broken down as follows. Building, $197.6 million; Civil, $6 million and Management Services $20.9 million. Excluding the charge we had income from construction operations of $65.4 million compared to income from operations of $34 million in the fourth quarter of '07. Overall, we increased our margins from 2.7% to 4.1% year-over-year.

Breaking down income from construction operation by segment before the impact of the impairment charge, the Building segment income for the quarter was $39.7 million, an increase of 15% from $34.5 million in the fourth quarter of '07. This increase was due primarily to higher revenues as discussed earlier.

Civil segment income from construction operations was $14.5 million in the fourth quarter of '08 compared to a loss from construction operations of $5 million in the fourth quarter of '07. The addition of Tutor-Saliba made a positive impact along with improved operating performance from both our New York, Civil and Cherry Hill operations.

Management Services income from construction operations was $17.7 million in the fourth quarter of '08 compared to $10.9 million in the fourth quarter of '07. This increase reflects the significant increase in revenues noted before including the positive impact of the addition of Black Construction. Other income was $2.9 million in the fourth quarter of '08 compared to $5.8 million in the fourth quarter of '07 due primarily to lower interest income. Interest expense increased to $2.4 million in the fourth quarter of '08, from $400,000 in the fourth quarter of '07 due primarily to debt assumed in conjunction with the merger with Tutor-Saliba and more extensive equipment financing in 2008.

The provision for income taxes was $4.4 million compared to $16.5 million in the fourth quarter of '07. Even though we had a loss before income taxes in 2008 a provision for income taxes was necessary due to the nontax deductible nature of the goodwill portion of our impairment charge. Due to the impairment charge recorded, net loss was $163 million in the fourth quarter of '08 compared to net income of $22.9 million in the same quarter a year ago. Again, on a pro forma basis excluding the impairment charge, our net income would have been $39.9 million for the fourth quarter of '08.

Diluted loss per share was $3.29 in the fourth quarter of 2008 compared to $0.83 for the same period of 2007. On a pro forma basis excluding the impairment charge our diluted EPS would have been $0.79 for the fourth quarter of 2008.

For the full year we recorded record revenues of $5.66 billion, up 22% from last year. 2008 marked our third consecutive year of record revenues. Due to the impairment charge, recorded net loss for the year was $75.1 million compared to net income of $97.1 million a year ago. On a pro forma basis excluding the impairment charge our net income for 2008 would have been a record $127.7 million and our full year EPS would have been $3.67.

Looking at our balance sheet at December 31, 2008, our working capital stood at $225 million, down from $293 million at 12-31-07. This represents a current ratio of 1.13 to 1.

As mentioned last quarter the decrease in working capital reflects the reclassification of our option rate securities. As of 12-31-2008, we had $386.2 million in cash and cash equivalents compared to $459.2 million at 12-31-07. We recorded $92.1 million in the cash from the merger with Tutor-Saliba. We generated $126 million in cash from operations in 2008. However, our cash balance decreased to primarily due to investments in the option rates securities 66.8 million for purchases of property and equipment, $38.7 million for repayment of debt, $58.7 million for the repayment of share holder notes arising out of the merger with Tutor-Saliba and $31.8 million for purchases of our common stock under our authorized share repurchase program.

At December 31, 2008, long term debt stood at $61.6 million excluding current portion. We had $137.1 million available under our revolving credit facility plus an additional $110.6 million available under a supplemental standby line of credit for incremental liquidity support should we need it while we await opportunities to liquidate our investment and option rate securities. The supplemental line of credit will reduce dollar for dollar as we liquidate our positions in option rate securities. This line was recently extended to December 31, 2010.

Stock holders equity increased $770 million to $1.14 billion from $368 million at December 31, 2007. This was primarily due to the equity issued in connection with the merger with Tutor-Saliba. We believe that our current financial position and credit arrangements provide us with the adequate resources to meet our liquidity and working capital requirements and implement our business plans in the future.

For fiscal 2009 the Company is lowering our guidance for revenues and diluted earnings per share to a range of $5.5 billion to $6 billion and $2.60 to $2.80 respectively. This guidance is reflective of current economic conditions including the challenges and the credit markets and the associated impacts on funding for new construction starts in the near term.

I will now turn the call back over to Ron for his closing comments.

Thanks, Ken.

The fourth quarter marked 13th consecutive quarter of record revenues for Perini. Despite of the current challenges and speculation in the markets we are extremely well positioned geographically, supported by our expertise and abilities as a true builder of large complicated building and more importantly Civil projects for the public and private sector. We were also fortunate to have a strong balance sheet and back log of work to carry us through these challenging times.

