Tutor Perini Corp (TPC) 2009 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2009 Perini Corporation Earnings Conference Call. My name is Ann and I will be your coordinator for today's call. (Operator Instructions). As a reminder, this conference is being recorded. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session following the presentation.

I would now like to turn the presentation over to Mr. Ken Burk, Executive Vice President and Chief Financial Officer. Please proceed, sir.

Good afternoon, everyone. Thank you for joining us on our Perini's first quarter 2009 conference call. With us today are Ronald Tutor, Chairman and CEO, and our President, Robert Band.

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 risk 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 a wide range of risk and actual results may differ materially.

These risk 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, 2008, our definitive proxy statement filed on April 17, 2009, as well as in today's news release. Our statements on this call are made as of today, May 7, 2009 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 is my pleasure to turn the call over to Ron Tutor.

Thanks, Ken. Good afternoon, and thank you for joining us on our first quarter earnings call today.

This was another very good quarter with revenues of $1.5 billion, net income of $39 million and diluted earnings per share of $0.80. The backlog of uncompleted construction work at March 31 was $5.8 billion. Currently, we have approximately $2.1 billion of pending awards for which we have received positive indication that we have been designated as their preferred contractor. Most of these pending awards should enter our backlog this year with the balance in the first half of 2010.

We continue to see very -- many private customers sitting on the sidelines until the current credit markets improve. On the other hand, we are seeing many extremely attractive market opportunities in the public works sector for major civil projects on a national basis that we expect to bid throughout the balance of this year. As we have stated before, we feel very well positioned to win our share of this work.

With the addition of our latest acquisition, Keating Building Company in January, we have strengthened our Building operations in the eastern corridor with the ability to perform both private and public building work in that area. Keating contributed approximately $475 million of work to our backlog as of the March 31st, 2009 date.

We continue to make progress with our integration with Tutor-Saliba, Keating in the balance of our companies. Recently we announced our executive team, who is responsible for integrating and building a more scalable organization with the ability to support operations on a national level through shared services from one of our primary locations. We expect this integration to significantly reduce our G&A run rate starting in the fourth quarter of this year.

MGM recently announced that they have received support from their partner Dubai World and their Bank Group to finish the City Center project. We continue to work closely with them as we all focused our sites on completing the majority of this project by the end of the year.

We continue our work as planned at the Cosmopolitan Hotel and Casino with no finanicing distractions. Pending final owner directions the project should be completed in mid 2010. We are very pleased with the progress we are making in McCarran Airport Terminal 3, a $1.2 billion contract with the Clark County Airport District. This project is a reflection of our vertical integration strategy complete with work being performed by us in certain of our subcontracts.

Our Civil work continues to improve their performance and is preparing for the significant growth in the near future that we project.

Finally, Management Services continues to deliver outstanding results for our company in Iraq and Guam. They too are prepared for the dramatic increase in opportunities that the Guam market promises to offer. We continue to improve our operating margins as we leverage the resources across all of our operations and execute the strategy of a more vertically integrated company with mechanical and electrical capacity.

In short, we believe our sound performance philosophy will give our customers better service and confidence in our schedules, which in turn affords us the opportunity to win more business and equally important earn a higher margin than what we have traditionally been able to achieve.

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

Well, thanks Ron. Pending projects of $2.1 billion mentioned earlier by Ron include $800 million for hospitality and gaming, $400 million in education, $300 million in industrial buildings, $300 million in government buildings, and about $300 million in healthcare projects.

As was the case last quarter, our private negotiated clients are largely dependent upon economic recovery and their ability to achieve acceptable financing terms and conditions.

However, domestic spending on education, healthcare, industrial and governmental building projects is expected to increase in 2009. For entire building group, we have identified and are tracking approximately $6.5 billion in targeted projects that could be bid and proposed on in 2009. 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 target market in Civil infrastructure to be in excess of $14 billion in 2009 in the regions we are working in now. We expect contributions from Civil work to increase significantly this year. Although a slower ramp up than we originally expected, the estimates still range from $10 billion to $15 billion in construction spending over the next several years for the relocation of the US Marines from Okinawa, Japan, to Guam.

