Gary Smalley - Executive VP & CFO Jorge Casado - VP of IR & Corporate Communications Ronald Tutor - Chairman & CEO

Brent Thielman - D. A. Davidson Sean Eastman - KeyBanc Capital Markets Steven Fisher - UBS

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation First Quarter 2018 Earnings Conference Call. My name is Tim, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference over to your host, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

Good day, everyone. Thank you all for joining us. With us on the call are Ronald Tutor, Chairman and CEO; and Gary Smalley, Executive Vice President and CFO. Before we discuss our first quarter results, I will remind everyone that during today's call, we will be making forward-looking statements, which reflect management's current assessments of existing trends and information. There is an inherent risk that our actual results could differ materially. Please refer to Tutor Perini's most recent 10-K and 10-Q filings for disclosures about risk factors that could potentially contribute to such differences. The company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law. With that, I will turn the call over to our Chairman and CEO, Ronald Tutor.

Thanks, Jorge. Good afternoon, and thank you, ladies and gentlemen, for joining us today. We had a very strong first quarter of new awards that totaled $2.2 billion of an excellent corresponding book-to-burn ratio of 2.2. It was our largest volume of quarterly awards in more than 6 years and resulted in a total backlog of $8.5 billion, a new record high and up 18% year-over-year. The largest driver was the order we previously announced $1.4 billion design-build lump-sum Newark Airport Terminal 1 project, which is currently in the early start-up breaking ground and commencing work, literally, this month. We believe it will contribute notably to our results starting virtually immediately and over the next 3 years that follow. The strong new award bookings resulted in the year-over-year backlog growth of 16%, 28% and 14% for our Civil, Building and Specialty contractor segments. As usual, I would remind you that strong backlog growth we have been experiencing since 2016 has occurred ahead of any anticipated purported favorable impacts of the federal plan spending measures and has been really a direct result of our state and local agencies' independent funding. Now while our new awards and backlog were impressive this quarter, we unfortunately experienced weaker-than-expected earnings per share results, essentially due to an unexpected negative arbitration decision that we were notified in late April. The decision related to a subcontractor dispute on a Civil segment bridge project in New York that we completed over 5 years ago. When comparing the results of our first quarter this year to last year's first quarter, there were certain projects that had substantially larger revenue and profit contribution than last year's first quarter compared to this year as we had expected accounting for some of the lower first quarter results. We anticipate that as certain other projects ramp up later this year, including Purple Line 2, California High-Speed Rail, CQ33 in New York, I-74 Bridge in Iowa and more importantly, the Newark Airport Terminal 1, our results from the second half of this year should be significantly better than the earlier portion. As I've said numerous times before, pace of activities remains very high and shows no sign of accelerating and when I say activities, bidding activities. Our success in winning large civil project continues into the second quarter. Last week, a joint venture led by our Midwest Highway subsidiary, Lunda Construction, was the low bidder to the - for the Southwest light rail transit project in Minneapolis with a bid of approximately $800 million. This major regional transportation project consists of 14.5 miles of extension of the Metro Green line and involves construction of new light rail infrastructure, 44 bridges, two cut and cover tunnels and 15 new stations. Contract award is anticipated in the next 60 to 90 days, with the project starting shortly thereafter. On the same day last week, Frontier-Kemper, our tunnel subsidiary, was low on $109 million tunneling project in Los Angeles from Los Angeles Department of Water and Power and should also be awarded within the next 60 days within a start this year. Furthermore, in April, we submitted our bid for the Purple Line Extension 3 tunnels at approximately $500 million in Los Angeles, and we're expecting to hear the results of that bid literally any day. Furthermore, June 22, we will bid the tunnel portion of - excuse me, the two stations, the Westwood and the VA stations, which together with the tunnel bid, should relate to $1.8 billion project. We are very confident with our competitive price in Phase 2, and we await those results on the tunnel daily and the station thereafter. Also in late April, we learned that we were the low bidder for the rehabilitation of the Broadway Lift Bridge over the Harlem River in New York at approximately $93 million. This project will begin this summer. This month, we are also bidding a $300 million train yard improvement project in New York. And following a $950 million portable swing bridge replacement in New Jersey, the $750 million Harry Nice Bridge replacement in Maryland and continuing major work from the Newark bridges adjacent to our terminal to LaGuardia people mover. These are just some of the numerous civil opportunities we are focused on as we speak. The Building segment's most significant near-term prospective opportunities include 3 hospitality and gaming projects in California, collectively, were $650 million. The government building project in Southern California at $350 million, a courthouse worth approximately $300 million and numerous