Tutor Perini Corp (TPC) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter Tutor Perini earnings conference call. My name is Jeremy and I'll be your operator for today.

(Operator Instructions).

I would now like to turn the conference over to Mr. Kenneth Burk, Executive Vice President and CFO. Please proceed, sir.

Good afternoon, everyone. Thanks for joining us on our second quarter 2011 conference call. With us today is Ronald Tutor, our Chairman and CEO and Robert Band, our President.

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 risks and uncertainties are discussed in detail in our filings with the SEC, including Tutor Perini's annual report on form 10-K for the fiscal year ended December 31, 2010, our definitive proxy statement filed on April 15, 2011 as well as in today's news release. Our statements on this call are made as of today, August 4, 2011, 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 our Chairman and CEO, Ron Tutor.

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

We ended the quarter with a backlog of $5 billion. However, on July 1, with the GreenStar and Lunda acquisitions it provided an additional $1.6 billion on July 1, bringing our current backlog to $6.6 billion.

During the second quarter we converted a number of pending awards in the backlog across all of our business segments. We continue to increase the mix of civil projects in our backlog, which is currently at 38%. Our building group is 55% of backlog and the balance, of course, in management services.

New contract award and adjustments to contracts in process during the second quarter added approximately $1.6 billion to backlog, including $775 million obtained through the acquisitions of Anderson and Frontier-Kemper.

Major awards during the quarter included a $147 million railway substation and structures in New York, an $86 million highway improvement project in Delaware, a $76 million courthouse in Philadelphia, a $73 million aircraft parking apron at Anderson Air Force Base in Guam, a $54 million award for the I-95 interchange in Baltimore and a $40 million building on the campus of Mississippi State University.

Currently, we have approximately $1.9 billion in pending awards consisting of $600 million of civil power projects, $435 million in hospitality and gaming, $285 million in education, $142 million in industrial projects, $109 million in healthcare, $103 million in office, $85 million in highways, $80 million for entertainment and $47 million in mining projects. That was a handful.

These awards are expected to enter our backlog over the next few quarters. Power projects continue to be held up by permitting delays, which hopefully will be resolved by the fourth quarter.

As for our most recent acquisitions, Lunda is in the absolute top tier of heavy civil contractors engaged in the construction, rehabilitation and maintenance of bridges, railroads and other civil structures, primarily in the Midwest and secondarily throughout most of the United States. Based in Wisconsin, Lunda supports our strategy to expand our civil construction capability regionally while broadening our presence in the Midwest.

GreenStar, through its subsidiaries, Five Star Electric and WDF, is one of New York's largest providers of electrical and mechanical services and systems. GreenStar has served a range of clients in a variety of markets, including transportation, infrastructure, commercial schools, and university residential and specialty construction.

With the closing of these acquisitions we've basically completed the execution of our major acquisition strategy. The combined Company at Tutor Perini Corporation is even more diversified and regionally situated in our end markets, with an expanded geographic reach and enhanced capabilities within those markets to self-perform more work for our customers.

For example, our specialty contractors group, which we expect will generate approximately $1 billion of annual revenues and operating margins of 6% to 8% have given us significantly more electrical and mechanical expertise and presence in New York, which right now is one of the strongest markets in America.

Structurally, we are pleased with the balance of our organization and believe we continue to be poised for further growth as the economy improves. The acquisitions completed over the last nine months are expected to be accretive this year and add an estimated $1.05 to $1.15 of earnings per share in fiscal 2012.

As we look ahead to the second half of 2011 we plan to focus on the integration of our newly acquired companies, allowing us to fully capitalize on opportunities as they arise in the market. We estimate the size of prospective opportunities in our civil infrastructure market at $14 billion that we'll be bidding over the next 12 months.

We believe that certain of those larger civil projects will be public-private partnerships that support state and local agencies with attractive financing alternatives, that are to be used in accelerating the bid process where so many of our agencies are desperately short of capital. We have identified a strategic partner for sponsoring P3 projects and expect to officially launch our entry into that business in the first quarter next year.

In the nonresidential building markets we see sporadic improvement. There are two large private building programs, each in excess of $1 billion in estimated value, that we believe could be awarded by year-end. Including these mega-project opportunities we have specifically identified and are tracking approximately $19 billion in projects that could lead to proposals within the next 12 months. Those projects are split 50-50 between private and public.

