Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Tutor Perini Corporation Earnings Conference Call. My name is Regina, and I will be your conference operator for today. [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. Mike Kershaw, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Okay. Thanks, Regina. Good afternoon, everyone. Thanks for joining us on Tutor Perini's fourth quarter 2011 conference call. With us today is Ron Tutor, our Chairman; and our President, Bob Band. Before we start, I'd like to remind our listeners that our comments today will contain forward-looking statements, including statements about future guidance. Management may also make additional forward-looking statements in response to your questions. These types of written and oral disclosures are made pursuant to the Safe Harbor provision contained in the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve 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, March 1, 2012, 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. Having made that clear, I will turn the call now over to our Chairman and CEO, Mr. Ron Tutor.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. In the fourth quarter of 2011, we experienced positive market momentum, particularly in our -- both our major building and major civil segments. Our civil group continues to be an area of focus and one of our most promising growth opportunities going forward. The volume of large infrastructure projects bidding has increased dramatically, primarily on the Eastern seaboard and the Midwest. For example, we were recently shortlisted for the $3 billion-plus Tappan Zee bridge replacement just outside New York City and the California high-speed rail project in the Central Valley of California, whose size exceeds $2 billion. We now -- both of these projects, excuse me, represent the type of size, scale and complexity that both limits competition and best suits our capacities. We have revised the size of our perspective opportunities in the civil infrastructure market to $17 billion for projects that should bid over the next 12 months within the areas of our influence. This is a $7 billion increase in the amount of work being pushed out by our various governments during this period. In the non-residential markets, we're continuing to see increased opportunities, with particular focus on the New York City and New York State. Recently, we were named the contractor for the Hudson Yards development in Midtown Manhattan by The Related Companies. This large, mixed-use development, including over 13 million square feet of commercial, residential and retail space, is one of 2 multibillion-dollar opportunities I referenced in our earnings call last quarter. Negotiations for the second opportunity are ongoing. Other significant opportunities in the building segment are driven in part by both our hospitality and gaming operations and our construction of educational facilities. We have identified and are tracking almost $27 billion in targeted building projects that we expect to either propose or bid in the next 12 months. And they're both at about a 50-50 private and public spread. This is an $8 billion increase in targeted projects from the prior quarter. Our integrated service capabilities have provided us a significant advantage in the building marketplace by offering a company that has services in the areas of electrical, mechanical, foundation and concrete work, that very simply no one else in the building business of scale offers. This additional capacity has opened many doors and is one of the primary reasons we were awarded the Related project, as well as other ongoing negotiations that appear to be productively moving forward. The specialty contractors segment has an active pipeline of more than $4 billion in targeted projects that should also bid during the next 12 months. As you might surmise, typically when we propose on a major civil or a major building project, we drag along both our building, electrical and mechanical groups with us, such that we bid typically as a team. We ended the quarter with $6.1 million of backlog, a 42% increase over the prior year, with a backlog mix of 37% building group, 36% civil group, 22% specialty, and the balance management services. New contract awards and adjustments to contracts in process during the fourth quarter added $773 million to backlog. Major awards included a $176 million airport an expansion project in Florida, a $64 million electrical project on a mass transit station in New York, a $31 million electrical subcontract for an energy plant in Texas, a $31 million medical office building and parking garage in Mississippi and a $26 million mechanical contract in New York. Currently, we have $4 billion in pending awards, including $2.5 billion in mixed use, $600 million in hospitality and gaming, $336 million in education, $189 million in corrections, $153 million for highways and transportation and $150 million in healthcare. Total awards increased $2.4 billion over the third quarter, primarily driven by the addition of the Hudson Yards project, which we expect to enter into our backlog in stages, as each phase is released for construction. Now I'd like Bob Band to bring you up-to-date on management services. Bob?