At last week's industry forum held in Guam, the US Navy spokesperson indicated that there will be a Guam multiple award contract worth up to $4 billion in total with perhaps awards up to 3 to 5 firms. The contract will be [let] in late 2009 and will cover a five-year period. The individual test code is ranging all the way up to $300 million each.

The target date for the Final Environmental Impact Statement and Record of Decision remains 2010 and the planning for major components of that program is well underway now.

The business outlook for projects in Iraq and especially Afghanistan continues to be attractive and the US has announced the surge of additional troops targeted for Afghanistan. Major projects in Iraq are progressing on schedule and include overhead cover, construction jobs, hardened housing for the State Department and other facilities for the US Military.

Our runway and taxiway projects in Guam under the US Air Force SATOC program are under construction and on schedule. We currently have three proposals outstanding for multiple award task order contracts, which should be decided in the second half of 2009, one each for the US Army Core of Engineers, one for the US Coast Guard Homeland Security, and then one for the US Navy.

Now, Ken Burk will give you the details -- financial details for the quarter.

Thank you, Bob. Our net income was $39 million for the first quarter of 2009 as compared to net income of $25 million for the first quarter of '08. Diluted earnings per share were $0.80 for the quarter as compared to $0.91 for the first quarter of 2008.

On a pro forma basis, including Tutor-Saliba, net income and diluted earnings per share for the first quarter of 2008 were $38.5 million and $0.76 per share respectively.

We ended the first quarter with a backlog of $5.8 billion. The breakdown of business -- by business group of our backlog at March 31, 2009 is as follows. Building, $5.1 billion; Civil, $452 million; Management Services, $320 million.

The high level breakdown of our total Building group backlog by a major end market type is as follows. Gaming and hospitality, $2 billion; transportation facilities, $1.1 billion; health care, $928 million; education, $222 million; municipal and government buildings, $379 million; industrial, $124 million and finally other -- our other category of other building projects, $300 million.

In the first quarter of 2009, revenues were $1.5 billion, an increase of 21% from $1.3 billion reported in the first quarter of '08. Most of the revenue increase in the quarter was due to the addition of Tutor-Saliba.

On a reportable segment basis, revenues from our Building group were $1.3 billion, an increase of 15% from $1.2 billion in the first quarter of last year. Revenues from our Civil group were $89 million, up 48% from $60 million reported in the first quarter a year ago. Management Services revenues were $86 million for the quarter, up 159% from $33 million a year ago.

Our total gross profit increased 61% to $107 million from $67 million in the first quarter of '08. Our total gross profit margin increased 33% to 7% from 5.3% in the first quarter of '08. This increase is primarily due to the increase in revenues from the addition of Tutor-Saliba and strong operating performance by our Management Services and Civil group operations.

General and administrative expenses were $44 million, up 60% from $28 million in the first quarter of 2008. This was primarily due to the addition and integration of Tutor-Saliba. Total general and administrative expenses were 3% of revenues for the first quarter of '09 compared to 2% of revenue for the first quarter of '08.

As Ron mentioned, we are well into our initiative to centralize our back office functions and expect to significantly reduce our G&A run rate starting in the fourth quarter of this year.

We had income from construction operations of $63 million in the first quarter of '09 compared to income from construction operations of $39 million in the first quarter of '08. Overall, our operating margins increased from 3% to 4% year-over-year.

Breaking down income from construction operations by business group; Building income for the quarter was$ 43 million, an increase of 24% from $35 million in the first quarter of '08. Civil group income from operations was $13 million in the first quarter of '09, an increase of 348% from $3 million in the first quarter of '08.

The addition of Tutor-Saliba made a positive impact along with improved operating performance from our New York Civil operations.

Management Services income from construction operations was $16 million in the first quarter, an increase of 148% from $6 million in the first quarter of '08. This reflects a significant increase in revenues noted before including the positive impact of the addition of Black Construction in Guam.

Other income was $1.3 million in the first quarter of '09 compared to $1.5 million in the first quarter of '08 due primarily to lower interest income. Interest expense increased to $1.2 million in the first quarter of '09 from $355,000 in the first quarter of '08 due primarily to higher average debt balance during the first quarter of '09.

The provision for income taxes was $24 million compared to $15 million in the first quarter of '08. Net income was $39 million in the first quarter compared to $25 million in the same quarter a year ago as mentioned earlier.

