Tutor Perini Corp (TPC) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 Tutor Perini Corporation Earnings Conference Call. My name is Regina and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will be conducting a question-and-answer session. (Operator Instructions). Today's event is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Michael Kershaw, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Okay. Good afternoon, everyone. Thank you for joining us on today's call. With us today is Ronald Tutor, our 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 provisions 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 a 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 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, November 3, 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 over the call to our Chairman and CEO, Mr. Ron Tutor.

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

This quarter we formed a Specialty Contractors Group, which is a new segment for Tutor Perini and a key part of our growth strategy as we have discussed numerous times in the past. This segment will continue to work for third parties as well as support our continuing and existing divisions and capabilities. We expect the Specialty Contractors Group to generate approximately $1 billion of annual revenues and operating margins consistently between 6% and 8% of revenue. This group has capabilities that include electrical, mechanical, and pneumatically-placed concrete.

During the quarter, we delivered the Resorts World project in New York at the Aqueduct Racetrack, a project in excess of $400 million that was completed in approximately 10 months. This extraordinarily accelerated pace of construction was extremely unusual given that it was in the greater New York area. This project is indicative of the ability of Tutor Perini in its two divisions to bring accelerated pace projects regardless of location, where timing is critical for the owner's benefit. We take great pride in that capacity.

We ended the quarter with a backlog of $6.4 billion. During the third quarter we converted a number of pending awards in the backlog across all our business segments. Currently our total backlog mix is 36% Civil Group, 38% Building Group, 20% Specialty Group, and the balance Management Services. New contract awards and adjustments to contracts and process during the third quarter added approximately $2.7 billion to backlog, of which $1.6 billion was obtained through the acquisitions of Lunda Construction and GreenStar.

Major awards during the quarter include a $143 million highway project in Baltimore, a $93 million office building in Foster City California, a $70 million campus building at Drexel University in Philadelphia, a $68 million casino project, a $60 million overheads coverage project in Iraq, a $50 million office building in Sunnyvale, California, and a $49 million high school in Orlando, Florida.

Currently we have $2.2 billion in pending awards, including $600 million in power, $515 million in hospitality and gaming, $469 million in education, $351 million in highways and transportation, and $121 million in healthcare. These awards are expected and in our backlog over the next few quarters.

The pipeline of work is the most robust we have seen in the recent past. We estimate the size of our prospective opportunities in our civil infrastructure markets to be in excess of $10 billion for projects that could bid over the next 12 months in mass transit, bridges, highways, and other civil work. Some of those larger civil projects will focus in the public-private partnerships that support state and local agencies with attractive financing alternatives to be utilized in accelerating projects that are desperately needed.

In the non-residential building markets, we are continuing to see some improvement, there continue to be multiple large private building programs in excess of $1 billion each in estimating value that can be and will be awarded within the next year. Included in these mega opportunities, we have specifically identified and are tracking approximately $19 billion in projects that should either award or negotiate to conclusion in the next 12 months. These targeted projects are split 50-50 between private and public sectors.

In the specialty markets, we have currently identified in excess of $4 billion of targeted projects and are evaluating other additional opportunities with a particular emphasis to the continuing growth in the New York area. As I have discussed in the past, we have completed the execution of our major acquisition strategy. We still expect that the acquisitions completed over the last year will 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 final quarter of 2011 and into 2012, we will continue to conclude the integration of our newly acquired companies, allowing us once completed to fully capitalize on the opportunities in those markets. Our new business units are expanding their footprint through our existing businesses, utilizing their complementary services in the many areas of geographics that we occupy. As an example, this quarter our management service group began utilizing one of our specialty contractors namely Fisk-Electric out of Houston, Texas tunnel project that we currently have in Haiti.

In addition, two of our specialty contractors are scheduled to perform work for our civil group on a contract in the Pacific Northwest where here to for they had not previously worked. This is opening up new opportunities for our acquisitions, enabling them to leverage Tutor Perini's geographic presence and expertise to gain market share.