other health care and various building projects in the $100 million to $200 million category. We have $400 million in various pending building awards in the Northeastern United States and are waiting the closure of those contracts. In the Specialty Contractors segment, our New York mechanical subsidiary, WDF, anticipates booking the previously announced $172 million Sandy recovering program at the Baroque Houses complex as we speak. The award meaning literally any day with a notice to proceed. In addition, with the award of terminal one at Newark to our Building Group at $1.4 billion, we have awarded a $270 million electrical contract to Five Star Electric and a $92 million mechanical contract to WDF. Overall, our Specialty Contractors Group continues to experience strong electrical and mechanical demand, and the group continues to support our Building and Civil groups on their larger projects. We continue to be very selective as to which projects the Specialty Contractors pursue, particularly in New York. And as a reminder, we anticipate working on fewer but larger and more profitable projects moving forward. Now I'll discuss the major projects that we executed work on during the first quarter. In California, the Civil group's most notable revenue drivers was the San Francisco Central Subway; of course, the California High-Speed Rail and Purple Line Section 2. The excavation portion of the SFMTA project in San Francisco is completed, and we are progressing toward a substantial completion in the fourth quarter of 2019 with testing and commissioning to follow. High-speed rail project continues progressing with major work in multiple locations. However, still experiencing delays in right-of-way as well as easements and other issues that don't permit us to build the work in the manner that we thought. Excavation of the Purple Line Section 2 project will commence in June with the launch bid for the tunnels in Century City, and we will be ramping up dramatically after that June starts for the balance of this year and certainly into the years to come. In New York, the Civil group is making continued progress on the East Side Access projects, namely CMO7, CS179 and CQ33. And in the Midwest, Lunda is increasing its work on the I-74 project with certain other civil projects nearing completion, most importantly SR99 in Seattle. We're in the final phase focused on testing and commissioning the various electrical and mechanical system with an aim to open the tunnel to traffic and complete the project as soon as this fall. The Building segment was busy in the first quarter on various larger projects, primarily in California, Maryland and Pennsylvania. The largest contributor for the group in the first quarter was the large technology office project in Northern California, which, of course, we all know what it is. That is now virtually complete. While this project was the segment's largest contributor, its revenue this year was substantially lower in the first quarter so it, too, was one of the projects that contributed to our modest year-over-year revenue decline. Having said that, the Rudolph and Sletten Building Group has replaced that with two or three other jobs of a large size so we see no downtick in either their revenue or profitability this year. Finally, Maryland Live! Casino and the W Hotel project in Philadelphia continues to progress toward completion. And, of course, as stated previously, the Newark Airport Terminal 1 has commenced as we speak in May, and we are immediately gearing up for a major construction operation with a very strict schedule and our commitment to that schedule. In the Specialty Contractors segment, major contributors in the first quarter included Five Star Electric's work on CS179 and CMO7. It's work on the Hudson Yards Tower A in Cortlandt Street Station as well as Fisk's electrical work on the Transbay Transit Center and SR99 in Seattle. As mentioned earlier, we ended the first quarter of 2018 with a record total backlog of $8.5 million, which, of course, does not include the $1 billion worth of low bids we experienced in the first two weeks of April, which should go to award I would hope by June. I might add we are waiting any day as I believe I said previously for a notice of our bid on the Phase III Purple Line tunnels in Los Angeles for the MTA. We're currently building the Phase II tunnel. The Phase III we're waiting is another $450 million to $500 million, and we expect the results to be published within the next week. The Building segment's first quarter new awards and adjustments totaled $1 billion, resulting in a backlog of $2.2 billion, up 28% compared to the first quarter of last year. In addition to the Newark project, the segment booked more than $500 million of other project awards and adjustments, including a $215 million government office building in California and $82 million of added funding for health care project in California and $79 million of additional funding for another large technology campus in Northern California. The Specialty Contractors segments booked new awards and adjustments totaling $576 million in the first quarter, resulting in a backlog of $1.8 billion, up 14% compared to the same quarter last year. The major contributor to this increased backlog, as I stated earlier, was WDF and Five Star's awards totaling over $360 million on the Newark Airport Terminal as well as Five Star's $76 million PATH tunnels E and F project for the New York Transit Authority, of course, in New York. Based on our current backlog, the market outlook and $1 billion of pending civil awards, we are maintaining our 2018 guidance. We expect the - we expect the diluted earnings per share for 2018 will maintain in the range of $1.90 to $2.30. With that, I'll turn the call over to Gary and the details of our financial results.