Diluted earnings per share was $0.80 in the quarter compared to $0.91 for the same quarter. A year ago on a pro forma basis, we mentioned it was $0.76 for the first quarter of '08.

Looking at our balance sheet at March 31, 2009, our working capital was $355 million, up $225 million at December 31, '08, represents the current ratio of 1.21 to 1.

As of March 31, 2009, we had $459 million in cash and equivalents compared to $386 million at December 31, 2008. We used $43.5 million of cash from operations in the first quarter of 2009. However, our cash balance increased due to the -- primarily to proceeds from borrowings under revolving credit facility during the period.

At March 31, 2009, long-term debt stood at $191 million excluding current portion and we had $121 million available under our credit facilities.

Stock holders equity increased $41 million to $1.2 billion at March 31, 2009, primarily due to the net income recorded during the period. We believe that our current financial position and credit arrangements provide us with the adequate resources to meet our working capital requirements for executing existing and new projects that we expect to add in the near future.

For fiscal 2009, we are reaffirming our guidance for revenues and diluted earnings per share at a range of $5.5 billion to $6 billion and $2.60 to $2.80 respectively.

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

Thanks, Ken. In short, in spite of the ongoing challenges and speculation in our markets, we remain confident in our competitive position, geographically and by our expertise and proven abilities to deliver large complex Building and Civil projects for the public and private sectors. The stimulus package is starting to pickup steam with indication that many large Civil projects throughout our markets in California and Nevada and the East Coast are being put out to bid and expect to be awarded throughout the course of this year. I remain confident that we will begin to significantly add to our backlog in the second, third and fourth quarters of this year with particular emphasis on those Civil markets. That concludes our prepared remarks. Bob Band, Ken Burk and I will now take your questions.

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

Hi, good afternoon.

Good afternoon, John.

I think it was Bob, you went through the pending awards and could you repeat that, I just couldn't get it down quick enough?

Yeah, I spoke too fast?

Sorry.

Well, what we like to talk about is our pending awards where we've been giving -- given positive indication by owners that we are selected and in line to receive a project. So we said pending awards of $2.1 billion --

Right.

Including $800 million relating to hospitality and gaming, $400 million in education, $300 million in industrial buildings, $300 million in government projects and $300 million in healthcare.

Okay. And that I mean does not include any Civil work at this point. I thought you had some work that you had been the low bider on or there was an indication that might be pending and waiting approval?

No, we haven't included -- this is Ron Tutor. No, we haven't included. With -- Civil work is unlike private work, you're a low bidder and it's either awarded or it isn't. So there are no -- well, I shouldn't say that there is a pending low bid that we expect to be awarded of $22 million in New York.

Okay. I saw that one and wait for the others. And I guess then one other housekeeping item. Ken, what is the current debt now?

Current -- the current maturities you mean?

That's correct.

Right.

You are saying about current maturities of debt?

Yes.

Yeah, it's $18.8 million, John.

Okay. Just so I can get net. And then, I guess finally in terms of the bigger picture. The uptick in Civil work that you are looking at coming into the -- I guess beginning in the second quarter. Are these projects across -- spread across the country or are there any -- and are they all tied to stimulus money or is this projects that were already in the works?

I think -- this is Ron Tutor. I think it's a combination of both. I think they were projects that were ready and some were put out to bid because they got stimulus money. My take is some of them were put out to bid assuming they had stimulus money and some were put out to bid because they were funded, because we are finding a very significant level of large Civil work bidding in both California and Nevada and all away from Connecticut through New York, Pennsylvania, Washington DC and into Florida of such a scale and number that it has to have stimulus money to have put them out. I mean it's virtually almost $1 billion a month of bidding.

In our markets.

And I assume these are projects that are of the size where you are going to get limited number of bidders on them?

Well, when I speak to those, we -- I really don't look at anything of the smaller size. What interests us typically are the $100 million and up, and the real focus is the $250 million to $500 million, $600 million and larger. And what they are doing, most of the work that we look at and talk about is that we are, when you talk about the 20s and 30s the Harold Structures job.

Yeah.

With the $22 million addition to an existing unwritten $40 million contract.