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

Thanks, Ron. In the management services group, we continue to focus on a number of US government ID/IQ contracts, including programs for the US Navy, Multiple Award Contract work on Guam, the $4 billion program for the relocation of US Marines from Okinawa to that island, the US Coast Guard Department of Homeland Security covering work for those agencies, and FEMA, and ICE, the US Department of State worldwide construction project contracting for containerized housing and offices in Iraq and other locations around the world, the vertical structures contract for USAID in Afghanistan and the Central Commands MATOC program, a $3 billion program over five years. These five newer programs add significant opportunities when combined with our existing ID/IQ contracts, including SATARK and HERC contracts for the US Air Force and the MACC awarded in late 2009 by the US Fish and Wildlife Service Department of the Interior, all of which should provide us with substantial new work in 2012 and beyond.

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

The $108 million task order under the US Department of State containerized housing and office contract in southern Iraq is achieving good progress as we speak, and the $73 million task order contract under the Navy MACC on Guam for an aircraft parking apron at Anderson Air Force Base is well underway. As that program in Guam ramps up, it is our expectation that we will receive substantial work matching our capacity on the island.

In Haiti, we have been awarded a $12.7 million electrification project by USAID. In Iraq, we have recently been awarded a $60 million overhead cover project by the US Army Corps of Engineers. We anticipate increased activity in Haiti, the Middle East, North Africa or in Guam, all consistent with strategic directions of the US Government.

Now, Mike will give you the financial details for the quarter.

Thank you, Bob. Revenue for the quarter was $1.2 billion, a 59% increase from $732 million reported in the third quarter a year ago. Our third quarter growth is primarily driven by recent acquisitions. Our total gross profit was $120 million, an increase of 32% from $91 million in the third quarter of 2010. Overall, gross profit margin decreased from 12.4% in the third quarter of 2010 to 10.3%.

General and administrative expenses were $58 million, up from $41 million in the third quarter of 2010. The increase reflects companies acquired that were not included in the third quarter of 2010. We had income from construction operations of $62 million, a 24% increase from $50 million in the third quarter of 2010.

Operating margins decreased from 6.8% to 5.3%. Our resulting net income was $35.5 million, a 15% increase from $30.9 million in the third quarter of 2010. Diluted earnings per share was $0.74 as compared to $0.65 for the third quarter of 2010.

Intangible amortization and other one-time items related to recent acquisitions resulted in a year-to-date expense of $2.1 million.

As a result of the formation of the Specialty Contractors Group, reportable segments for results of 2010 have been recast to reflect comparative prior period information. Revenues from our building group were $568 million, an increase of 11% from $511 million in the third quarter of 2010. The increase is primarily related to the acquisition of Anderson offset by a net decrease in volume.

Building group income from construction operations was $8.9 million, a 69% decrease from $28.5 million in the third quarter of 2010 as a result of the substantial completion of public works project in Las Vegas and Philadelphia.

Operating margins were 1.6 compared with 5.6 a year ago, primarily driven by the higher mix of public work projects in the third quarter of 2010, compared with the current period and the volume of private building work during the current quarter. Revenues from our civil group were $281 million, an increase of 64% from $171 million reported in the third quarter of 2010. The increase is primarily due to the acquisitions of Frontier-Kemper and Lunda.

Civil group income from construction operations was $23.8 million in the quarter, a 13% decrease from $27.3 million in the third quarter of 2010. Operating margins were 8.5% compared to 15.9% in the third quarter of 2010. This decrease is due primarily to favorable performance on projects in New York during the third quarter of 2010 and the timing of ramp up on projects in the Western US.

Revenues from our Specialty Contractors Group were $336 million and income from construction operations was 33.1, the majority of which was generated by the acquisitions of GreenStar and Fisk.

Operating margin of 9.9% for the quarter was a result of favorable performance on some of that New York area project. Revenues from management services were $86 million, an increase of 106% from $42 million reported in the third quarter of 2010. The increase is due to the ramp up of an Air Force base project in Maryland and the startup of a task order contract for containerized housing in southern Iraq.

Due to the change in volume discussed above, management services income from construction operations was $5.4 million, an increase of 86% from $2.9 million in the third quarter of 2010. Operating margins were 6.3% compared to 7.1%.

