Tutor Perini (NYSE:TPC) Q1 2019 Earnings Call

0:01 Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation first quarter 2019 earnings conference call. My name is Tim, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will be opening the call for a question and answer session. As a reminder, this conference call is being recorded for replay purposes. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the conference over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

0:39 Hello, everyone, and thank you for your participation. Joining us today on the call are Ronald Tutor, Chairman and CEO, and Gary Smalley, Executive Vice President and CFO. Before we discuss our results, I will remind everyone that during today's call, we will be making forward-looking statements which reflect management's current assessment of existing trends and information. There is an inherent risk that our actual results Thank you, Jorge. Good afternoon and thank you for joining us. Our first quarter

1:29 of 2019 featured 3.2 billion of new awards, the strongest quarterly volume of new awards ever, which resulted in a new record backlog of 11.6 billion, an increase of 37% year over year. Our book-to-burn ratio for the quarter was 3.39. Backlog growth was once again broad-based across all three segments and was particularly robust in the civil segment driven by the award of the $1.4 billion Purple Line Segment 3 Stations Project in Los Angeles and the $253 million Culver Line for the New York Transit Authority in New York City.

2:14 Other major awards in the quarter that contributed to our backlog growth included the Choctaw Casino and Resort Project in Oklahoma, the specific value of which is undisclosed but well over $400 million, a new hospitality and gaming project in California, which is valued at well over $300 million, and the $200 million Southland Gaming Casino and Hotel in Arkansas. For perspective, our civil segments backlog now stands at an all-time high. While the building segments backlog is as high as it's been in 10 years, and specialties backlog is approaching a record level.

3:02 Importantly, nearly three-fourths of our total backlog is comprised of higher margin civil and specialty projects. In addition, the strong demand environment for our construction services continues as evidenced by the large pipeline of very significant project opportunities across all our segments. Accordingly, we believe that our backlog growth should continue later this year as we pursue various other large projects and that our significant backlog combined with a sustained market demand will fuel strong revenue growth, continually improved operating margins, and increased earnings over the next several years to come.

3:54 We are optimistic that the federal government will finally agree upon and implement their long-awaited infrastructure program, which is now being bandied about at a $2 trillion level. However, the creative manner in which they reach $2 trillion is by seeding federal money with private and public, and I don't know that that's a completely accurate summary. However, any significant investment by the federal government which adds to the states, counties, and local agencies currently forcing work out at record levels will just add more pressure to an industry struggling to keep up as we speak with the amount of work to be built.

4:43 As I have mentioned previously, we're focusing our bidding efforts on pursuing larger, more complex civil projects simply because they present Far fewer competitors and consequently much higher margins. At the end of June, we will be bidding a $400 million 8th Avenue Communications train control project in New York City. Very similar to the Culver Line that we were recently awarded. Other bids we are looking at this year is Los Angeles MTA and their three and a half to $4 billion West Santa Ana line. Santa Ana line, which is in the format of a P3.

5:33 The $2 billion Brooklyn Queens Expressway in New York City, a triple cantilever bridge, and the $400 million Amtrak tunnel phase three at Hudson Yards, wherein we built phases one and two already. In addition, $1,400,000,000 portal swing bridge replacement and the $450,000,000 Raritan River Bridge lift replacement both in New Jersey. The building segments larger opportunities include three large healthcare projects in California, the total of which exceeds $800,000,000, a $700,000,000 airport cargo facility in Florida, a $300 million courthouse via P3 in Miami, and $150 million cruise ship terminal all in Florida.

6:34 The specialty contractor segment is bidding on more than $600 million of mechanical electrical projects, primarily in New York, but secondarily in Texas, California, and Florida. In addition to already having booked $500 million of pending awards. We continue to see very strong demand in both New York and Los Angeles on our specialty groups as well as our civil operations. Next, I will review certain key projects that contribute to our first quarter results, starting with the civil segment. Work is progressing on the Purple Line Section 2 extension in Los Angeles as we excavate the tunnel launch pit in Century City and begin construction of the tunnel shaft literally 1,000 feet east.