Thank you, Ron. Good afternoon, everyone. I will start by discussing our results for the first quarter followed by some comments on our balance sheet, cash flow and our guidance assumptions. Revenue for the first quarter was $1 billion, down modestly as expected compared to last year's first quarter. The decrease was primarily due to various electrical projects in New York that are completed or nearing completion as well as the reduced project execution activity that Ron mentioned on the SR99 project, which is also nearing completion. Lower revenue this quarter also resulted from reduced volume on various other Civil and Building segment projects that are nearing completion, newer projects that are earlier in their project life cycle and are not yet generating a larger volume of revenue expected later and certain delays in the timing of new awards and project execution activities for previously awarded projects. Segment revenues were $263 million, $490 million and $275 million for the Civil, Building and Specialty Contractors segments, respectively. Civil and Specialty Contractors revenue were lower compared to the first quarter of last year due to the reasons mentioned, while Building segment revenue was consistent with the same quarter of last year. As a reminder, several large mass transit projects as well as the Newark Airport project and a large bridge project are all expected to ramp up this year so we anticipate strong revenue growth later in the year. G&A for the first quarter was $68 million, up slightly compared to the first quarter of 2017. The increase was mainly attributable to increased compensation-related expenses, including those related to the retention of certain key executives. Loss from construction operations was $1 million for the first quarter of 2018 compared to income from construction operations of $37 million for the comparable quarter last year. The decrease was largely due to the $17.8 million pretax charge we took as a result of the unexpected outcome of the arbitration decision that Ron mentioned as well as to the larger - excuse me, as well as to the lower volume. As Ron noted, we received the unfavorable arbitration decision in late April. Accounting rules for subsequent events required us to reflect this unexpected charge in our first quarter results. As a result of these factors, Civil segment income from construction operations was $3 million with a corresponding operating margin of 1.1%. We expect the Civil segment's operating income to return to a normalized level next quarter and remain there, given the anticipated start-up and our acceleration of various large projects, including the pending low-bid projects that Ron mentioned earlier. Building segment income from construction operations was $6 million, up 23% compared to last year's first quarter, primarily due to favorable performance on two health care projects in California. Building segment operating margin was 1.3% for the first quarter of 2018, up more than 20 basis points compared to the same quarter last year. Specialty Contractors segment income from construction operations was $7 million, down compared to the same quarter as 2017, mainly due to the reduced volume on various electrical projects mentioned earlier. Consequently, the segment's operating margin was 2.6% this quarter compared to 4.7% in the prior year first quarter. We believe that as various newer and higher-margin projects ramp up this year, the Specialty Contractors segment operating margin should improve to the lower end of the 5% to 7% range that we normally expected the group and that we have been signaling. Interest expense for the first quarter was comparable to the prior year's first quarter with both periods at approximately $15 million. We recognize the tax benefit of $4 million based on our pretax loss of $50 million, which reflects an effective tax rate of 28.1% compared to tax expense of $8 million and effective tax rate of 37.1% for the prior year first quarter. We continue to expect our effective tax rate to be around 29% to 30% for the year, reflecting the impact of the new 21% federal statutory rate offset by the loss of certain tax deductions and the new tax rules. Net loss attributable to Tutor Perini for the first quarter was $12 million or $0.24 per diluted share compared to net income attributable to the company of $14 million or $0.27 per diluted share for the