Interest expense increased to $11.6 million from $1.6 million in the third quarter of 2010 due primarily to interest expense recorded on our $300 million senior unsecured notes, $200 million term loan and borrowings under the revolving facility. The provision for income taxes was $20.9 million compared to $17.8 million in the third quarter of 2010. The effective tax rate was 37%, up from 36.5% for the third quarter of 2010. The increase is primarily due to a return to provision adjustment in the current quarter.

At this time, we are refining our guidance for 2011 revenues to an estimated range of $3.6 billion to $3.8 billion and diluted earnings to an estimated range of $2.00 to $2.10 per share.

Looking at our balance sheet at September 30, 2011, our working capital stood at $682 million, which includes $273 million in cash and cash equivalents, up $89 million from $593 million of working capital at December, which included $471 million in cash and cash equivalents. This increase in working capital primarily relates to working capital acquired from the recent acquisitions offset by cash used to complete those acquisitions. The current ratio decreased from 1.6 at December to 1.5.

During the third quarter of 2011, we used $36.5 million of cash to fund operating activities, primarily due to payments made for income taxes, interest and the timing of collections in the Specialty Contractors Group. At September 30, 2011, long-term debt stood at $759 million, which is an increase of $385 million from December.

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

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

Thanks, Mike. As we move into the fourth quarter of 2011, we have formed a new segment and significantly increased our geographic reach across the United States. We think we have further strengthened our platform that positions the company for continued growth in the future as we see the US economy beginning to recover. Project opportunities in our markets are robust and we are well positioned, located virtually in all sectors of the US, to capitalize on these opportunities with our diverse capabilities and geographic presence.

That concludes our prepared remarks. Bob, Mike and I will now take your questions.

(Operator Instructions). And gentlemen, your first question today comes from the line of Steven Fisher with UBS.

Hey, good afternoon. Did you say that the Building segment margins were 1.6% in the quarter, did I get that right?

That's correct.

That's correct.

I mean, is there something that was unusual in pushing that margin down or is that the reasonable run rate that we should consider going forward?

The reason it was down, because we mentioned that two major public workshops, Terminal 3 in Las Vegas and the convention facility, the Keating Building in Philadelphia, which were significant profit earners were completed. And that's the residue of a lot of private and negotiated work that for years has been under margin pressure. What has kept our margins up, as I've reiterated in the past is our commitment to hard money public works and basically low bid work.

So basically you're saying going forward, because you don't have these high margin projects, this should be the right margin going forward, is that what you are saying?

No. That's not what I said. I said you must differentiate between the significant public works that we just concluded with private negotiated work. We expect to continue to replace that, with the higher margins contained in public works. We are going to bid a $300 million courthouse next week in Fort Lauderdale, Florida. We bid a $300 million prison in Pennsylvania last week. We continue to bid those, but until we can replace $2 billion worth of public works that we built at very high margins, which concluded last quarter, those are the margins. They will be replaced. The mix will continue. But as of this moment, they were done.

Okay. So for the near-term until you replace those...

Correct.

We are probably looking at lower margins?

You're right.

Yes.

Okay. And then, wonder if I missed it, but did you give guidance for 2012?

No.

No.

No. Any particular reason for that, I know generally in the past, you have given at this time, although I think it was one exception over the last year or so perhaps that you put that out.

We are looking carefully at these acquisitions. We think we will be in a good position to give an accurate projection by sometime between the end of December and end of January. We've just made some very significant acquisitions and before we're ready to validate their projections, we're auditing, we want to be comfortable. And I think relatively shortly, we'll be able to give you that.

Okay. I mean, you reiterated the $1.05 to $1.15. So I'm wondering if anything has changed in your confidence in that number over the last few months. And do you feel more confident in your base business outlook relative to the acquisitions and...

We think the acquisitions, and we told you on the call, will add $1.05 to $1.15 to our baseline business. We think our baseline business will continue to strengthen and be as strong as ever next year. And I think again, I'll be able to give you a much clearer projection within roughly 60 days to 75 days.