7:34 As the launch pit completes, which we expect by September, the two tunnel boring machines will be assembled, lowered into the launch shaft and would expect to begin to mine in November. In Beverly Hills, we are preparing to relocate utilities on Wilshire Boulevard and are setting our staging sites, preparing to start with soldier powers the latter part of this year. In British Columbia, Frontier Kemper is progressing significantly on the Kamano Second Tunnel project. In the Midwest, Lunder remains active on their I-74 bridge project, and it's just begun work on the $800 million Minneapolis Southwest Light Rail in the Northeast.

8:30 In New York City, our most active project is the CMO-7 subway completion in New York City, coupled with a balance of the Eastside Access CS-179 contract as well as the New Jersey Newark Airport Terminal 1 which is commenced steel framing which should complete by October. The building segments most significant contributors included a large technology campus in Silicon Valley, the Rosewood Miramar Beach Resort in Montecito, California, the El Camino Hospital Integrated Medical Office Building in Mountain View, and of course the Newark Airport Terminal 1 in New Jersey.

9:21 Given the anticipated significant ramp of activities later this year on many of our larger projects, including Purple Line 2 and the Purple Line 3 station segment, which we believe will be awarded at the end of May or by mid-June, We expect significant revenue growth and higher margins across all those segments for the year 2019. Once again, based on our current backlog and outlook, we're reaffirming 2019 earnings per share guidance of $2 to $2.30. As a reminder, because of the timing of the project ramp-up activities, our earnings are expected to be significantly weighted.

10:12 George's second half. With that, I turn the call over to Gary Smalley to present the details of our financial results.

10:21 Thank you, Ron. Good afternoon, everyone. I will start by discussing our results for the quarter, followed by some commentary on our balance sheet, cash flow, and then the guidance assumptions. Revenue for the first quarter was $958 million, down modestly compared to last year, primarily because revenue from certain newer building and specialty projects do not fully replace revenue from older projects that have completed or are nearing completion. This is solely due to timing. In particular, recall that we completed a very large confidential technology building project in Northern California during the first half of 2018. That project contributed significantly to our results last year, but represents a challenge to replace those results in the first half of this year. Additionally, adverse weather in the first quarter of the year impacted some of our building and civil segment projects in California and the Midwest.

11:12 The revenue decrease was partially offset by certain newer civil segment projects and another building segment technology project that are all ramping up. Civil segment revenue for the first quarter was $333 million, up 27% year over year, reflecting favorable impacts from those newer projects that are accelerating and beginning to contribute more meaningfully. Revenue for the building and specialty contractor segments was $433 million and $192 million respectively, both down compared to the first quarter of 2018 due to the timing of revenue burn for newer work. We anticipate larger, favorable project contributions from various projects within these segments that are now starting and are accelerating over the course of the year.

11:59 Gross profit for the first quarter of 2019 was $88 million, up 32% compared to the first quarter of last year, with a corresponding gross margin of $9 million. This was a relatively good gross margin compared to 6.5% for the same quarter of last year, especially since our first quarter typically is our weakest quarter of the year due to the impact of weather, as we have previously communicated to the street and is the case every year. GNA for the quarter was $66 million, down slightly compared to last year, mainly due to lower compensation-related expenses. Our income from construction operations for the first quarter was $23 million, up substantially compared to a loss of $1 million for the same quarter of last year.

12:45 Recall that last year's first quarter results were impacted by an unexpected adverse arbitration decision for a completed civil segment project, which resulted in an unfavorable adjustment of about $18 million. Civil segment income from construction operations for the first quarter of this year was a very strong $42 million Thank you very much. Projects that are ramping up and solid results on other civil projects that have already been underway for some time.