I think, John just to add more clarity, I mean it's really not so much about competitive looking for lower competitors as much as it is we are able to command higher margins with the size of the projects that we go after and we are not in a commodity -- a playing field if you will into lower levels.

Okay. And finally, I think in the previous calls you had talked about the potential acquisitions out there and you acquired Keating during the quarter. Is there anything left out there that still might be coming?

Yes, we are in the middle of discussions that hopefully we'll conclude on or before the 21st of May to determine whether we are going to have another significant acquisition.

Okay.

So, hopefully we will be able to report back on that prior to the end of May.

Okay. Great. Thank you very much.

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

Good afternoon, guys.

Hi Richard.

Just following up on John's last question with acquisitions. How have you seen seller's expectations, I mean may be at one point when things had slowed down, may be there is a little bit more pressure to sell, but with the expectation that all the stimulus money is going to be out there, have they started to say, "Well, maybe we are worth more now than we might have been three months ago?"

I haven't seen any of that. The particular acquisition we are talking about has been discussed and looked at over the last six to eight months. We have a basic formula that doesn't really relate to the stimulus or those potentials and I haven't had any feedback from any of the people we talk to, few as they may be, that because stimulus spending and Civil spending is going up, they want more money. So, so far our experience I haven't heard any of that talk.

Okay. And then, in terms of that $2 billion existing in the gaming hospitality backlog, could you break it down of what's City Center and what's Cosmopolitan?

Yeah, we have -- approximately $1.1 billion is City Center and about $800 million is Cosmopolitan.

Okay. And then, getting back to the pending awards, is it safe to assume that some of the hospitality and gaming, I think that $800 million, is going to be put on hold I mean at least for -- over the next couple of quarters versus some of the institutional work which might get let a little bit quicker?

Well, I think it's fair to say that there are some financing contingences that have to be met and that could take some time as we've indicated with the thawing of some of the markets. So there are some contingencies that relate to that. There still is a chance that they could be awarded in the near term, but we are working closely with our customers in that regard. The other projects are in varying degrees of being able to be signed up and entered into our backlog that have fewer contingencies like the financing. So I think that's how we would characterize it.

Okay. And then, in the past you talked about 2010 potentially growing earnings at least 10% to 15%. Given what you see now, is that still a decent way to look at 2010?

It's an interesting question. We are trying to get our arms around now of just what the impacts of these credit crunches will be and I really don't think I can comment right now. Hopefully by the next quarter we'll have a better handle on it. All of it will stem around our banks in this country and our financial institutions going to stabilize and begin to re-lend the kinds of projects that we build. If the answer to that is yes, we are confident in 2010 and that's really what we got to look at before I can speak with any degree of certainty.

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

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

Hi, good afternoon. On the Cosmopolitan, just wondering how much of that, if everything goes on schedule, how much you might execute in 2010 of that remaining 800, would that be roughly 300 or so?

I would say 2 to 3 -- Steven this is Ron Tutor. I am familiar with the project. Yes, I would say probably 25% or thereabout, 30% of it.

Okay, that's helpful. And then, in terms of the margins on the Building side of things there, up a bit this quarter. I am wondering if you expect those to expand over the next couple of quarters as the McCarran project ramps up.

Well, I think McCarran is a very large increase in our Building margins as well as the influence of both DMSI and our overseas work. And frankly, Tutor-Saliba and our Civil work, where we've always had increased margins, I think it's more the influence of those specifically than any increase in margins on our existing Building works and we expect that mix to continue to add to our basic margins as we get more and more Civil work and obviously for example, the casino and hotel market takes some time to come back.

Great. But within the actual Buildings segment that piece -- as McCarran becomes a bigger piece of it, should it --?

You are right. As McCarran becomes a bigger piece of the backlog, it's at a much higher margin, which of course will then drive the overall Building margins up.

And do you think we could start to see that next quarter more meaningfully?

So, I think the second quarter will be a significant revenue increase at McCarran. McCarran is framing the steel for the building. The steel will complete erection probably in the third quarter and with it you will begin to see a dramatic increase in revenue and of course with an increase in revenue, margin goes with it.

Okay. And on the Civil side, were there any special incentives that you had in the quarter driving the margin there? I am just trying to get a sense of what the normalized range of margins might be for that segment?