Okay. Maybe just one last question here, just wondering at what point you think it makes sense to start paying down some of the debt that you have on the balance sheet?

Well, we have long-term bond debt and we don't look to pay that down for a period of years. Although we do -- I have thought about a program. But I'd say it's at least three years before we consider any reduction in bond debt. We have a window I believe that was four years after issuance, before we can pay it down with any penalty. I think our near-term goal will be to pay down the term loan. It's in a very desirable interest rate. We'll have to weigh the accumulation of cash against that. And of course, we went into debt really for the first time since I was CEO on any significant scale for the benefit of these acquisitions. We think frankly, our earnings after taxes will be such that our plan will be over the next three years to demonstrably reduce the debt.

Okay, thank you.

Your next question comes from the line of John Rogers with D.A. Davidson.

Hi, good afternoon.

Hey, John.

Hi, John.

Couple of just housekeeping items, first the total depreciation and amortization in the quarter was, how much?

For the quarter?

Yes.

Hold on a second. For the quarter, I think it was $9 million.

No, no, listen to the question. He said depreciation and amortization.

12.5.

12.5, great.

Steve, that includes depreciation, equipment.

And then, the other thing is the non-operating income in the quarter was up to almost $6 million, what was included in that?

As we were finalizing the purchase price adjustments and the booking on Frontier-Kemper, we ended up with a small bargain purchase gain as a result of all the negotiations that we did. It was a good deal.

Okay. Okay.

It's in our Q.

Okay.

When you see our Q.

All right. And then, relative to the acquisitions, can you give us an estimate or comment on what you think they've added so far this year or of the $2.00 to $2.10, how much of that is from the acquisitions?

The acquisitions to-date have added about $0.37.

Okay.

Year-to-date.

Okay, thank you. And then...

So it's Fisk, it has been in it all year, superior.

Right.

It staged over the year, John.

Okay. So for the full year, we are looking roughly about $0.50 or so?

$0.50 to $0.60.

Okay. And then, I think it was the last call, Ron, you had mentioned something about looking at getting involved with funding or entering into a partnership or something for some of these public-private partnerships.

Yes, I did. And that has been continuing. We hired a senior executive to manage that piece for me. I believe that by the time January comes along, we'll be able to give you a specific report and I am in hopes that during the first quarter next year it will have consummated into a fund.

Okay. And what would your theoretical role be within that fund, you would invest in the fund or use, have access partner with the fund or...?

We might invest 5% of the capital and of course, we won't run the fund, because that would be the classic conflict of interest. But the fund will be setup basically to support Tutor Perini and our partners' efforts in the P3 markets.

Okay. Okay.

In other words, it will be a strategic alliance between that fund, its principals and managers of which we will be a minority partner and the Tutor Perini ventures that are continuing to work on all of the P3 work we see coming forward.

Okay. And then, just lastly, Ron or Bob, in terms of Guam, where are we on that now?

They have awarded three major contracts unfortunately of which it appears we were second on all three; a $90 million pier renovation, $160 million hospital, and a $170 million site development. It's moving slower, but these are much bigger projects then Guam has ever seen, so there is no caution of the commitment of capital, but in our government's inevitable fashion they are behind every date they set. We are still awaiting the outcome of another $160 million proposal that we tendered and hopefully we can begin to transform from being second bidder to low.

Okay. And -- sorry last thing if I could. Is the Seattle Tunnel job, is that in backlog now the whole thing?

Yes. In fact -- in fact we've got our final notice to proceed in August and the contract is in full force and ongoing.

Okay, great. Thank you very much.

Sure, John.

Your next question comes from the line of Richard Paget with WJB Capital.

Good afternoon everyone.

Hi, Rich.

Good afternoon.

Hi. Just to piggyback off of John's Guam question. One of your competitors earlier today was talking about Guam and saying that they are looking to bid on about $300 million to $600 million over the next 12 months to 18 months. Does that number seem about right to you from what you are seeing right now?

It isn't wrong enough to comment whether it's $300 million or $600 million or $500 million. It's not as significant as we had hoped, but still significant by Guam standards.

Okay. So, the big rollout is still at least...?

Still backing up and we are still waiting.