13:37 Building segment income from construction operations was $3 million compared to $6 million in last year's first quarter. Mainly due to the lower volume so far this year as well as positive contributions in the first quarter of last year from the large technology project in California that I mentioned that completed last year and was nearing completion in the first quarter. The building segment's first quarter operating margin was 0.7% compared to 1.3% for the first quarter of 2018. As I mentioned earlier, we have several large new building projects that were recently awarded, which we expect will contribute more positively to our results later in the year. Specially contractors reported a first quarter loss of $7 million from construction operations compared to $7 million of operating income in the same quarter of last year.

14:27 The decrease in the segment's income was primarily driven by unfavorable closeout adjustments on certain electrical and mechanical projects in New York. Lower contributions related to the volume reduction mentioned earlier were mainly offset by favorable performance on other electrical and mechanical projects in New York. We expect stronger contributions from the specialty segment later this year as Five Star Electric and WDF in particular increase activity on some significant new projects, including work on the Newark Terminal. The Culver Line Project and various mechanical projects for the New York City Housing Authority and other public agencies. Despite the weak performance this quarter, we are still targeting an operating margin range of 5% to 7% for the specialty contractor segment over the remainder of this year.

15:16 Interest expense in the first quarter of 2019 was $16 million compared to $15 million in the same quarter of last year. The increase was primarily because of a higher Average revolver balance and interest rate during the year's first quarter compared to the prior year period. Our effective tax rate for the first quarter is 31.7% compared to 28.1% for the same period of 2018. The higher rate in this year's first quarter resulted from the recognition of some immaterial, unfavorable, non-recurring items which caused a fairly large increase in effective rate due to the relatively small pre-tax income for the quarter. Net loss attributable to Perini for the first quarter of 2019 was approximately $400,000 or a loss of a penny for diluted share compared to the loss of $12 million or a loss of 24 cents per diluted share for the first quarter of 2018.

16:09 I'll now shift gears and discuss our balance sheet and operating cash. Our project working capital grew 9% in the first quarter primarily because of an increase in accounts receivable due to the timing of collections on a handful of projects. We continue to be focused on reducing our unbilled costs through negotiation and settlement of various claims and change order disputes, and we still expect to be in a position to report some substantial progress in this area later this year. We used $125 million of operating cash in the first quarter, primarily due to investments in working capital. Keep in mind that our first quarter operating cash is always lower than any of our other quarters.

16:54 This is driven in in part due to the lower revenue in the quarter. It's also because at the end of the year, a lot of our customers try to accelerate payments and we sometimes receive two payments in December instead of a single payment. And so there's somewhat of a, we'll say a shift in that cash. And so we felt that the pain of that in the first quarter this year. Also keep in mind that our first quarter cash has the impact of incentive comp and also tax payments and especially this year we have a lot of positive operating cash contributors that will be accelerating or ramping up as I mentioned earlier. And it's because of these significant ramp ups that we expect that we will have a positive cash flow for the rest of the year and that we will be improved compared to last year and we still are targeting operating cash for the year to be in excess of net income as it was in both 2016 and 2017.

17:56 Our total debt as of March 31st, 2019 was $899 million compared to $762 million at the end of 2018, reflecting an increase in our revolver balance that supported our working capital needs during the first quarter. Our debt compliance leverage ratio for the trailing 12 months ended March 31st was 2.87. Note that earlier this week we amended our credit agreement to set the maximal leverage ratio at 3.50. for the remainder of the credit facility term, thus eliminating the step down from 3.5 to 3.25 that would have otherwise occurred as of March 31st. As you can see, we did not amend the credit facility based on a need to do so in the current quarter, as we would have been comfortably below the previously required 3.2 leverage ratio without the change. Instead, the amendment allows us to reset the leverage ratio at a level which better represents typical terms in the credit facility market, while providing us a cushion should it be needed later for any short-term funding of the growth we are expecting with our increased record backlog.