same quarter last year. The decrease was largely due to the project charge, which impacted net income by $12.7 million as well as the timing-related lower project volume. Let's shift gears now and talk about our balance sheet and operating cash. Our project working capital grew slightly in the first quarter of 2018, primarily due to a significant decrease in our accounts payable. Although our cost and excess of billings or our unbilled cost increased this quarter, our actual net cost in excess of billings decreased slightly due to a larger increase in our billings in excess of cost for our advanced billings. We remain committed to significantly reducing our unbilled cost, and as mentioned last quarter, anticipate meaningful reductions to start becoming apparent in the second half of this year and throughout 2019. The increase this quarter in our unbilled cost was once again due to additional cost incurred on certain projects that have some of the larger unbilled positions as these projects advance closer toward completion. Operating cash usage was $73 million for the first quarter of 2018 compared to usage of $33 million for the same quarter last year. Cash usage is typical for us in the first quarter due to normal business seasonality as well as the timing of certain collections and payments. Despite the cash usage in this quarter, we anticipate strong cash generation for the full year in 2018 and continue to target and expect operating cash generation to be in excess of net income as it has been for both of the past two years. Our total debt as of March 31, 2018, was $870 million compared to $736 million at the end of '17, reflecting an increase in our revolver in the first quarter from its 0 balance at year-end due to the expected seasonally low cash quarter. Our leverage ratio for the first quarter of 2018 calculated over a trailing 12-month period was 3.06 below the requirements of our bank covenants that require us to be under 3.5 for 2018. Finally, let me discuss some of our latest assumptions related to our 2018 guidance. For the full year, we still expect revenue growth in our Civil and Building segments, which should be particularly strong in the second half of the year. And we anticipate revenue consistent with 2017 for the Specialty Contractors segment. For the rest of 2018, the Civil segment's operating margin should be in the 10% to 12% range, and the Building segment's operating margin should be in the 1.5% to 2% range, both as we have indicated in the past. For the Specialty Contractors segment, our expectation is that by the end of 2018, our operating margin should reach toward the lower end of 5% to 7% range that we normally anticipate, as I just mentioned. As Ron noted previously, we are maintaining our EPS guidance for 2018 in the range of $1.90 to $2.30. We continue to expect that our EPS generation will be substantially weighted toward the second half of 2018 due to typical seasonality in our first quarter results. Keep in mind that our 2018 guidance projects earnings growth for each of our 3 segments and back fills for $0.43 of EPS we recognized in the second quarter of 2017 related to a $37 million legal settlement. As noted earlier, we still anticipate an effective tax rate of between 29% and 30% for 2018. We also continue to expect approximately 51 million diluted shares outstanding, interest expense of $57 million and of this amount, $12 million will be noncash. Capital expenditures of around $50 million and depreciation and amortization expense now estimated at $55 million. As a reminder, we expect that our G&A will increase modestly in 2018 on a dollar basis as a result of the growth we are anticipating but that G&A will be lower in 2018 on a margin basis when compared to 2017. We also anticipate that non-controlling interest will increase in 2018 to approximately $15 million to $20 million compared to $6 million in 2017. Also as noted earlier, our operating cash in 2018 should exceed net income, as it has for the past two years. Although we do not provide specific quarterly guidance, keep in mind that for the second quarter, we expect some of the same project timing impacts that we experienced in the first quarter. Also keep in mind that in the second quarter of last year, we recorded the large positive legal settlement that I just mentioned. With that, Ron, I'll turn the call back over to you for the questions.