Thanks, Ron. In the management services segment, we are currently participating in 8 multiyear indefinite delivery/indefinite quantity contracts for a diverse array of U.S. government agencies. The aggregate program value for these IDIQ contracts is an excess of $15 billion for all participants. These programs include the U.S. Navy program for the relocation of U.S. Marines from Okinawa to Guam, the U.S. Department of State worldwide project for containerized housing and offices, and the USAID contracts for both vertical structures and water and energy projects in Afghanistan. It also includes a Central Command's MATOC contract for the U.S. Army Corps of Engineers; the U.S. Coast Guard and Department of Homeland MATOC for HCs such as the Coast Guard, FEMA, ICE and others; as well as the U.S. Department of Interior's contract, primarily for the Fish and Wildlife Services; and the -- both contracts for the U.S. Air Force, our SATOC and HERC programs, as well. We are actively pursuing work under all these programs, which provide us with great visibility into our new work pipeline in 2012 and beyond. We estimate the size of perspective opportunities within these contracts to be bid to be approximately $4 billion for projects that would be bid over the next 12 to 18 months. Work currently in backlog continues to produce solid results. A $108 million task order under the U.S. Department of State containerized housing, an office facilities program in Southern Iraq that's achieving very good progress, and the $73 million task order under the U.S. Navy MACC in Guam for an aircraft parking apron at Andersen Air Force Base is well underway. In Iraq, we have recently been awarded a $55 million overhead cover project by the U.S. Army Corps of Engineers. In Haiti, we've been awarded a $12.7 million electrification project by USAID. This is the first of what we hope to be many contracts in Haiti. So we anticipate increased activity from the USAID programs in Haiti and Afghanistan and from the Navy in Guam, as well as increased contract completion assignments in the U.S. for our surety clients, which amount of work doubled this year. Now Mike will give you the financial details for the quarter.