Now I would like Bob Band to share more details of management services.

Thanks, Ron. In the management services group we continue to focus on a number of US government ID/IQ contracts already awarded, including programs for the US Navy, MACC work on Guam, the $4 billion program for the relocation of US Marines to Okinawa -- from Okinawa to that island.

Also the US Coast Guard Department of Homeland Security covering work for those agencies, including FEMA, the US Department of State worldwide construction project for containerized housing and offices, and the vertical structures contract for the USAID -- that is US Agency for International Development in Afghanistan.

In addition, we were named as one of the 14 CENTCOM MATOC contractors for the US Central Command, a $3.8 billion program over the five-year period. These five newer programs add significant opportunities when combined with our existing ID/IQ contracts, including SATARK and HERC, for the US Air Force and the MACC contract awarded in late 2009 by the US Fish and Wildlife Service, all of which provide us with substantial new work opportunities in 2011 and '12 and beyond.

We estimate the size of prospective opportunities and our management services group target market to be in excess of more than $2 billion for projects that could be bid over the next 12 months.

The $108 million task order under the US Department of State for containerized housing and office facilities in southern Iraq is achieving good progress at the moment and the $73 million task order under the US Navy MACC for an aircraft parking apron at Anderson Air Force Base is well under way. To date we have been awarded one-third of the total task orders awarded and 40% of the value of awards made under the US Navy MACC on Guam. As that program ramps up it is our expectation we will receive substantial work matching our capability on the island.

We are currently awaiting good results on a portion of the Japanese-funded Mamizu MACC and we expect to win our fair share of the work under that program as well. The overall relocation program on Guam will most likely extend through 2018.

In Haiti, good news. Last week we received notification of award for a $13 million electrical substation project by the US Agency for International Development. We continue to closely monitor relief-related projects with USAID and the nongovernmental organizations which have now begun to bid. We anticipate increased activity in Haiti and other locations in the balance of the year and next year as well.

Now Ken will give you the financial details for the quarter.

Thank you, Bob.

Our net income was $19.7 million for the second quarter, as compared to net income of $32.7 million for the second quarter of 2010. Diluted EPS was $0.41 for the quarter as compared to $0.66 for the second quarter of 2010.

The breakdown of our $5 billion backlog by business group at June 30, 2011 is as follows. Building, 2.7 billion, civil, $1.9 billion and management services $317 million. This backlog breakdown does not include the $1.6 billion added through acquisitions that Ron mentioned earlier.

Revenues for the quarter were $819.9 million, a 10.3% decrease from $914.4 million reported in the second quarter a year ago. On a reportable segment basis, revenues from our building group were $600 million, a decrease of 9.5% from $663 million in the second quarter of '10. The decrease is primarily related to the substantial completion of large hospitality and gaming, and public works projects.

Revenues from our civil group were $141.5 million, a decrease of 28% from $197 million reported in the second quarter of 2010. The decrease is primarily due to the substantial completion of projects in the metropolitan New York area.

Management services revenues were $78.4 million, an increase of 45.7% from $53.8 million reported in the second quarter of 2010. The increase is due to the startup of the task order contract for containerized housing in southern Iraq.

Our total gross profit was $87.2 million, a decrease of 11.8% from $98.9 million in the second quarter of '10. The decrease was due primarily to the reduced revenue volume I mentioned earlier.

Overall, gross profit margins were comparable at 10.6% versus 10.8% in the second quarter a year ago. G&A expenses were $50.2 million, up from $43.1 million in the second quarter of 2010. The increase reflects one-time acquisition-related expenses and includes companies that were acquired that were not included in the second quarter of 2010 in the G&A. As we integrate the acquired companies we expect to achieve overhead efficiencies across the organization.

We had income from construction operations of $37 million in the second quarter compared to $55.9 million in the second quarter of '10. Operating margins decreased from 6.1% to 4.5%.

Breaking down income from construction operations by group, our building group income was $24.9 million in the second quarter, a 16.2% decrease from $29.7 million a year ago. This decrease was primarily due to the revenue I mentioned earlier.

Operating margins were 4.2% for the quarter, compared to 4.5% a year ago. For our civil group, income from operations was $15.3 million in the quarter, a 48.5% decrease from $29.7 million in the second quarter of '10. Operating margins were 10.8% for the quarter, compared to 15% in the second quarter of '10. The decrease is related to performance-related incentive payments we received last year on projects in New York.