Thanks, Gary. Our record backlog continue - excuse me, together with the continued strength of our current market opportunities gives me the confidence for long-term growth and improved profitability that we speak to. I think this is evidenced by the substantial amount of work that we were either low bidder and/or awarded in the first 4 months of this year and interestingly enough, all of that work was either civil or high-margin, lump-sum, low-bid Building work. So the $3 billion of approximate addition to our backlog was really in work that had significant margins beyond our normal mix of Building and Specialty. Despite the profit shortfall we experienced this quarter, as a result of those fortuitous low bids and contract awards, and in fact, we expect significantly more awards this year of substance to continue to increase our backlog. I believe that the stronger performance expected this year should enable us to obtain the results we have put forth in our profit budgets. With that, I will turn the call over to the operator for the usual questions and answers.

[Operator Instructions] Our first question comes from the line of Brent Thielman of D. A. Davidson.

Ron, obviously, you didn't expect the arbitration ruling that you are keeping $1.90 to $2.30. Look, I just want to drill down a little more, like, is the confidence in the full year because you've got better visibility and the timing of some of this work in backlog versus a couple of months ago? Or is it more - you picked up more work even here since the end of the quarter that sort of backflow schedule this year? I just want to keep my head around keeping that outlook.

Certainly. Well, what really took place with the award of Newark, where we were the, literally, the only bidder. And to our knowledge, we thought there might be one other bidder, but that award was significant in two basis. One, it starts the work immediately; and two, it's share size and profitability. To that, you add additional civil work that I spoke to in the backlog, namely, the light rail project in Minneapolis we were low bidder in April, the tunnel in Los Angeles and the bridge in New York, all of what is over $2 billion in awards and another $1 billion remaining to be awarded shortly are high-margin civil or lump-sum buildings that whatever shortfall we suffered in the unexpected arbitration loss, I feel will be compensated by the additional new high-margin work that instead of in our traditional design-build mode where we wait six months to one year to get the work started generally cost revenue and profits, this work virtually starts immediately. And I expect this work to make up for whatever that shortfall was in that unfortunate arbitration award. I'm also extremely confident in our ability to continue to compete in that L.A. Metro market. As I said earlier, we have a $450 million second tunnel phase. We are very confident. We expect to hear that within the next week. Right behind it, we have $1 billion-plus stations contract. Remembering that both of these mirror the prior contract where we significantly beat our competition, and we continue to be confident we will do that. So I'm really looking at a series of very large jobs and profitability. And I'm telling you that I believe our backlog will continue to break records all the way to the end of the year. We're on a roll.

Okay. That's encouraging. And then - and Ron, the Newark job, I know it's one part Civil, one part Building. On the Building site, is there a reason to think that might carry margins in excess of what that segment typically sees?

That was a hard money bid with virtually no competition. I will tell you that project has civil-level margins across the board.

Okay. And then just lastly on the specialty, I guess, just a question whether those results were within the realm of your expectations? Are you seeing performance is going to mechanical subsidiaries improve?

They were disappointing last year, and what's happening is I continue to meet with them. Some of the negative work from 3 and 4 years ago has finally worn out. All the work we've awarded them and we are, by far, their biggest contributor in backlog and profitability is very high-margin. I know because I review their estimates and dictate their margins. So all these major awards, not only are they profitable for us - the $270 million contract we awarded Five Star was extremely profitable, to put it mildly, as was the $92 million to WDF. We did not take any other bridge from any other contractor, and essentially, we relied on their bids. And I'll let your mind do the wander from that point. So we think that everything is going as good as could be anticipated. I mean, that does not mean we still don't have to execute the work. That, of course, has to take place. But this marketplace and the kind of progress we continue to make with adding to our backlog with high-margin work is a truly an eye-opener even to me.

Our next question comes from the line of Sean Eastman of KeyBanc Capital Markets.

First one, just high-level one for you, Ron. Clearly, some really notable momentum and backlog. It's continuing into the next quarter. I just wanted to get your high-level thoughts on what you guys are seeing here. Do you think TPC is gaining a lot of share here? Or is it just purely really robust conditions and market conditions in the states you guys are in? And just drawing on your experience, I just wonder how long do you think this is going to last? And how much longer you can keep building this backlog the way you have been.