Okay. Thanks, Bob. Revenues for the quarter were $1.1 billion, a 60% increase from $688 million reported in the fourth quarter a year ago. Our revenue growth in the fourth quarter is primarily driven by our recent acquisitions. Our total gross profit was $125 million, an increase of 74% from $72 million in the fourth quarter of 2010. Overall, gross profit margins increased from 10.5% in the fourth quarter of 2010 to 11.2%. General and administrative expenses were $75 million, up from $40 million in the fourth quarter of 2010. The increase reflects companies acquired that were not included in the fourth quarter of 2010. Net income from construction operations are $51 million, a 59% increase from $32 million in the fourth quarter of 2010. Operating margins were comparable to last year at 4.6% versus 4.7% a year ago. Results for the fourth quarter included a $4.5 million revision and assumed recovery of claims for the 3 jobs currently in progress, one in our civil segment and 2 in our building segment. Although we have revised these projects downward, we are actively pursuing full recovery of amounts contractually owed to us. In addition, we recorded a $4.8 million impairment of auction rate security holdings and a $1.7 million charge associated with the true-up of previously recorded purchase accounting provisions. Production on existing civil work progressed slower than expected during the quarter, primarily driven by a longer ramp-up cycle for the SR99 Project than previously anticipated. Our resulting net income was $24 million, a 27% increase from $18.9 million in the fourth quarter of 2010. Diluted earnings per share were $0.50 as compared to $0.40 for the fourth quarter of 2010. Segment results for the comparative period have been restated to allocate intersegment eliminations of revenue into the applicable building, civil, or management services segments. Revenues from our building group were $446 million, essentially unchanged from the fourth quarter of 2010. Building group income from construction operations was $2.6 million, a 73% decrease from $9.8 million in the fourth quarter of 2010, as a result of the substantial completion of public works projects in Las Vegas and Philadelphia, the timing of award and start-up of new work, and the revision and assumed recovery on disputed change orders on 2 jobs discussed earlier. Operating margins were 0.6% compared to 2.2% a year ago. Revenues from our civil group were $337 million, an increase of 93% from $175 million reported in the fourth quarter of 2010. The increase is primarily due to the acquisitions of Frontier-Kemper and Lunda. Civil group income from construction operations was $26.8 million in the quarter, a 52% increase from $17.6 million in the fourth quarter of 2010. Operating margins were 8% compared to 10% in the fourth quarter of 2010. This decrease in margins is due primarily to the favorable closeout on projects in New York during the fourth quarter of 2010. Revenues from our specialty contractors group were $288 million and income from construction operations was $29.8 million, the majority of which was generated by the recent acquisitions. Operating margin was 10.3% for the quarter, reflecting favorable performance on some of our New York area projects. As we fully integrate the acquisitions and incorporate our vertical integration strategy, we believe that long-term operating margin -- income margins in the specialty contractors segment will be between 6% and 8%. Revenues from management services were $44 million, a decrease of 8% from $48 million reported in the fourth quarter of 2010. The decrease is primarily due to the East End Barracks project nearing completion in the current quarter. Partially due to the change in volume discussed above, management services income from construction operations was $7.8 million, a decrease of 16% from $9.3 million in the fourth quarter of 2010. Operating margins remained strong at 17.6% compared to 19.4% in the fourth quarter of 2010, primarily due to favorable closeout of overhead cover projects, which contributed more in 2010 than 2011. Interest expense increased to $9.8 million from $4.2 million in the fourth quarter of 2010, due primarily to a full quarter of interest expense recorded on our $300 million senior unsecured notes, a $200 million term loan and borrowings under the revolving facility. Provision for income taxes was $14.7 million compared to $7.3 million in the fourth quarter of 2010. The effective tax rate for 2011 increased from 35.1% in 2010 to 37.1%, primarily due to a return to provision adjustment related to state taxes. At this time, we're initiating guidance for 2012 with estimated revenues in the $4.5 billion to $5 billion range, and diluted earnings in an estimated range of $2.10 to $2.30 per share. We expect our earnings to be weighted towards the back half of the year based on the anticipated timing of new awards and when we start to earn progress on those awards. We estimate our tax rate for 2012 to be approximately 38.0%, an increase over prior years primarily due to the anticipated mix of work trending toward states with higher tax state rate. Looking at our balance sheet. At December 31, 2011, our working capital stood at $557 million, which includes $204 million in cash and cash equivalents, down $36 million from $593 million of working capital at December 2010, which included $471 million in cash and cash equivalents. The decrease in working capital primarily relates to cash used to complete those acquisitions in the first quarter of 2011, offset by working capital acquired from the recent acquisitions. Current ratio decreased from 1.6 at December 31, 2010, to 1.14 -- to 1.4, sorry. During the fourth quarter of 2011, operating activities provided $93.4 million of cash, primarily due to cash flow generated in the civil group. At December 31, 2011, long-term debt, excluding the current portion, stood at $613 million, which is an increase of $239 million from December 31, 2010. However, we did pay down total debt by approximately $160 million in the current quarter. We expect to continue to pay down debt and to remain in compliance with our covenants. With that, I'll now turn the call over to Ron for his closing comments.

Thanks, Mike. As we move into 2012, we are facing an unprecedented volume of projects to bid, particularly in our civil segment led by the $3 billion-plus Tappan Zee bridge and the $2 billion-plus California high-speed rail segments currently out to bid. The majority of our other perspective civil opportunities, which probably exceed another $4 billion on projects we have confirmed to bid by year end, are really a culmination of work we've been tracking and thought should have bid in 2010 and 2011, and has finally been put out into the market by our government in 2012. Our East Coast building operations are growing, much of it attributable to our selection on the Hudson Yards project and the huge growth in the New York building markets that are ongoing right now. Although I am disappointed in the lack of Guam opportunities that have bid to date, with only 3 major projects awarded, all 3 of which we appear to have been second bidder on. The government has committed to the multibillion-dollar Guam program even though it has slid back over 3 years, and it continues to be parceled out much slower than we anticipated. However, having said that in Guam, our -- both our building and civil opportunities on the East Coast continue to challenge our capacity to even bid them, they are so large in number of opportunities and size of projects. That would conclude our prepared remarks, Now Bob Band, Mike Kershaw and I will now take whatever questions you have.