With the stimulus package now in place, we should be able to capture our share of business that will begin to fill the void of private gaming and hospitality work that has been put on hold or deferred until economic conditions improve. There is a vast level of major Civil works currently being bid in the United States in many of the areas where we consider ourself one of the strong competition in a limited group of contractors able to build those projects. That was even prior to the stimulus package being introduced by the government. We think our strength in Civil works will more than carry us through the difficult next what we consider to be the next two years of difficulty that's facing everyone in our country.

That concludes our prepared remarks. Bob Band, Ken Burk and I will now take your questions.

(Operator Instructions). And your first question comes from the line of John Rogers of D.A. Davidson. Please proceed.

Hi, good afternoon.

Hey, John.

First thing is can you tell us what came, what major, if there were any major projects that came out of backlog? Or was it a lot of smaller projects? It looks like you pulled some things out of the Building side that were in there previously.

We haven't taken anything out of backlog, John. Basically what we saw was just the burnoff of contract volume in the fourth quarter.

Okay. So it was all just burnoff.

Yes.

Okay. And then the second thing is you guys, I know Bob and your comments, you mentioned some of the market opportunities and gave us some size on that. Can you tell us roughly what those markets look like a year ago? I mean the $10 billion in opportunities in the Civil side for instance that you're identified, is that flat with a year ago, up, down? Kind of give us a sense there.

This is Ron Tutor. It's significantly up. A year ago we were finding ourself looking for Civil work to bid both at Tutor-Saliba and Perini.

This year in 2009 we are inundated with major projects all over the country. We have probably the most extensive jobs out to bid that we were tracking and presently bidding that I have ever seen in my career and that doesn't include the work supported by the stimulus package. We believe the Civil market in the US in the large complicated bridge, road work, highway work will be such as to be a dramatic increase over 2008 or even 2007.

When do you expect these to actually the awards start to come?

We're waiting for one award right now on a project. We're low bider. We are bidding another major project this week. Another one next week. We are literally working six and seven days a week in our Civil group bidding two and three major projects a month and the competition is never more than two or three bidders. So we expect this to be a significant Civil year, a major breakout.

Okay, and just a final question. City Center, can you give us an update there? Just kind of where that project is, schedule-wise, and everything?

We're scheduling to complete in phases between the work that Perini has, probably between end of summer and the latest completion is December 16, the (Auria) Hotel.

Okay. And Cosmopolitan's 2010?

2010, first quarter.

Right. Okay. Thank you.

Sure.

Your next question comes from the line of Richard Paget of Morgan Joseph. Please proceed.

Good afternoon, everyone.

Hi, Richard.

I wonder if you can elaborate with the timing or what you expect with the stimulus package. It sounds like the big awards that you're working on now is keeping you busy. What are your people on the ground hearing of how the mechanisms of this money is going to get spent. Is it all going to kind of rush out at once and it's going to be difficult to track everything, just given all the geographies. Or there is going to be some orderly method in which they...

Where the stimulus is going so far is, they've set aside, and I don't recall the number, I'm going to guess $70 billion and they're going to states and they're going to projects that are already designed and they're putting it out in the marketplace wherein the states that have the projects of consequence ready to go and lacked funding. They're going to push it out into the marketplace.

It's too early to tell how well organized they'll be. But one of the things they have to understand with only a handful of major contractors in the country for the large complicated work, they're going to have to put it out at some reasonable pace over the next 12 months. But as busy as the Civil work sector is right now, it's going to be significantly increased with the stimulus package. The whole goal of it is to find projects ready to bid, not start a two year pre-designed, preplanning process, but get to work out the bids that's ready.

Now, do you have the ability to shift your Building assets into the Civil arena?

Without a question. Most of our engineering staff and supervision, concrete supervision, grading supervision we can move into the Civil sector so long as we augment them with our experienced Civil managers and build up and basically tie them together. Not all of them, but enough of them to make an impact since we intend to dramatically increase our Civil operation.

And then getting to the acquisition market, are you increasingly seeing targets becoming more distressed and maybe expectations that they had six months ago, they might come back and saying --

Candidly, our approach is we don't talk to distressed companies that are marginal. The only kind of companies that I like to look at are ones that are excellent with good track record, a solid balance sheet and whatever their reason, they are ready to sell but not because they are distressed. Distressed companies we don't need.

Okay, but even if it was a strong company, say six months ago that fit that criteria, I'm sure there are plenty of that might have a --

The kind of companies we look at are not highly leveraged. They have limited debt if any. And a downturn in the marketplace for them would mean they just wouldn't make as much money. If a downturn meant they went from making money to losing money, then that would be something that would not be interesting. We don't see anybody and we have one more potential acquisition we're looking at carefully and excited about and other than that, we're no longer in the acquisition market.