Our two biggest spheres of influence and revenue and profits are the States of California and New York, where we have major offices, major organizations, et cetera. Obviously, those are the two biggest producers of revenue and infrastructure in America. I don't think it's ending. I think it continues to ramp up. And unfortunately, for our industry, many of our peers have struggled significantly, particularly the foreign ones. And the competition as I've said previously continues to diminish and diminish to where it's almost like the last man standing syndrome. For example, on $1,400,000,000 hard bid, we were the only bidder in Newark. On an $800 million light rail rebid, we were one of two bidders. There is very little competition today, and that is reflected, of course, in our pricing and will continue to be. The industry has been very harsh to its participants over the last 30 or 40 years. And I believe the market has changed so that we cannot only maintain our roles in both New York and California, but probably increase our position in those markets.

That's great. And based on your commentary, it doesn't seem like this is a concern, but we've seen more discussion on cost inflation, rising construction costs. Is that something you worry about? And if not now, I mean, at what point does that become a concern? And maybe just more broadly, what's your biggest worry in terms of hitting this 2018 guidance you've laid out?

Let me try to hit that complex question in all its components. The first part of the question was inflation, its impacts on our bids and the risks associated with it. Candidly, I review and manage every major estimate in the U.S. Anything over $100 million I review it no matter where it is and engage [heavily]. Our attitude as a company, if we think there's any inflationary pressure on fuel, labor, materials, et cetera, remembering that we're a very large buyer of all products. We simply look at the market conditions and include in our cost what we believe the worst possible scenario for inflation might be, whether it's labor, fuel, lumber plywood, we just don't take inflation risk. Now if you ask me, what is our greatest risk? As I think, we continue to sign up sizable work at high margins, the biggest question and the biggest challenge will be to know and understand when we've exhausted our executive and project level management core and prudence dictates that we begin to slow down our aggressive bidding and settle in on what we have. I think I've referred to that in calls previously. It's my biggest judgment. We're not there yet, but the way we're signing them up, it may be sometime this year.

And last one quick one for me for Gary. Just given what we saw this quarter with this dispute settlement, I just wanted to ask you guys, given that you still remain confident around reducing those unbilled in the second half and given that settling disputes is a pretty big part of those reductions. Should we be concerned that we'll see other write-downs? May be you could just give us some background on what happened this quarter? And how it relates to future dispute settlements to be expected?

Well, Sean, one thing. This is - they're all independent. They're all mutually exclusive. There's not anything that we saw in this one that is a lesson learned that we would take elsewhere. We evaluate every one of our positions very carefully, and we use top legal counsel to help us in determining our positions. Look, there is always risk in litigation. Our track record historically, we think, compared to everyone else in the industry, we're the leader in our success in litigation. This one was unexpected, caught us off guard. We don't expect these type of things to continue because of the care that we take and the diligence that we apply. We feel good about the positions that we have. We think we are conservative in our book positions. Typically, it did not turn out to be the case in this particular one that was resolved during the quarter. But overall, we believe that we are. So could it happen again? Well, of course, it could. No one would tell you, at least, not honestly that it couldn't. But at the same time, we do feel good about how things are progressing in both the claims of litigation fronts on other projects.

[Operator Instructions] Our next question comes from the line of Steven Fisher of UBS.

Just to follow-up on the arbitration, can you just kind of walk us through what the next potential upcoming legal cases are to be resolved? And when and how they might reflect in size relative to what we've seen in the first quarter?