Management services income from construction operations was $6.5 million in the depression, a decrease of 5.8% from $6.9 million in the second quarter of 2010. Operating margins were 8.3% for the quarter compared to 12.7% in the second quarter a year ago. This decrease is due to the favorable performance that we experienced last year on US government facilities in Iraq.

Other income and expense was $1.2 million in the quarter compared to other expense of $1.1 million in the second quarter of 2010, due primarily to a gain on the sale of one of our properties in 2011.

Interest expense increased to $7.3 million in the quarter from $3.2 million in the second quarter last year. This was due to the interest expense resulting from our $300 million senior unsecured notes that we issued in October of last year.

The provision for income taxes was $11.3 million compared to $18.8 million in the second quarter of '10. Our effective tax rate was 36.5% for both the second quarter of '10 and '11.

Looking at our balance sheet, at June 30 our working capital stood at $699.4 million, up $106.5 million from $592.9 million at December 31, 2010. The increase in working capital primarily relates to $200 million of cash we drew on a revolving credit facility in anticipation of the acquisitions which were closed on July 1, 2011, less the amounts we used in the acquisitions of Fisk, Anderson and Frontier-Kemper during the first half of 2011. The current ratio increased from 1.61 to 1 as of the end of the year of '10, to 1.66 to 1 at June 30, 2011.

As of June 30, 2011, we had $421 million in cash and equivalents compared to $471.4 million at December 31, 2010. The decrease in our cash balance during the first half of the year is primarily due to the acquisitions of Fisk, Anderson and Frontier-Kemper and the funding of operating activities.

During the quarter we used $39.7 million of cash to fund operating activities, primarily due to payment for estimated taxes and bond interest as well as the completion of certain large projects in our building group, which were offset by positive cash flow from the civil and management services groups.

At June 30, long-term debt, excluding the current portion, stood at $606 million, which is an increase of $231.6 million from the beginning of the year. This was as a result of borrowings under our credit facilities for the acquisitions of Lunda and GreenStar on July 1, 2011.

On August 3 we amended our existing credit facility, increasing the revolving credit facility by $40 million to $300 million and adding a $200 million term loan to finance recent acquisitions. Our amended credit facility matures in August 2016.

At this time we are reducing the guidance range we previously provided for 2011 to reflect the current economic conditions resulting from reduced levels of anticipated new work acquired during the first half of 2011. Revenues are now estimated to be in the range of $3.6 billion to $3.9 billion and diluted earnings per share are estimated to be in the range of $2.00 to $2.20 per share.

The ranges reflect our current view of new work prospects that could enter our backlog and be converted to revenue and profits this year, as well as what we estimate in terms of revenues and earnings from the acquisitions that we recently completed. We expect our tax rate to remain the same at 36.5% for 2011.

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

As we conclude the first half of 2011, I would state that essentially what we have done is conclude our acquisition program that diversified not only our building base into the south but our civil works into a very strong position in the Midwest as well as developing our commitment to the tunnel business and significantly increasing our specialty contracting.

I believe that essentially puts into place all the strategic acquisitions in this marketplace that we contemplated, together with very positive financing that we accomplished with both our banks and the bonds we floated. They will have some effect, obviously, on the balance of the year, but we expect them, as stated earlier, with their accretive earnings, to have quite the impact on 2012. I believe where we want to be in the marketplace that we work in will now have to pick up the rest.

That concludes our prepared remarks. We'll take questions.

(Operator Instructions). Our first question comes from Steven Fisher with UBS. Please proceed.

Hi, good afternoon. Can you hear me okay?

Yes, we can, Steve.

Great. Ken, just want to clarify -- did you say that to hit the ramp-up of the earnings, to hit the guidance in the second half you only need the benefit of the acquisitions and what you have in backlog, that you're not basically counting on a lot of new awards for the second half of the year? Did I hear that correctly?

We certainly need some level of new work to contribute, but it's certainly less than what it was in the previous quarter.

Okay. I guess are you counting on a significant number of those pending awards to hit in the second half?

Well, as we mentioned, we're expecting those to be awarded and I would say that very little of that would be expected to generate revenue and profits in the second half of the year.