And then, Ken, sorry, can you just repeat the break down of backlog again?

Sure. It was $5.7 billion for Building. Hold on one second here.

It was $528 for Civil.

It was $528 for Civil. and $416 million for Management Services.

Okay, thanks. I'll get back in queue.

Your next question comes from the line of Steven Fisher of UBS. Please proceed.

Hi, good afternoon. Clearly it sounds like the outlook in Civil is pretty robust for you guys. Can you just give us a sense maybe in the aggregate how much gaming backlog you expect to burn in 2009? I'm just kind of wondering what the gap on the Building side you'd have to fill in 2010 can be with Civil work.

I'd say the gaming side of 2010 is probably $2.5 billion. That's about right.

That's a fair estimate.

That's a fair estimate, and I believe out of that $2.5 billion we'll probably be able to replace a $1.2 billion to a $1.3 billion of it and the rest will be gone.

Okay, so $2.5 billion was the gaming revenues in 2009?

Right.

And you can replace half of it, but at a much higher margin?

No. I think the margins will be no higher in the Building work. Civil work will be the area that when we significantly increase our Civil revenue, you have to remember we make about four times the margin on our Civil revenue than we do on our Building.

Right, that is what I meant. So in that regard, two quarters in a row of 12% to 13% on the Civil business, that's the normal run rate of the business?

We should be able to do that or better.

Is the work on the stimulus coming out of that expected to be incrementally competitive such that the margin might be less attractive?

Well, as I said before, unlike the Building business where there's a lot of companies that perceive themselves to be builders, the heavy construction business when you get the $300 million and up, it's a rarefied stratosphere that there is no such thing as new entries. And other than a couple of foreign companies that have bought US subsidiaries there isn't ten major heavy construction companies in the United States that can build those projects. So it's the same competitors without any entree. and so far we haven't seen any diminishing of margins in the large work.

So you expect to see less than ten bidders on --

I would say the average job has three. That's ten in the entire country.

That's for the size of product -- projects we go after. We are not in the commodity construction business at the lower levels.

Right. Now, that's helpful. And on the Management Services side of the margins, they ramp down but I think you indicated last quarter that it would happen when you hit the start of the most recent round of overhead coverage systems. So, is that where we are today, kind of starting that next round and then maybe in the second quarter of '09 we could see the margins ramp up again if execution is like it has been like in the past?

That could work that way, Steve. Overall for '08 our margins in the Management Services side with the income from operations level before impairment charge were over 20%, so we're very well satisfied there.

Okay. And the last question for me is, I wonder if you can give us sense in the timing of the Keating acquisition. Why now? Was it simply available at the right price and what do you expect the trend in revenues to be in 2009?

It was really something that I'd been working on with Ken and Bob since the first quarter of '08, and it just took that long to close. And the idea behind the Keating transaction is we'd had an east coast presence for as long as Perini has been in business but we've closed our Boston Building office. We did not have any operation in the east other than that we ran out of our west coast office in Phoenix. And I wanted to have a major presence in New England, New York and the eastern region, and when Keating became available, although it took a long time to get done, we saw it as filling that void with talent, a large backlog and proven record of 30 years in the business. Mr. Keating elected to stay on for five years. It's a well managed, motivated business that we think will be significantly enhance our east coast Building presence.

Thank you very much.

Sure.

Your next question comes from the line of Avi Fisher of BMO Capital Markets. Please proceed.

Hi, good evening. Thanks for taking my questions. Can you break out the Tutor-Saliba contribution to backlog and revenues, please?

Avi, as you recall, we don't provide the detailed back up in that regard. It's all built in to each of the segments. So we are really are maintaining our reportable segments with Building, Civil and Management Services.

Okay. Could you provide color, then, on what kinds of projects are in Civil? Maybe some examples of them? I mean if there are any ones that stand out that are over $57 million or $100 million.

We aren't bidding, with very few exceptions, anything less than $150 million unless it's add-ons or adjacents to existing jobs. For example, we built with Tutor the Colma, the Bart Colma extension and finished it four or five years ago, it was $700 million. Bart has currently out to bid a $250 million below grade track job up in northern California that we're bidding at the end of March. Right behind it is a $400 million Warm Springs line for Bart. We're bidding $350 million design build bridge in Washington, DC, in April. We are bidding $350 to $450 million steel erection project in New York City. We're looking at a $1.2 billion design build highway in Utah. It goes on and on. There's an $800 million highway complex in South Florida that we are bidding with local partners. That's the kind of major Civil work that we're looking at in literally all over the country.