19:02 A handful of definitional adjustments were also made, but the amendment did not change any of the other covenants. Earlier, Ron reaffirmed guidance. Note that none of our previous assumptions related to the guidance have changed, including the effective tax rate for the year, number of shares outstanding, interest expense, CapEx, depreciation, amortization expense, G&A, and non-controlling interests. Lastly, I will reiterate what Ron mentioned regarding the quarterly pace of earnings this year. While we expect to report improved results in the second quarter compared to the first quarter, we anticipate substantially better results for the third and fourth quarters as we typically do due to the previously discussed project ramp-ups on various large projects. With that, Ron, I'll turn the call back over to you.

19:47 Thanks, Gary. To recap our record backlog and the continued awards, and many more. Due to the significant demand and limited competition we have talked about literally for the last two to three years. In addition, as we continue to pursue and win a significant share of our endeavors and execute effectively on our current backlog, we are continuing to diligently negotiate and settle various claims and change order disputes in order to collect the substantial cash we erode. In addition, I can add that over the past two years, we have virtually added limited, if any, claims of substance or unbilled receivables to the enormous backlog we are dealing with.

21:06 So we are making the kind of effective impact that are necessary. And as a result, we have just concluded one litigation. We're about to conclude another arbitration, both of which We think we'll handily win by the summer. We're on our second mediation on our largest claim with one of our large state owners that has asked for a second mediation to try to settle. We are in the midst of litigation, mediation, and settlement discussions as we force these cases to either resolve or to try them in court.

21:51 If the court dates hold and the mediations hold, a significant level of these cases will be concluded by the end of next year and certainly an amount this year of consequence. However, as I've said before, and unfortunately with our current judicial system, we get a court date, any excuse to postpone it, any excuse for all our public agencies to defer having to face the music. but sooner or later they got explained to a trier of fact why they haven't paid us and what usually takes place on the courthouse steps, the first time serious negotiations happen. I'm optimistic. As I've said previously, I can't pinpoint but give you the best of my knowledge of what's happening. And with that, I'll turn the call over to the operator for your questions to follow. Thank you.

22:48 Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question comes from the line of Tahira Afzal of KeyBank Capital Markets. Please proceed with your question.

23:18 Thank you. Hi Ron, obviously you're seeing a lot of success on the backlog side and that is really a testament to your brand name and the momentum in the market. However, obviously we've had a batchy start. The specialty group continues to have some execution issues. At what point do you start looking at the company structurally and seeing if you need to make changes?

23:48 I've made a number of changes. What do you mean by structurally make changes?

23:54 Well, the specialty group, for example, is not doing well. And I would argue, you know, maybe you need to look at whether that should be part of your business. And you can argue otherwise. But obviously, your EB to backlog is exceptionally low, would suggest a loss of investor credibility. And that's really what I wanted to get more of a sense of.

24:18 I lost the last part. You said something about investor credibility and leading up to that?

24:24 Yeah, I mean, if you look at your EV to backlog, right, you would argue just based on... By what to backlog? Basically, a valuation run does not seem to suggest that people have confidence that the backlog will translate into earnings.

24:43 I won't dignify that with an answer since all we've done is be successful in our backlog turning into profits. But of course, if you don't see it that way, that's your prerogative.

24:58 Fair enough. I'll hop back into the queue. Thank you. Our next question comes from the line of Alex Regal of FBR and Company. Please proceed with your question.

25:10 Ron and Gary, fantastic quarter. Congratulations. Thank you.

25:15 The margin has grown, or the backlog has grown tremendously. Ron, can you talk a little bit about your perception of what the margin and backlog looks like today versus the margin that's coming through your P&L and give us some perspective on pricing in the marketplace today versus maybe pricing in the marketplace over the last three to five years?

25:37 I'd say, to be totally candid, and I probably shouldn't be, All of our margins from three to five years ago are up 40 to 50%. And that's all on the major work. The billion-dollar-plus jobs, as I said, we had no competition on the Newark Terminal. We had two bidders on Purple Line 3. We had two other bidders on Purple Line 2. And frankly, our successes in the subway business have been ongoing for 30 years. So we don't think we have any competition in below ground subway tunnels and stations. And as they continue to grow in both New York City and New York, we're the beneficiary of that. And very candidly, we have significantly raised our margins.