[Operator Instructions] And gentlemen, your first question today comes from Steven Fisher with UBS.

Ron, could you just clarify, you said negotiations are underway on a second multibillion-dollar high building project that's not the Hudson Yards. How many companies are you still competing with? And when do you think you could get a conclusion on that?

Well, it's -- of course, it's the Genting convention facilities. And I don't think we'll see any conclusion in that until March or April, and I'm unaware of any one else that they're talking to. We're wrapping up the results in accounting and payoff of the casino. And we believe that as we're doing preparatory work for the convention facilities, we're in firm hopes that we'll get something resolved with them over the next 60 days. No guarantees, but we have our hopes.

Okay, that's great. And then on the guidance, can you maybe just give us some segment help in terms of where you expect revenue growth and any revenue declines? And then directional trends on margins? Because it seems like there could be margin pressure implied in the guidance.

Yes, I mean if -- really as we've put in there, that our expectation is it upward at the back end of the year. Margins at the beginning of year are probably going to be fairly similar to the back half of this year in both building and civil. And they'll be a little bit down on specialty because we had the tremendous work that we just closed out in those areas. And management services is -- works along, as Bob has explained. It depends on what work they get awarded.

Okay. And then, I mean, the building was a little bit depressed, particularly in the fourth quarter by...

Building business, Steve, is depressed. Our civil businesses are holding up well, as is specialty. Our building businesses are depressed because we wrapped up the convention facilities in Philadelphia and the Las Vegas terminal, both of which were double-digit profit jobs. And although we are signing up very large revenue jobs in New York, the margins are under pressure in the building business. And you picked it up, it is true.

Your next question is from the line of John Rogers with Davidson.

I guess, first thing, Mike, can you give us the segment earnings for the full year?

Yes. Hang on a second. The segment earnings for building, it is $46 million; for civil, it is $78 million.

You're talking gross profit, are you not?

Talking income from operations, which is the number that we provide.

From operations. That's prior to G&A?

That's after G&A. That's what we --

Before corporate?

Before corporate, yes.

Well then define what you're telling them, will you? If I don't know, they don't know.

And specialty is $65 million, and management services is $22 million, and corporate is about $44 million. Expense, obviously.

Okay. The -- and I guess, in terms of the corporate and the overhead expenses that you're looking at for 2012, is it the same sort -- I mean, it's going to come up. Is it the same sort of run rate that we saw in the fourth quarter?

It's going to be the same kind of run rate as Q4. Towards the back end of the year, we're hoping that we'll start to get some benefits from synergies, but that requires us to get on common systems and those take a long time -- a little bit longer than other things to get done. But it shouldn't be any worse than where we are today.

Okay. And then in terms of the project revisions that you referred to, a $4.5 million charge, is any of that MGM or is that still out?

No.

Where are we on that?

We specifically said they're on current, executing projects, so they -- that we're working our way through in the normal course of business.

Okay. And where is it in terms of MGM, the update from your receivables?

Litigation has commenced once again, continue to batter each other in the hopes of collecting the money they've tried to defraud us out off. And there's a trial date, I believe, first quarter next year, but I'm not certain.

Okay. And will you report a receivable there for the full year in the 10-K?

We record a receivable for the money they owe us.

Right. How much are you showing in terms of the receivable on your books right now? Because I think you've said in the past that you're actually -- the money you're seeking is more than that.

It's gone down a little bit because of the settlements that they went -- that were...

That they paid...

The net is about $130 million. Our piece.

Our share of it's approximately $130 million.

But it essentially gets grossed up on the balance sheet because there's -- our receivable, some of that is payable to subcontractors.

