Jorge Casado - Vice President of Investor Relations and Corporate Communications Ronald Tutor - Chairman and Chief Executive Officer Gary Smalley - Executive Vice President and Chief Financial Officer

Alex Rygiel - B. Riley FBR Steven Fisher - UBS Sean Eastman - KeyBanc Capital Markets Bill Newby - D.A. Davidson

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

Hello and thank you all for joining us today. With us on the call are Ronald Tutor, our Chairman and CEO; and Gary Smalley, Executive Vice President and CFO. Before we discuss our second 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 for joining us. We delivered solid second quarter results of $0.49 per share that exceeded our expectations was strong operating margins in our Civil and Building segments. We also achieved our fourth consecutive quarter of double digit year-over-year backlog growth driven by new awards that totaled $13 billion. Our total backlog grew 15% year-over-year to a new record high of $8.7 billion. The backlog growth was broad based across all our segments, reflecting increases of 12.15% and 24% respectively for our Civil, Building and Specialty contractor segments. Our new awards in the second quarter resulted in a book-to-bill ratio of 1.2. The most significant new awards included the $410 million Purple Line Extension Section 3 Tunnels in Los Angeles, the $172 million Baruch Houses project in New York for WDF, the $93 million Broadway Bridge Rehab by our New York civil group, the $59 million Visiting Quarters project in Charleston, South Carolina for the Roy Anderson company, and the $53 million CSO 86 Tunnel Systems Installation project in New York for Five Star Electric. In addition, we are awaiting contract award and notice to proceed for the previously low bid $800 million Southwest Light Rail Transit project in Minneapolis, pending finalization of Railroad Agreements, which we expect to accomplish in September or October of this year. Furthermore, our subsidiary Frontier-Kemper was recently low bidder on a $121 million tunneling project in Los Angeles for the Department of Water and Power and our Gulf Coast buildings subsidiary Roy Anderson recently won a $68 million Industrial Revitalization project in Mississippi. In addition, our Florida Building Group was a recently low bidder on the $42 million FIS Service Facility at the Fort Lauderdale Airport where we have been working consistently in the last 10 years. In bears repeating as we've communicated in the past that the continuing and significant backlog growth we have been experiencing for the past year has occurred ahead of any anticipated favorable impact of state and local funding measures, as well as the purported sizable federal government program which is not yet been defined. Our revenue and earnings results for the second quarter reflect some of the same project delay and timing issues that we have continued experience, particularly with respect to the High-Speed Rail Program. However, we still expect that a certain other projects ramp up later this year, particularly the recently awarded Newark Airport Terminal One, the Purple Line Section 2, which is now beginning to start construction on all its phases. The California High Speed Rail which continues to work over the 31 miles and the I-74 Bridge being built by Lunda Construction between Iowa and Illinois. These results for the third and fourth quarter should be significantly better than those in the first half of the year, realizing that the projects that are added are over $2 billion of higher margins civil work, as well as an airport terminal for the Port Authority of New York in Newark where we're the only better and it has a civil works type margin. The bidding environment remains very active across all our segments and continues to increase over the coming years as I predicted and it seems with no limits in sight. Later this month, we expect to bid in literally within two weeks the $1.6 billion Purple Line Section 3 Stations in Los Angeles and our New York City office will be bidding over $500 million of civil projects in New York over the next 60 days, including the Throgs Neck Bridge deck replacement. Later in the year, we find the $950 million portal swing bridge replace in New York, the $750 million Harry Nice Bridge replacement in Marilyn, tunnel Phase three in Hudson Yards and a continuing stream of work that keeps our New York office very busy. The New York City MTA recently availed the comprehensive plan to modernize its transit system with a focus on upgrading its antiquated signal system. This plan proposes spending as much as $19 million over the next five years and $18 billion more in the years after that. With funding sources yet to be determined, the plant continues to provide insight into the enormity of scale in project opportunities that are forthcoming. In the Building segment as various near term prospect of opportunities including two large educational buildings valued at $500, two healthcare projects at $400 million and a hospitality