Okay.

But it's still a lot better than where we've been.

Right. And then Ron you talked about prospects in the civil business at about $10 billion, now last call you had a level about $14 billion, so was there something that was re-categorized did some?

No, I just got a little more conservative. The truth of it is, it's probably more, but I got tired of throwing out these monstrosities. For example, we are preparing to prequalify on a $700 million bridge in Pennsylvania. God bless, the Tappan Zee Bridge it's now out to contractors for qualifications at $5 billion one bridge; we don't know whether they are going to break it up into three of four pieces, they are talking to the community about potential P3 for part none, so there is more big civil work really than we've ever seen. I frankly got tired of throwing out these gazillion dollar numbers.

All right, fair enough. And then with the low bid pending, the $600 million power project still being there, any update on that?

I am getting tired of waiting for an award. Let's just say that one way or the other it will be adjudicated by January.

Okay. And then finally, I know Ron you gave the percentage back down of -- break down of backlog, but Mike could you just give us the exact numbers of backlog per segment?

Yes, just a minute. For each segment we have in the building group $2.5 billion.

You don't even want to multiply the 6.4 times the percentages?

Well, I was hoping I could get exact numbers.

Exact, $2.482145 million for building, civil is $2.3 billion, specialty group is $1.3 billion, and management services is a little over $300 million and that -- I think that will be in our Q when that gets published tomorrow.

Okay. That's coming out tomorrow?

Yes.

All right, great. Thanks. That's all I got.

Okay.

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

Hi good afternoon.

Hi, Avi.

Hi Avi.

Quick question first. I haven't seen any sort of segment historical reconciliation, has that been made available yet?

No. It will be in our Q tomorrow, it -- we did do that so that we pushed things into the right specialty contract, moving out of building and -- mainly out of building.

Got you. And how far back will that go when it's in the Q?

That will show back to last year, September 2010.

Got you. Okay. Just...

Against this year and we will roll that forward as we go over in the next year.

Right, not having that makes the analysis obviously a little bit difficult.

Yes.

In terms of the acquired revenues, can you provide what the acquired revenues in each segment?

Yes. Hang on. Have you got any other questions maybe while I...?

Sure, I can keep them coming. The Aqueduct Racetrack, it sounds like that was a pretty rapid completion. Were there any one time benefits or completion awards associated with that?

No, there wasn't. It was the cost plus accelerated contract that Tutor Perini built through its Keating and Perini Building Company subsidiaries; it was vintage to Los Vegas, accelerated fast and opened on time.

Got you. So a little of Las Vegas and Queens.

Yes, sir.

You mentioned -- I think if I have picked up something on the operating cash flow or use of cash because of the timing of collection to specialty except contractor group and I wonder if you can talk a little bit about the cash flow dynamics of that group?

Yes, I mean, with specialty being a subcontractor they actually spend that money like payroll before they get paid. So it's really just the transition from them to us in this quarter then we would expect that to be fairly normalized as we go forward from one period to the next.

The only place that it's not normalized is New York City; it's a very different public atmosphere of which the GreenStar Group of WDF Mechanical and Five Star Electric are respectively the largest electrical and mechanical contracting companies in New York City. New York City by her own 30-years there has a particularly slow payment record, where it just is part of doing business in New York where you are historically paid 60, 90 as much as 120 days later than the norm elsewhere. Change orders have a process, so even though approved in advance and in writing take an inordinate period of time to get approved and certified. So, when we acquired GreenStar, we did acquire that slowness of payment that's typical of New York City and particularly toward subcontractors.

Got you. So it sounds like it will be a use of cash until it sort of catches up.

Absolutely.

Your G&A expenses seemed a little bit higher than my expectations. Is there any effort or any expectations that that might come down?

Yes, I mean -- the increase in G&A this quarter is purely a result of the acquisition, so it's the new companies that we put in and we will have a focus going forward as you can expect out of Ron that we would be looking at G&A very critically over the next three to six months to see where we can take cost out of the new acquisitions. We've -- what we've been able to do so far on those acquisitions is bring them into our insurance programs, we are bringing them into our benefit programs, but we haven't been able to get yet to taking duplicate cost that is out of those businesses yet. I mean that takes a little bit of time.