26:22 And I don't think anybody in our industry with the capacity and qualifications to do these large jobs hasn't raised their fees significantly. Ours, minimum of 40%. It is just now beginning to come into play because although our California high-speed rail has been very successful, it's been stymied by delays and as they finally release the next billion dollars worth of work, those margins will come out because we'll be able to go to work. Purple Line 2, Purple Line 3 tunnels, Purple Line 3 stations. which equates to over $4 billion worth of work is ramping up and beginning to take hold. So those higher margins should begin to hit our balance sheet. In addition, on these jobs, we have a very significant specialty contractor presence. And those margins exceed 15 and 20% because we simply bid them as a team. And this is where the additional So one other question I might respond to over the last lady's comments. Our specialty group has been a problem and has been headaches, but virtually all of its management have been

27:52 replaced, and they are an integral part of our success and our bidding strategies. Thank you very much. and are doing extremely well today as we try to resolve all the issues of the past. The most foolish thing we could do now that they're finally in position would be to get rid of them or spin them off.

28:41 So that isn't going to happen and we will continue to execute the way we are and at the same time there's a tremendous push from me to resolve claims. Part of the reason we took the write downs in the first quarter was because I resolved a number of claims and took the write-downs because, in my opinion, those claims, even though they didn't settle at what I felt they should have, it was worth putting them behind us as we commit to eliminating these unbilled receivables. So we continue to make progress, albeit much slower than any of us would like. We're getting there. Sorry for the diatribe. Next question.

29:27 Ron, we have a tight labor market broadly. You have record backlog. Clearly, you're going to be adding to your workforce in a pretty substantial size. How should we think about the risk associated with increasing labor workforce cost structure?

29:50 Interestingly enough, we operate on the theory. That the bigger we get, we do not get more cost effective on these billion and two billion and three billion dollar jobs. So we think we intelligently hedge our labor costs as the jobs get bigger and frankly less efficient than the hundred and two hundred million dollar jobs because instead of a hundred men on the payroll, you have a thousand men. And since I've run all our biggest work, anybody thinks he can manage A thousand men as effectively as a hundred men is naive. So I believe we address that. And the only thing I can say to you in all honesty, my entire life as we've grown, people always ask me, where are you going to get the additional workmen?

30:40 The truth of it is, we're a union contractor everywhere in this country, with the exception of our Mississippi office and our Florida office, Neither one of which have any impact on Tutor Perini. They're nice, small building operations that don't hire many people and as such don't need many people. But as a union contractor in one of this country's largest, we've always got the men trained out of our unions. And every union president I've talked to continues to train and ramp up through their apprenticeship programs the people to do the work. So the one thing we've never experienced is the inability to get people. We have from time to time in certain locations had less qualified and less capable craftsmen when they get very busy, but the way we've adjusted to that is very simply hedge our labor accordingly.

31:38 So I don't see that as a problem, certainly not now. Could it be in the future? It's possible. More realistically, our biggest problem will be As I've said before, we are finishing our San Francisco subway job in San Francisco. We'll have a billion dollar staff available sometime next year. We are hopefully by the end of next year, we'll have made strides in high speed rail to where I could begin to peel certain people out. Same thing with certain subway jobs in New York. So we have some capacity, but to continue to train and recruit and hire the people to do this new work that we're fully capable of qualifying for and being contracted with.

32:28 That's our biggest issue and my biggest single worry. The only difference is once I'm convinced we don't have the people to do the work, regardless of the margin we can achieve, we'll simply stop bidding.

32:43 Gary, one quick question on the pacing of revenue growth over the next three quarters. How should we think about it? Does it look to be smooth in accelerating growth in 2Q, 3Q, and 4Q? Is it lumpier in one quarter versus the other? And then by segments, is it fairly smoothly kind of a step function across segments as well?