Okay, great. And I guess, last thing, Ron, in terms of your stock sales and the open window there, that's sort of a recurring question that we get. Any comment on that?

Well, the problem is, I'm in escrow that has now been delayed twice in closing on my movie assets. So a window just opened up. It depends on whether I get a closing on Monday or Tuesday or not. It will depend -- I may have a small sale. Small, 300,000 to 500,000 shares. It will depend on whether my asset sale closes. The lawyers keep going back and forth, but the window closes quickly, so I have to make a decision by midweek. My sales, I have no alternative in.

[Operator Instructions] Your next question comes from the line of Avi Fisher with BMO Capital Markets.

I apologize, I got on the call a little bit late. Can you just go down the segment backlog. I missed that, I apologize.

Yes, hang on a second. Let me go back to the script. I already found it. We didn't actually give the numbers, but I know that's what you usually ask for. $2.2 billion for building, $2.2 billion for civil, $1.4 billion for specialty and $300 million for management services, for a total of $6.1 billion.

Got you. And when I jumped on you were going through the charges. So first on the revisions, can you specify what projects in the civil and 2 buildings projects were generating the charges?

There was 2 on civil, 1 or 2. They're ongoing projects, Avi. They're relatively small adjustments on each one, but unfortunately, they added together to create the $4.5 million that we took.

Right. And I thought I heard you say 1 on civil and 2 on buildings. And I'm just curious how you're generating charges on the building side? Because I thought most of that was cost plus.

There are some projects in there that require us to get change orders and proceed with work.

One of them is a government contract with the Department of Commerce fixed price that we have a major dispute with the Department of Commerce. And we've elected to take a write-down, even though we intend to litigate for it all and collect it all.

And on the other charges, where on the P&L will -- did you expense the change in the ARS and the $1.7 million? Is that in G&A, is that in direct costs?

Yes, ARS is in other income and expense. The $1.7 million is in multiple places, if I recall. Part of it's up in income from -- above income from construction operations, and some of it is below. It'll be clear when you get -- when the 10-K gets published.

And when do we expect that?

Tomorrow.

Okay. And Ron, it's actually interesting you were bringing up the MGM litigation. You're talking about the litigation with the Department of Commerce. I just wonder how the change in municipal budgets, have you seen and what kind of change you've seen in terms of your ability to get change orders from clients who are more cash-strapped than they've ever been?

Well that's the -- really the great challenge. We find that in dealing with almost all our government agencies, if they owe us, they pay us. We have occasional disputes that are just part of the game. But our biggest risk, frankly, is working for private companies. When, like MGM, they overspend and run out of money, and we're at the end of the job, and now they owe us, and very frankly, can't pay us. So we end up having to litigate to collect our money, which seems to be a satisfactory way for them to get free loans. So that's really something we are doing a much more stringent program and reviewing the owners we work for, proof of financial ability to pay and probably are going to be much more difficult in invoking the clauses in every contract we insist on, whereby at any time they add significant scopes of work, and they don't have the money in the bank loans or commit the capital to fund those additional scopes, we threaten to stop the work. I'm going to do whatever I can to see to it they we're never placed in another MGM position.

Yes, I'm sure that'll be the case. Regarding, even on the public side -- Ron, you've been in this business a long time. And people that -- your reputation about generating change orders is a long history. People you know who you are and how you operate and it's worked successfully for you and for shareholders for some time. My question is, does it get harder to get the change orders now that even your public clients are more cash-strapped than they've ever been?

Well, first of all, that's a complete miss -- when I say get change orders, the proper way to put it, and I'll correct you, is we absolutely insist on being paid for changes. We don't generate changes. We don't create them. Maybe we're a little hard-lined that we get paid when owners make changes, and we're not as flexible and giving as others. But all we ever do is if you change, you're going to pay. Whether you pay the hard way or the easy way, you are going to pay. And if you're unwilling to pay for the changes you've made, then we'll let a trier of fact decide who's right and who's wrong. But most of our owners, we work through it, they recognize they've made a change and they pay it. 9 jobs out of 10 are resolved without a lawyer talking to a lawyer, thank God. So only those rare occasions, and usually it stems from a job that has generated such an extraordinary level of change, even our public agencies struggle how to come up with the money. So unfortunately, sometimes litigation buys them time. I think most public agencies realize that at some time in the process, if they owe you, they pay you. At least that's my continued fond hope.