Right, appreciate that. What about the $528 million currently in Civil backlog? Can you give some color on what kind of projects those are? And what phase you're in on them?

We have two bridges in New York that we're in the finish stages. We have a project called (Harold's Structures) that we started a matter of months ago that's about $130 million that's on-going. We have a $70 million contaminated material removal project at Tutor-Saliba. We are just wrapping up the I-80 ramps into the Bay Bridge.

And how about that pier project, too.

Yes, just a number of, and we have, that's right, we're in a joint venture on a large pier project, $120 million with the Navy and Washington DC, excuse me, the state of Washington in Bremerton. It's a distribution of work in Civil just like we always do.

Okay, well, a lot of it's kind of new, sort of injected into backlog recently so I wanted color on what kind of stuff that was.

We're looking for 2009 to be a dramatic increase in our Civil backlog with the work we were looking at bidding which we think is right down our competitive alley.

Maybe I misheard, but Bob mentioned $300 million in Civil in the pipeline? I'm just --

It's a pending award.

Oh, that's a pending award, not sort of the --

That's a pending award that we hope to get awarded probably in March now.

Got you, good, that's helpful. And, have you already seen, it sounds like you have, but have you seen leadings or RFPs tied to the stimulus?

No. We haven't seen anything that was tied to the stimulus package. Typically public works jobs don't go out to bid until they're funded. A stimulus package just passed now they moving the money around trying to make deals with the states to see what goes. Every time a project comes out with us funding's in place. When I mentioned all these projects we're looking at, that's with committed capital. The stimulus package projects have not hit the streets yet.

Right. When do you expect them to, 1Q or 2Q?

I'm going to say by April, May. By then the bargaining with the states and discussions of who gets what. As our governor in California said, if they can't use the money elsewhere, he'll take it all. They've got enormous amount of work ready to bid but no funds.

There's also a time line, if they aren't able --

Yes, they lose it.

They lose it. The emphasis is you take it, you got to put it out.

Are those -- my understanding is that within the stimulus there really aren't large size ready to go projects.

The stimulus -- you're missing -- the stimulus doesn't determine the projects. They go to the state. The states determine what they got and how to use it. That's all I'm aware of. You're not going to get $70 billion out to the states unless you have a large project.

Okay, appreciate the color. And also, did you have bookings in the quarter? When I sort of back out the bookings calculation it seems to imply there weren't too many awards in the quarter.

There weren't too many awards in the quarter. We had some contract adjustments up or down but very few awards during the quarter. A couple in the education field specifically, but it wasn't much more than that.

Got you, okay. Any color on how much backlog is left in the Cosmo and City Center projects?

Cosmo has, I'm going to guess--

We have between the two projects it's about $2.9 billion. As of December 31, 2008.

And any color on, the question that I'm hearing a lot, anything with a size of the MGM receivables. How much of your receivables are associated with MGM?

MGM's been paying on schedule.

They paid on schedule and they typically bill in the range of $200 million a month.

Thank you. And what was the value of the Guam SATOC?

The Guam work, the taxiway and the runway add up to $56 million.

$56 million. When is that expected to complete?

That will run on for 18 months or so.

Got you. And the burn rate for the Keating, you said you added $800 million, you will add, I should say, $800 million in backlog in 1Q '09 from Keating?

$840 million is what we're estimating right now.

They're predicting $600 million in revenue this year.

$600 million. And that's typical, sort of seasonal, summer is a little faster, and winter's, fall is a little slower?

Yes.

And I promise I'll ask just one last question. You include McCarran in your Building segment but should it,or does it, or will it have similar margin dynamics as your Civil business?

In a word, yes.

How come we're not seeing that yet then?

We just started. There's been hardly any billing.

The McCarran job is a very good example of really where we are headed from a public works building standpoint and our vertical integration strategy. A good example which is going to carry higher margin because of our self-performed work, our mechanical operation. All of those things we feel pretty strongly about in terms of our business model going forward.

And when does it reach ramp?

We ramped up in revenue probably February was the first month. We commenced steel erection in March. We will probably at that point be on a very significant monthly billing. All of last year, all we did was mobilize and bring engineering and staff. There was no physical work started on site until the end of December. We are now ramped up going full tilt. Starting I would say the first week of March we will be on a major role.

Okay. I said that would be my last question, so I'll keep to that. Thanks very much for your time.

That concludes the question-and-answer session, as well as your conference call for today. Thank you for your participation, and have a great day.

Thanks, everybody.