33:05 Yeah, so to your first question, Alex, I would look at Q2 being up. but Q3 and 4 being more dramatically up that is on pace with the acceleration or the ramping up of these larger projects that Ron had mentioned. With respect to the segment, you know, breakdown by segment, building is going to be more gradual, if you will, and what I described for the company is going to be really more reflective of civil and specialty.

33:37 Thank you very much. Congratulations. Thank you. I would like to remind all of our participants at this time, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Dane Carmi of DA Davidson. Please proceed with your question.

33:57 Hey, good afternoon. This is Zanon for Brenton.

34:03 Hi, Dane. Yeah, we can't hear you really well. If you could talk a little louder, maybe get a little closer to the phone, please.

34:09 Okay, how about this?

34:11 Much better. That's great. Thank you.

34:13 Okay, glad we got that one done. Yeah, Zane on for Brent this afternoon. Hi, Zane. First off, how did the timelines change at all on some of the big projects that you're expecting to drive earnings later this year? And any better visibility on the startup of those than a couple months ago when you guys last reported?

34:36 I don't think so. I think that Purple Line 2, the billion, $300 million station and tunnels, is fairly close to the initial schedule and ramping up dramatically with the tunnel drive starting by somewhere between December this year and January next year. We're starting with our work in Wilshire Boulevard at the Beverly Station. That's starting over the next 60 days. High-speed rail is beginning to get back to work again after basically being stalled for months of delays. I think it's all coming together. I think Newark, the terminal, we're erecting steel across the entire terminal, which should be erected by October, November.

35:22 So it's all building up to where the significant revenue associated with the size of those contracts and the costs that ensue and follow that revenue should be going full tilt on most of these projects if they're not already going within the next three months.

35:43 Great. Thank you for that color there. And then following up, with good civil margins not thinning the weather in the West, are you guys ranting on some of that work now with the weather subsiding? And how has weather really impacted you guys this last quarter and how you're looking at it through this March and April?

36:03 Did you say renting? I didn't quite hear you.

36:07 The weather, and with regards to ramping up. Oh, ramping.

36:13 In the West, the weather always has a marginal impact, but realistically, as you might guess, bad weather in California is 8, 10 inches of rain, so it's really not bad weather as it is in New York, New Jersey, and even more so in our Midwest bridge operations. where it snows and gets to freezing temperatures in both Minnesota and Wisconsin where there are highway operations. So I don't think it's any different than the norm this winter and we don't see any weather impacts other than typical if that's an answer for what you're looking at and We're already into May and it's sunny and believe it or not back east it's relatively sunny and the bad weather has ceased.

37:04 So we're going full tilt on all our New York City and New Jersey work. So I can't really say weather's an issue and I don't expect it to be for the rest of this year unless somehow we get hit between Thanksgiving and New Year's.

37:19 Thank you. I appreciate the time.

37:22 Sure. Our next question comes from the line of Stephen Fisher of UBS. Please proceed with your question.

37:31 Thanks. Good afternoon, guys. Hi, Stephen. Hey, Ron. Wondering, Gary, maybe if you could just clarify the profitability in the specialty segment in the quarter. How much was that closeout adjustment, and what would the profit and margin be without that in the quarter?

37:54 Yes, Steve, the I would look at it this way. The margin for the quarter would have gone up about a percent and a half, and it's more than one closeout. It was a couple of them. But the margin would have gone up about a percent and a half. So I think you can determine that most of the difference between our income from construction operations comparing last year's first quarter with this year's first quarter is that delta is mostly that. So We had a $15 million delta, $14 million delta year over year, and most of that difference is due to that.

38:31 Essentially, the loss would have been the same amount of profit within give or take. The $7 million loss in the specialty group without the adverse settlements of claims would have been a gain of approximately $7 million. So it was a $14 million swing.