It's already August 3, and if they were awarded next week and mobilized by October 1, as you can see there's not much that can be contributed this year. It's really a limited amount this year and most significantly the impact would be on 2000 as well.

He was on a cell phone.

Hello?

Go ahead and go with the next caller, then, or next question.

Our next question comes from John Rogers with D.A. Davidson. Please proceed.

Hi, good afternoon.

Hi, John.

First thing, in terms of the growth that you mentioned or the contribution from the acquisitions in 2012, are you assuming that your core business or your continuing business grows next year?

We believe that our business -- we believe we hit a lull in 2011. We believe we can grow our present business in 2012. The acquisitions will simply increase that earnings.

In terms of the specialty contracting that you now have. Are you going to provide us with -- or report that as a separate segment, or it will be included in the buildings or spread between civil and building?

I think we'll report that as a separate segment, because it really doesn't belong in either. It goes across from both civil to building. Right now it's my intent to report it as a separate segment.

Okay, just because the margins are -- it's a different margin profile.

Absolutely.

Okay. Is there any significant backlog as of June 30 in that group?

Well, we have --

Fisk-Electric.

Oh, right, sorry.

We have Fisk-Electric, we have Desert Mechanical, we have the other smaller ones, but we have some backlog in the business.

Majority of the backlog came from the Five Star acquisition, which is upwards of $1 billion.

Okay. Ron, I have to ask -- given where the stock is trading now, does it change the amount of stock that you're considering selling the number of shares?

Well, I said before, I guess I can repeat it again -- I hated every sale of stock I've made since the first one. I have one more that I have to make over the next 30 days to satisfy a final agreement. After that, I don't intend to sell any stock at these ridiculous numbers.

Okay.

It's like cutting off fingers every time I sell at these prices.

Okay. I hated to ask, but -- thank you.

All right. I always get asked and I always issue the same statement.

Thank you.

Our next question comes from Richard Paget with WJB Capital. Please proceed.

Good afternoon, guys.

Hey, Richard.

Maybe this question is for Bob, and Bob, you outlined a lot of opportunity in the MS segment. Any change in that outlook, given this debate over the debt ceiling? I know it's kind of early of what that program's going to mean, but there has been talk of -- and I think you alluded to it -- that Guam's going to stretch out longer.

I've read some portions of it where they were thinking of really scaling that program back. Could you comment on that and then any other thoughts on some of your federally funded based businesses, how those are --

Well, first of all, on Guam, we don't see any sign that that whole program will be scaled back. Yes, it's taking longer and it will stretch some, and that stretch really works to our advantage.

We've had a 50-year presence on the island and all of the Johnny-come-latelies are struggling with the expense of trying to maintain a presence. So we think that bodes well for us over the long term.

As far as the other programs that we're involved in, very healthy programs. They all have specific purposes that continue to be overhead cover opportunities, albeit for the State Department. There continue to be programs in Afghanistan under USAID. One multi-year program there's only two contractors involved, us and one other competitor.

So no, I see a robust program ahead. Am I concerned about budget-cutting and whatnot? Not too much. That'll be spread around so much I'm really not sure where the effect will be.

All right. Then, Ken, just to make sure for modeling purposes, I note that at the end of the quarter you had about $605 million in debt and then a $200 million post-quarter close, the term loan. What's the interest rate on that?

Well, the interest rate's in the 3% range for the term loan.

Did you have to draw much on the revolver?

What was that, Richard?

Did you have to draw much on the revolver, or that $200 million covered what you needed?

No, the $200 million was drawn just ahead of closing so we could fund on July 1. Then subsequent, as you know, we put the term loan in place, which basically goes to pay back the revolver -- pay the revolver back off. So we restored, essentially, all of our working capital facilities.

Our revolver is back intact, is what that translates to.

All right, thanks. I'll get back in queue.

Our next question comes from Avi Fisher with BMO Capital Markets. Please proceed.

Hi, good afternoon. Just trying to drill down into the proforma balance sheet. Could you disclose what sort of cash and total debt was after the Lunda and GreenStar close?

You say the total cash?

Yes, cash and total debt after the close of the -- as of July 1, after the deals closed.

Yes, well, what you saw was we entered into the two transactions. The transactions combined for Lunda and GreenStar were about $320 million, and then if you net against the cash it's about $284 million. And then we mentioned -- and then the total debt component was $200 million that we added.

That's the $600 million as of June 30.