project worth $350 million all in California. In addition, the building business has more than $00 million of pending awards on contracts in the final stages of execution. Demand for our specialty contractor services increases throughout the country and no more evident it is then New York City. The New York City Housing Authority or NYCHA recently released its latest physical need assessment in which it estimated that the agency will need to spend $31.8 billion over the next five years to make various repairs and replacements of mechanical and other systems at its 177,000 public housing units. NYCHA's significant customer of WDF and Five Star Electric are mechanical and electrical subsidiaries respectively, so we anticipate significant new opportunities with this customer alone. Needless to say all of the work in New York City continues to aggressively grow in size and scope. The only negative in New York is dealing with those agencies is their inability to bait timely, as well as address issues on a timely basis. So we continue to structure our meetings on the basis that we will support your growth, however we insist on better payment processes that we are to continue to bid your work. Despite all of this increased demand, we continue to maintain a discipline position, only bidding the various larger jobs wherein we get the kind of margins we expect to be appropriate. Now, I will go over some of the major projects that contributed during the second quarter, beginning with the Civil segment in the New York region. Our most active civil projects in New York City included CMO. CQ33 and CS179, all are part of the East Side Access project being completed by the New York Transit Authority. In addition of course, we just started work on a $1.4 billion Newark Airport Terminal 1 project with a projected commencement of steel erection in November of 2018. That job is scheduled to complete in 39 months from April of 2018, so you can understand the generation of revenues and profits that should flow from its construction. In California, our major civil projects include the San Francisco MTA Central Subway project scheduled to complete in the fourth quarter of 2019. The California High-Speed Rail project where we continually press the agency to complete their evaluations of site in delivery of ground we need to complete the contract. AS a matter of fact, we are now in the process of reinstituting our forces and adding back people we have had to lay off because of the delays caused by owner right away issues and it appears that will be in a significant construction mode by October 1. Purple Line Section 2 Extension, we have commenced work on the street closure in the tunnel launch bid in Century City with an eye toward in March or April putting the two tunnel machines in the launch pit and commencing tunneling by June of 2019. We are also in the process of starting the Wilshire/Rodeo Station in October of 2018. So that given by first quarter, all components of Purple Line to both stations and the tunnels should commence work. In the Midwest, Lunda Construction continuous to move on its work on the I-74 Bridge and in Seattle we are in the final 60 days of final testing and commissioning of the systems and the turnover of the SR99 tunnel, which me maintain will be done on or before October 1. Several healthcare facility projects in California were among Rudolph and Sletten in the Building segment stop revenue contributors in this second quarter, those included El Camino Hospital, the persecution cancer building and UCF Medical Center. Other buildings segment contributors was the Rosewood Miramar Beach Resort in Montecito, the Palisades village retail mixed use project in Pacific Palisades and a large technology campus in Silicon Valley expected to ramp up later this year. As a reminder work on Newark Airport Terminal 1 is being split 50-50 between the Civil and Buildings groups, because that project is lump sum with a significant Civil segment type profit margin as the job progresses, it should positively impact the Building segments operating margin of course as well as contributing to the civil margins of Eastern civil. In addition to the prime contract, our sub-contractors Five Star Electric and WDF Mechanical, we have awarded them $360 million dollars of subcontracted electrical and mechanical work to be performed on the Newark Airport Terminal 1 project. Those margins would be in addition of course to the margins that we would enjoy on the prime contract. At the Specialty Contractors segment, major contributors in the second quarter included Fisk's work on the Transbay Transit Center in San Francisco and SR99 in Seattle, as well as Five Star Electrics work on the East Side Access contracts previously mentioned. Based on our results today and our mid-year forecast, we are narrowing our 2018 guidance with diluted earnings per share now expected in the range of a $1.90 to $2.05 per share. With that I'll turn the call over to Gary to present the details of our financial results.