And regarding the margin question that Steve asked earlier, specifically on the civil side, a year ago you had sort of 10% to 12% civil margins, as a sort of segment estimate forecast. You brought that down, I think to the 8% to 10% range. Can you -- has that been updated? Has that been changed? Because your margins seem quite low given the backlog mix.

Well, you're talking about the civil margins or the overall margins?

Both.

Well, the civil margins were reduced because, if I take you back a year ago, we had a couple of very extraordinary projects called the JFK Runway in New York and the foundation work at the World Trade Center. Where, although if you'll remember, we left a lot of money on the table, they were very, very significant profit earners that earned well more than we'd originally anticipated, taking those margins up. What we're really bidding our backlog now is still similar to what we bid then, the only difference is we're not -- we don't have own enough experience in the backlog to make it a determination we're going to make significantly more than we bid. It's premature. And that's why you're seeing a drop off in the percentage. It's only 2 to 3 points.

And is that the newest run rate, the 8% to 10% range?

Yes. And remember that's after division G&A, which usually runs 4% to 5%.

Okay. And then on the -- what about on the guidance side?

What would you like to know?

Well, I'm just curious, given the mix of backlog and the fact that civil margins are going to stay in the 8% to 10% range, why the margin guidance looks to be down year-over-year. Was that from the mix towards the specialty subcontracting or...

Well, I think specialty has been very good. I think we say 6% to 8%, I'd have a tendency to lean closer to the 8%. I think the building, the margin on the building revenues, as I said, with the $1,200,000,000 job at Terminal 3 done and the $500 million or $600 million we did at the convention center with very high levels of margins, that's dropped off. We've been unable to replace it with high-margin building work. Although the revenues are similar, the margins have dropped off, and probably will continue at this level in the building business until we're fortunate enough to get the hard money bid work where there's risk and reward.

Appreciate the color. And finally, Mike, one last question. I missed the tax rate guidance. I know you said it in the comments.

Yes, we did. It's 38%.

38%. And should we just annualize the interest expense for all of next year?

Yes.

Unless we get lucky, and what I read in the paper, they reduce the corporate rate, then we'll revisit it again.

Gentlemen, you have a follow-up question from the line of John Rogers with D.A. Davidson.

A couple of quarters ago, Ron, you'd mentioned the possibility of looking at -- I don't know whether you'd call it a joint venture or for a funding mechanism for PPP-type projects. Any update on that?

We have a current meeting with our -- with a very large, what would I call them, equity company that we're trying to put the final finishes on it so we can move it forward. That should take place in the month of March. We've worked full-time on that company for the last 12 months in hopes of bringing it out this summer. I'm getting to a point, I'm losing patience.

And would this be used on any of the big projects that you've referred to that you're pursuing right now?

No. Interestingly enough, not one of these projects is a P3. Even the Goethals job, which was $1 billion P3, is coming back out toward the end of the year as a straight design build. So right now, the pressure's off the P3s. We still think they're a very viable and strong potential. But it appears literally everything we're flooded with this year is straight design build or design bid build.

Ladies and gentlemen, this does conclude the question-and-answer portion of today's broadcast. I'd like to turn the call back over to management for some closing remarks.

Thank you, everyone, for joining us. As usual, we tried to keep you abreast of where we are and where we're going, and we appreciate your questions. Thank you.

Ladies and gentlemen, thank you so much for your participation in today's conference. This does conclude our presentation, and you may now disconnect. Have a great day.