38:48 Gotcha. And again, that's basically the write-down you've taken to be able to collect cash on that settlement.

38:57 Well, and they were a number of what I'd call smaller claims that I had no intention of litigating. So when I looked at them, it made no sense to litigate them. They just didn't warrant investing that kind of capital in lawyers. Typically, to get $5 million, I don't want to spend $5 million. So we settled and closed out with certain owners and I wouldn't have called them good settlements, but we put them behind us as we focused on the larger ones.

39:28 Okay. And then maybe just, again, Gary, clarifying the commentary on the cash flow. It sounded like you were saying there was a bit of a pull forward into Q4 of last year, but the fourth quarter was also kind of disappointing on cash flow. So I guess I'm trying to figure out what's really going on here in the cash flow. And I know you said it's going to get better as the year goes on, but we're really just trying to figure out why it isn't better.

39:55 Well, the fourth quarter last year, we had $56 million of cash flow. So for the year, we were slightly positive and we were disappointed with that because we wanted higher cash flow in the fourth quarter, but still it was a solid $56 million.

40:12 Okay. Maybe just framing the year on the guidance, just I'm kind of wondering how you're weighing the puts and takes of the quarter and the confidence in the guidance because it seems like it was maybe a bit weaker than expected on the quarter, but the bookings were better. So would you say you're sort of now net more confident in the guidance or you would have been basically at the upper end or beating had it not been sort of for this slower than expected start?

40:46 I think our confidence is the same as it was before, Steve. There are always puts and takes, and we have some puts and some takes, and we feel the same as we did going into the year.

40:58 Also, I might add, and I always try to be blunt and direct even though sometimes I'm not supposed to be, some of these write downs that we took in the first quarter that adversely affected the first quarter, had they been Not taken, of course, we would have exceeded our first quarter budget. But the reality of those, those were contained within the allowances I made when I set the earnings per share, assuming that I would take certain settlement write downs in order to achieve and collect the money necessary. So even though we took a significant level of hits in the first quarter, we're still within what we've allowed in our earnings and there's nothing that's taken place that would lead me to believe we won't still finish in that area.

41:50 Got it. And then if you could just frame the 12.5% civil margin in the quarter, is that something that based on the margins in backlog you expect to build on from here? Because obviously even not for a Q1, that's still a pretty healthy margin.

42:07 We should do better because the 12.5% is way down. by a significant amount of work back east. In London is our highway company and New York Civil. In the very large work, I think I explained earlier how significant the margin is in our billion plus contracts. However, in our bread and butter 50 to 100 to 200 million, we're still laboring in the high single digit, maybe up to 10% as we compete. and what we would call the bread and butter 80,100,200 million dollar jobs. However, as we morph much more significantly into the larger jobs, it will go up because there'll be more of it. For example, we have high speed rail right now at a billion and a half and growing significantly with added work and change orders being added every day.

43:06 We have purple line two at a billion 373 million. which is well into its start and ramping up. We have Purple Line 3 tunnels at $410 million, Purple Line 3 stations at $1,360 million. We then have Newark Terminal at $1,400 million. So we have one, two, three, four jobs over a billion dollars with significant margins. That total is $1.4 billion. It's almost $6 billion of our $12 billion backlog, or better yet, $5 billion of our civil backlogs in the billion plus. You do the math. Our backlog is contained within the billion dollar jobs.

43:53 That's where it is, and that's where the margins are. Because all of this has transitioned, remember, over the last two years. The only billion dollar job we had two years ago was high-speed rail. And as profitable as it's been, it suffered with constant delays, the owners caused by lack of right-of-way and lack of easements and permits. So all of this new work, which is beginning to just ramp up and affect revenue, is all new and just beginning to have the impact so necessary.

44:30 Terrific. Thanks, Ron. Thank you, everybody. Enjoyed the call. Talk to you the next time. This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

44:44 Have a wonderful rest of your day.