The next really significant event is we have a mediation with our insurance carriers on the SR99 tunnel. I believe that's set for August, unless the insurance company manages to postpone even that. As such, as you know, that is a $500 million insurance policy that we think we have the benefit of. We paid $42 million for the policy. We think we've got something coming. So that mediation is set for August. I believe the trial starts before the end of the year so that's eminent. And from my experience, as any guide to insurance companies, they share one thing in common: they collect premiums and deny claims until you're on the courthouse steps. And I believe they will step up and do what they're obligated to do in that space. That's the biggest. Secondly, the Long Island LIE claim, the highway job in Long Island that literally goes back to 2005 is due to litigate in the fourth quarter unless as I speak, the state stalled it again. We don't think - I'm personally knowledgeable. I got the post for 3 days. I was involved in the completion of the existing job. I genuinely believe the state is culpable and owes us our claim and that we should certainly generate more than what we've booked. And I would love to litigate a claim where the state paid us, said we owe you for delays and then turned around it went to all Albany for a close-out of a contract. They took back all the money they paid us, and said, we don't care what the district you worked and signed or gave you entitlements, we're not paying you. In our world, we don't think you can do that, but unfortunately, you've got to get in front of a trier effect. So we're very confident about that one. There are a number of smaller claims that we are in the process of negotiation and settlement with the New York School Authority, the City of New York DEP. And I would guess, there must be 20 various claims all the way from $1 million to $25 million, that we are having the kind of discussions where they are admitting entitlements, saying we agree. We cost you and we're discussing dollars and mechanisms as to how we can resolve those, namely the CMO6 claim on the tunnels we took over, the Jamaica station with WDF, the Roosevelt station, 71st and Continental job. Those are all large claims that are well upwards of $100 million, probably closer to $200 million, that are all in stages of discussions with the owner. The exchanges being we understand, we owe you, let's work toward a resolve without having to waste time and money on lawyers. Now whether or not that well-meaning push takes place, we'll see this year. But those are all coming to fruition, and that is why we continue to have a level of optimism that this year, namely, between May and December, we would hope we bring a significant number and dollar amount to closure. Another one is, of course, the Shasta Bridge for Caltrans, which we've had continuous discussions, all of which were based on completion and acceptance of the job so that we can immediately go in to negotiation that took place. We're in talks now. So that's a lot of money being discussed in all a very positive position. And let's hope by the end of this year, there will be major results.

That's helpful, Ron. And on Newark, it seems like a lot is riding on this airport project. And you did mention that it's hard bid. I know you're the only bidder, but what would you say to investors that are nervous about execution on large hard bid and the fixed-price project in the Northeast?

Well, let's put it this way. [Yours truly] is always runs those very large jobs, particularly when they're over $1 billion. And we just don't fail to exceed our bid profits. I think, in the last 10 years, if we managed under my thumb of 5 jobs in the $1 billion range, they all met or exceeded our profit. There's nothing difficult about Newark. It's a steel frame straightforward terminal. We probably built more airport terminals than anyone. We have a great margin on excellent cost. We're very pleased. And for the life of me, I can't see any reason we shouldn't meet or exceed our profitability. And yours truly will be there personally every step of the way to see to it that we do. If we don't, I've only got myself to blame because I will be writing it.

Okay. And just Gary, a couple of quick clean-ups here. It looked like you had a loss on the sale of equipment. I feel like that's uncommon especially for Tutor Perini. What happened there?

We had a joint venture that sold some equipment, and there was - it was [indiscernible]. But anyway - so we sold some of the equipment and it was the best price we can get. So it wasn't a huge loss, but it is something that - you're right, we normally don't experience.

In our experiences over the last 30 years, we just don't lose on equipment sales. However, we're in control as the sole owner on the majority of our equipment. When you have a joint venture and you don't put enough money in the job write-off, the partners always require that you liquidate and that means whatever the market bears at that point, you sell it. And I'm afraid that's what happened to Frontier-Kemper on that particular job.

Got it. And then working capital, Gary, I know it's hard to pinpoint it precisely. But has that turned positive in the second quarter? Or is that more later in the year timing?

I think it's more later in the year, Steve, just with the cost in excess being such a large amount and then also the billings in excess, the billings that we expect to get on some of these lump-sum jobs that we expect to - such as Newark and some of these other bid opportunities that we just won on. We expect those to allow us to advance-build those projects. So as soon as those start to ramp up, Newark right away, the others shortly thereafter, we expect that to turn. So maybe late second, early third quarter, I think you'll start to see a movement there.

There are no further questions of the audio portion of the conference. I would now like to turn the conference back over to management for closing remarks.

Thank you, everyone, for joining us. Hopefully, we were able to answer your questions, and we move onward and upward. Thank you.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful rest of your day.