Well, without giving specifics, because it's not that simple. I think I've said in the past number of conference calls that our Civil works averages at Tutor-Saliba are multiples of our Building averages and we expect to continue to earn in the Civil sector multiples of what we traditionally earned in the Building business, just by very nature of the difference between negotiated Building work and hard money public works in the government sector.

Okay. Related to the healthcare and --

Let me add one statement that I believe I did once before in the matter of our public record in the merger of Tutor-Saliba and Perini. Tutor-Saliba averaged over a period of 10 years and $4 billion -- excuse me $3.5 billion of Civil works, approximately 16% gross margins. Over that long of a period and that volume of work, we seen no reason we can't bring that level of margin into the merged businesses, where in fact Tutor-Saliba is running and our people are running the Civil work. So, when you compare that mix with the kinds of margins you are used to seeing in the Building sector, you will understand what I mean by significant increases in margin.

And that -- would that be on the same reported basis in terms of how SG&A is included?

You mean from an operating income level you mean or --?

Yeah, exactly.

Yeah, I think it will follow scale Steve with that performance. Of course we'll see the revenue growth and that will bring with it a better spread of G&A across that revenue.

Okay. Just lastly, in terms of the healthcare and education projects that are pending awards, what's the funding source there and is the funding already in place?

We don't -- we are not really able to get into that discussion. Steve, we -- our clients really prefer us not to talk about it. But I will say that there are some financing contingencies that they need to workout, some of them are just pure economic driven and not necessarily tied to a credit -- specific credit need. So, I mean I think it's fair to say that we have some of that. Most of that work is in California with good clients, clients that we've had for many, many years, so we expect it to go.

Okay. I'll follow-up, thanks a lot.

(Operator Instructions). And the next question comes from the line of Avi Fisher with BMO Capital Markets. Please proceed.

Hi, thanks for taking my questions. Just getting back to one of the questions earlier when you -- with your pending awards and you said that the limited inclusion of big Civil projects. Is it -- do I understand properly that most of those projects are kind of rip and read projects they don't really know until they are -- if they are pending until the contracts are open?

I'd say the majority are rip and read unfortunately or I don't know if the word unfortunately is the right term. Some of them are design build proposals where they literally sit on them for weeks and particularly in New York State as often times as months while they debate the various proposal. So, I would say, 70% are rip and read you know that day, and the other 30% depending on where it is can take anywhere from a month to as many as four or five months before they make adjustments.

You absolutely anticipated my next question which is, because I was curious why -- whether or not you were involved in any design build?

We are. A lot of the big Civil work I'd say at least a third to 40% of it goes to design build, so yes we are a large player in that.

Okay. That's what I was confused about. And then along with McCarran, you mentioned that 3Q the steel erection will be complete at McCarran. Is that when you anticipate full ramp or are you at full ramp already?

We would say that we will be ramping -- we are ramping up dramatically in revenue right now as we speak and I think our monthly billings will increase even more significantly by September. When the steel is up, the metal deck is in, we concreted metal decks and we will begin to frame walls and exterior surfaces. It opens up 2,200,000 square foot building to probably 1000 to 1500 craftsmen.

Okay. And how long does that go for?

We think we're going to start -- we think we'll finish the job somewhere in the area of September of 2011.

Okay.

Which is ahead of the original schedule by some three to four months.

Okay. And then, I had kind of been anticipating or I have been anticipating sort of a transition with positive mix shift from the hospitality gaming or from the Building segment to more of the public Civil work. And my question is can you transfer some of the talent you have in the Building side to the Civil side or are those mutually exclusive businesses?

Absolutely. You hit right on it, because many of the same engineers that adjudicate shop drawings, request for information, many of the engineering staff are equally adept with drawings on the Civil side. It may have all of our civil managers and many of our major civil superintends, but all of our concrete structures that we've been so good at frankly in the Building business, those same concrete walls and columns and piers are involved in the building of freeways and bridges. So, we think a significant part of our, shall we say casino building operation, which will be reduced significantly, we will be able to use in a significant increase in our Civil groups. So, it's -- I think we can use a -- the majority of our people shall we say.

Has that been your experience at Tutor-Saliba where you've been able to transition them?