That's basically right, because we had the revolver, and then that was paid back with the term facility.

Okay, so the debt after the close of the deal was the same as it was at the close of the --

That's correct.

Yes, it was funded on June 30, and even though it closed in July that's the money that was borrowed to close them.

Okay, and I just apologize -- is the cash at the close of the quarter, are the cash after the deals closed the same as cash at the end of the quarter?

No, we paid the $200 million out.

Got you, okay, so less $200 million. Okay. City Center receivables -- I wonder if you could provide us an update on that.

Stuck in the Supreme Court still. The Nevada Supreme Court has been looking at the issue of MGM's attorneys being terminated by the judge, and they've managed to take a three-week -- or what should be a relatively short decision and it's been going for six months so that it's completely stopped.

There's really nothing happening other than the total debt has been paid down to somewhere in the neighborhood of $228 million, including our debt and a handful of subs that remain to be settled. None of the trial or discovery will commence again until the Supreme Court finally renders a decision as to whether MGM's lawyers can come back on the case.

Got you, so it's still ongoing. We'll ask you about it next quarter, then.

Yes, it'll still be ongoing.

Civil margins were within the 10% to 12% target, but they were a little weaker than I expected, given the usual 2Q, 3Q ramp in project burn. Was there any negative impact from rising commodity costs, and how our commodity costs impacting the P&L?

No, we have not had any problems with rising commodities because the only real commodities that impact us would be limited to concrete, asphalt, copper and what was the other -- fuel.

The way we bid work, we bid and try to anticipate in a conservative matter what the worst-case scenario is, and we just simply have not been impacted by any conditions that exceeded it by any degree, so candidly, over all the years, commodity prices have never hurt us dramatically because we try to anticipate the worst and include it.

Got you. John asked about this for next year, but what about for this year -- in the $2.00 to $2.20 guidance, how much of that is organic?

Mm, well, if you assume basically the run rate of the $1.05 and the $1.15, you can basically get back to an organic number that way.

Okay, so think about half of that. Also, you talked about the operating cash flow of $39.7 million use.

Yes.

Was that for six months or for the quarter?

That was for the quarter.

Finally, since you've disclosed this in the past, can you talk about backlog by end market, if you have it?

Yes, we have that. No, that's the cut by company. Hang on.

We don't do it by end market, we do it --

Yes, we have it, though.

Do you?

Yes, we can provide it. Avi, I'm just going to give you the broader -- in the building business, hospitality and gaming, 5%, transportation buildings 3%, healthcare 13% --

I have percentage of the total. He has the --

Right, I got it.

Let me just give you -- municipal and government courthouses, 19%, industrial, 7% and then other, just going to give you high level. Highways, 18%, mass transit, 7% -- hold on -- and bridges and wastewater, 13%, and then management services is all government at 7%.

All right, thank you for the details.

It's a high level and those, as you know, do not include Lunda's backlog, which is $400 million, and that would be all civil, which is predominately bridges and highway structures. And then of course GreenStar, which is $1.2 billion of backlog. That would be added to the overall backlog number.

Will you at some point publish some numbers on this new segment, the specialty contractors?

As Ron mentioned, we are evaluating the specialty group and evaluating establishing a new reporting segment. That analysis will be completed in the third quarter.

Okay. I appreciate the details and look forward to more later. Thank you.

Our next question comes from Philip Volpicelli with Deutsche Bank. Please proceed.

Hello. Sorry about that. I'm just wondering if there's any amortization associated with the new term loan.

Yes, it's a five-year amortization. I think the first year is 15% and then it progresses up. I think it ends up about 22.5%, but it's fairly level through the five-year amortization period.

Okay. Then the newly acquired businesses, should we assume that those are at greater margins than the core business, or how should we assume they will play out?

Well, both Lunda and -- excuse me, I want to say Five Star when I mean GreenStar -- they're both at higher margins. Lunda would be on a par with our high margins in the civil business because that's from whence they come. And GreenStar would be on a par with our specialty businesses, in both cases higher than our average margins, more toward the high end than the mid-end. I think that's more in the 6% to 8% range we talked about with GreenStar.

Great -- thank you very much.

Our next question comes from Kenneth Williamson with JPMorgan. Please proceed.

Hi, guys, thanks for taking my call.

Sure.