Got you. And simply -- Steve asked about the buildings margins, but the civil margins were also below your forecast, I mean, your targeted guidance. I think it was a pretty good construction season, so I am curious why we were below the 10% to 12% target?

It's a good question.

Really driven by the acquisitions that we brought in with Lunda and Frontier-Kemper that are a little bit lower than those 11% projections.

And are you changing there for your segment?

We're going to have some timing issues as we have -- we are in the startup of a couple of projects and those margins tend to grow towards the backend of the projects.

I mean -- but you are really -- I mean you are really at full ramp on say the Antlers Bridge and the Oakland Tunnel project?

Absolutely, and the fact that tunnel holds through in 60 days. I think it's an anomaly. It didn't really go down that much. The Caldecott tunnel is doing much better than anticipated; Antler is holding its own. I really think if we dug it out we would discover that in 2010 we made enormous profits on both [Greenwich Corridor] and on the JFK together with bonuses and I think probably somewhere in the 9% to 10% is a more balanced, I don't know that we can -- now when these are all after G&A ,of course, after division G&A. I don't know that we can continually sustain 11%s and 12%s, but it will be better than what we posted.

Got you. And I know you gave kind of a target for Specialty Contractor, but I apologize, I missed it. What did you say were the margin expectations there?

Between 6% and 8% net of G&A.

And what did you do in this quarter?

We did a little bit above 9%, but that was because of some exceptional performance on a couple of projects up in the New York area.

Got you.

We wouldn't expect to achieve those every time.

Okay. And did you get those acquired revenue numbers or...?

In building, it's about $100 million; in civil, it's about $130 million; and then specialty is essentially, the whole thing, is a little over $300 million.

Well, those are in corporate.

Yes.

That's within those numbers.

Yes, specialty is $300 million.

All right. And what are the eliminations, that's a new line item?

Because we have got work that is being performed by [specialties] -- the ones that Ron talked about for, where we are crossing segments. There is now an elimination between specialty and the other segments when they do work for them.

So, intercompany revenues?

On Aqueduct alone would be $140 million.

Yes.

Whereas WDF and Five Star work for Perini.

Right. So you got then -- that's right. So that you got gross in the segment and they have to be eliminated.

All right. I appreciate the time. I look forward to getting some of the historical stuff in the Q.

Okay. Thanks, Avi.

(Operator Instructions). Your next question comes from the line of Philip Volpicelli with Deutsche Bank.

Good afternoon.

Hi, Phil.

First question is with regard to cash and if you could breakdown the amount drawn on the revolver currently, and I'm assuming the term loan is at $200 million?

On the revolver.

On the revolver, yes, there was some drawn at year end, about $130 million on the revolver.

Okay. And what's your cash balance as of the end of September?

Cash balance as of the close?

Yes.

I think I have that in the call, let me find it again.

It's $270 million.

$270 million. (Multiple Speakers).

I am just trying to put together your capitalization (multiple speakers). Mike, maybe as you dig for that, I can ask Ron his least favorite question.

The cash at the end of September was $273 million.

Great, okay. And then Ron, has there been any movement on MGM or are we still waiting for the judge there?

No, the Supreme Court just approved or reversed the court judge and allowed the lawyers to go back in and represent MGM, so the case is back going again as of last week.

Okay. So no real update from where...?

No, it's just froze for six months while they played with that.

Okay. Last question from me. The P3 separate entity that you planned to put 5% of the capital in, is that capital going to come from Tutor Perini? In other words, is there going to be more debt on Tutor Perini's balance sheet to...?

There won't be more debt. It will come out of cash.

Come out of cash. Okay, great. Thank you very much.

Ladies and gentlemen, this concludes the question-and-answer portion of today's event. I would like to turn the call back over to Ron Tutor for closing remarks.

Thank you, ladies and gentlemen. I hope we had quickly answered all of your questions and we look forward to the next call.

Ladies and gentlemen, this concludes our presentation. Thank you for your participation. You may now disconnect.