We do it all the time. If you are a very good concrete superintendent or a very good iron worker superintendent, you don't know much of the difference between a building and a freeway and a bridge, it's many of the same directions. So long as the appropriate supervision above is well versed in that type of work, you go out and just get it up. So, that's been my experience at Tutor for a lot of years and we expect that to continue in the new company.

Got you. And just switching gears a little bit, in terms of Guam, what kind of margins do you target for Guam? Would that be along the lines of the Building segment margin or the Civil segment or --?

Those low margins you are aware of in our Building sectors are only appropriate in the US Building market. Our Guam revenues -- our Guam margins are again a multiple of what we enjoy here in the US Building market.

But -- I can't imagine they will be similar to the overhead structure work given the relative safety of Guam?

Well, no, Guam -- but you have to understand the differences. In Guam, our operation has always been so self-contained unlike any builder in the US. We have a very large facility and we literally do 100% of the work ourself, not only the electrical and mechanical, we put the roof on, we put the dry wall up, the insulation, we put the plumbing and toilets in. So, when you are in Guam, there is no sub-contract community. There are no unions to call for men. You have to have a totally self-contained workforce and as a result we are entitled to more margin and we've been there now 14 years and black 50 years. That market demands a higher margin and we've always got it. I see no reason that should change.

Okay. In terms of your bookings and buildings, how much of that was scope addition and how much of that was new work?

I think most of it was new work, there wasn't really much of a --

If anything we've had some reduced scope at MGM, I really can't think --

Yeah, that --

I really can't think of anything up or down of any kind.

I think there were pluses and minuses on them.

That was exactly what my next question was, were there any canceled backlog in any of the segments?

No, not in this quarter, nothing that wasn't from old quarters.

What about Keating? When you did the press release it said it had $860 million of backlog, now it has $475, what's the -- did you churn off $400 or --?

Yes, I will be with that. We decided that there was some financing contingencies on some of their hospitality work and we decided not to include it in our normal reported backlog. So that's really explains the difference.

So they kind of reported backlog a little more aggressively than you do?

If you looked at it when we initially closed the deal and then what we got more into it when we re-brought them in and obviously after we closed the deal we decided that it was more prudent to show a lower number and that's what we did.

Were there any other areas on the P&L where you saw that?

No.

Okay. Just on the back?

It's just a judgment call on existing contracts wherein they are in discussions with financing, but nothing is concrete and we thought the right thing to do until we were more satisfied that it would be financed to pull it out of the backlog.

Okay. I have tapped out my list of questions. Thank you very much for your time.

Thank you.

Ann, any more questions?

Hello.

Okay. We will ask for our operator to come back on.

Is anyone there?

Sorry, one moment.

Earth to Ann.

And Ann is here, I am sorry. And our last question comes from as a follow-up question from the line of John Rogers with D. A. Davidson. Please proceed.

Hi, thanks. Yeah, we are still here.

I thought we lost everybody.

In terms of the consolidation and the cost savings associated with that. What are you targeting there?

You mean in dollars?

Yeah. I mean your run rate for corporate, it looks like it was about $9 million outside of the segments and I am just trying to get a sense of how much cost savings by consolidating the headquarters?

Let me put it like this -- skip we -- I believe -- this is Ron Tutor. Our cost savings because that as you realize as we reduce staff and issue severance and packages, I think Ken's statement of fourth quarter you will begin to see the significant aspect of this integration. There is no question in my mind I'd like to see $10 million a year in G&A savings.

Okay.

That's across all segments.

Yeah, for the company in total.

Okay. And the cost, I mean you mentioned severance and just direct consolidation costs that you are experiencing now and it sounds like you will see those in the second and third quarter?

Yeah, we actually booked some in the first quarter.

Okay.

So -- but, we got that in hand and that's baked into our estimates.

Okay. And just, I mean scale of that?

Scale of one-time costs?

Yeah.

Probably about $2 million or a little under $2 million.

Over the three quarters or in the first quarter?

In total. Well, the first quarter was just under 2 most of that's in there, so I think it will start to trail off from there. But we don't expect it to grow significantly.

Okay. Great. Thank you.

And that concludes our question-and-answer session for today. I would now like to turn the call back over to Mr. Ken Burk for closing remarks.

I don't have any closing remarks, but thank you for joining the call.

Thank you everybody.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a great day.