A couple of my questions were already answered, but I did have another follow-up on the Anderson Air Force Base work. I think there was a $73 million award in the quarter, but can you comment on what the total backlog is tied to that expansion project?

$73 million was the Anderson contract.

So just the one runway expansion project is the only project tied to that base?

No, you asked what Anderson was. That's what it is.

But if you're asking if there's more work around that base, I think the probability is high that there will be more work in the future.

Of course.

Okay, but today the awards for the transfer from Okinawa to Guam that you guys have put in the backlog is $73 million.

That's the only award that we currently have that's tied to that move. However, you should know that they have awarded and started construction on the hospital at $160 million, and a wharf at $90 million. So there are other major projects ongoing that are all part of that move from Okinawa to Guam.

Okay.

I think what you're really looking at is these funding issues with the government, they drag out that program, but it won't cut it back. It really can't. It's like once you start the foundations and the frame of a house, you have to finish it even if you take longer.

Okay, great. Then you made some comments about the City Center receivable. I think you said $228 million was the total, but that's not entirely Tutor Perini. Can you just break out --

No, over $100 million of that is the remaining subcontracts.

Okay. Great, that's all I had. Thanks.

Our next question comes from Steven Fisher with UBS. Please proceed.

Did you die, Steven?

He's on a cell phone. Maybe he'll go back in.

Hello?

Go to the next one.

Our next question comes from John Rodgers with D.A. Davidson. Please proceed.

Hi, thanks. I just wanted to follow up on -- you mentioned two large building projects that you were bidding on -- I think $1 billion or more each. Can you give us any more color on what those -- I assume they're not hospitality, but anything --

They're not hospitality and we're not bidding. They are proposals, both ongoing with existing customers that we hope to bring to a close by the fourth quarter. No guarantees, but we believe we have an excellent chance.

Okay. Then also on the power plant project that you mentioned, I think it was $600 million that's pending out there, but I think you said it was delayed or being held up?

It's delayed in permits and agreements between the owner of the power plant and the local utility, and it's not moving forward until those are consummated.

Okay, and what type of power plant is this?

Geothermal.

Okay, okay. Thank you.

We now have Steven Fisher on the line again.

Hi, sorry about that before. Bad cell spot. In the civil business over the last couple of years you've had several occasions where you've been able to generate margins in the mid-teens. I'm wondering if at this point you have any visibility to getting back to those levels, either this year or in the first half of 2012?

I don't think that's going to take place this year because as I said, we're already in August and any changes will not dramatically affect this year. I think there are certain price pressures in the civil business, but I believe that where we are is relatively close to the year prior, and I think we have an opportunity to increase our margins in 2012. Whether we can get back to 2010 levels remains to be seen.

Okay, great, thanks a lot.

(Operator Instructions).

Our next question comes from Peter Ehret with Invesco. Please proceed.

Hi. Just a question -- you mentioned these public-private partnerships and maybe more to come on that next year. Could you just elaborate on that, and perhaps more specifically, do you envision using your balance sheet or your creditworthiness in any way?

No. What we spoke to in our presentation was the fact that we are in the final stages, hopefully, and believe we'll accomplish it by the first quarter next year, is with a very strong strategic partner, develop a P3 finance company that essentially funds the debt side of it, independent of Tutor Perini, where in we and our partner would be the design builder and contractor, and also own a stake in the infrastructure company.

But so as to be certain that it can't be consolidated with any level of debt that it generates with our balance sheet, it will be kept separate and our investment will be shown strictly as a capital investment in another company. It will not be in any way attached to or be a part of Tutor Perini other than as an investment by the Company with no contingent liabilities.

We will not guarantee debt, we will not do anything like that. What we bring to that group is our capacity, ability and strategic presence to get these jobs. They will have the opportunity to finance them to the benefit of those partners, of which we will be one, and I might add one of the smaller partners.

Okay, good. Thanks.

At this time there are no questions queued. I'd like to hand it back to Ron Tutor.

Thank you. That was a call that we enjoyed enlightening you on where we are currently, as we get through 2011. I think you see pretty much the end of our acquisition strategy, where from our perspective we've infilled what we consider to be the needs of our strategy moving forward.

Now it's incumbent upon us to integrate those companies and execute in what remains of 2011 with specific reference to 2012. We think that will be where we'll bear out the direction of the company and all of the acquisitions.

Aside from that, thank you for your participation.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.