Thank you, Ron. Good afternoon, everyone. I will begin by discussing our results for the second quarter, followed by some comments on our balance sheet, cash flow and our guidance assumptions. Revenue for the second quarter was $1.1 billion compared to $1.2 billion in the second quarter of last year. The decrease was due to reduced activities and certain building segment projects in California and Florida that are now complete and a net reduction of project activities on various civil segment mass transit projects in New York and California. Revenue was also lower due to the timing of work on certain projects as well as continuing delays in the California on the California High-Speed Rail project. Segment revenues were $402 million, $447 million and $271 million for the Civil, Building and Specialty Contractors segments respectively. Civil and Building segment revenues were lower compared to the second quarter of last year, because of the reasons I mentioned and Specialty Contractors segment revenue was slightly lower, due to reduced activities on various electrical projects in New York. As Ron mentioned, our project execution activities are increasing on various major projects including the Newark Airport and the Purple Line Extension projects, so we still expect that our Civil and Building segment revenues will increase in the third and fourth quarters. G&A for the second quarter was $64 dollars, down about 7% compared to the second quarter of 2018. The decrease was principally due to lower compensation and legal expenses. Income from construction operations for the second quarter was $55 million, an increase of 61% compared to the same quarter of last year, reflecting favorable operating margins in the Civil and building segments and improved although still lower than acceptable operating margin in the Specialty Contractor segment. Recall that our results for the prior year second quarter were impacted by unfavorable adjustments on certain projects in the Specialty Contractor segment. As a result of favorable project execution, Civil segment income from construction operations was $49 million in the second quarter, down 15% on lower volume compared to the same quarter in 2017, but with a solid operating margin of 12.3% that matched last year's second quarter margin. Building segment income from construction operations more than doubled to $13 million compared to last year's second quarter result, but because of corresponding operating margin of 2.8% compared to 1.25 for the comparable quarter last year. The increased operating income was largely due to improve profitability on projects in California and certain higher margin projects in Texas and at Newark partially offset by the lower volume mentioned earlier. Specialty Contractor segment income from construction operations was $7 million, a significant improvement compared to a loss from construction operations of $14 million in the prior year second quarter that resulted from the unfavorable adjustments that I just mentioned. The segment's operating margin was 2.8% this quarter compared to a negative 5% in last year second quarter. We still expect that as various legacy projects are completed in the Specially Contractor segment and are replaced by newer higher margin projects, the segment's operating margin should soon improve to the lower end of the 5% to 7% range that we consider the norm and what we consider to be acceptable for this. Interest expense for the second quarter was $26 million compared to $23 million in the prior year second quarter. The prior year period included certain debt extinguishment costs associated with the refinancing of our credit facility last April. Tax expense for the second of 2018 was $12 million which reflects an effective tax rate of 30% compared to tax expense of $20 million, an effective tax rate just under 38% for the same quarter last year. We continue to expect our effective tax rate for the year will be in the 29% to 30% range, reflecting the impact of new 21% federal statutory rate offset by the loss of certain tax deductions. Net income attributable to Tutor Perini for the second quarter was $25 million or $0.49 per diluted share compared to $30 million or $0.59 per diluted share for the same quarter last year. We call that last year second results included a gain of $37 million related to a legal settlement that contributed $21.9 million of net income and $0.43 of the reported $0.59 per diluted share second quarter. Now, we move on to discuss our balance sheet and operating cash. Our project working capital grew slightly in the second quarter of 2018, primarily because of an increase in costs in excess of billings or unbilled cost and a decrease in our accounts payable and retain as payable. Although our unbilled cost increase once again this quarter, our actual net costs in excess of billings have continued to decrease, due to a larger increase in our billings in excess of costs or advanced billings. We remain committed to significantly reducing our unbilled costs. And as mentioned last quarter, anticipate meaningful reductions to begin in the latter part of this year in especially in 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. We generated $11 million of operating cash in the second quarter of 2018 compared to the usage of $2 million in the second quarter of last year. We anticipate stronger cash generation in the second half of this year likely experience for the same period last year, 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 June 30, 2018 was $823 million compared to $736 million at the end of 2017. This reflects an increase in our revolver from its a zero balance at year-end due to the expected seasonally lower cash generation during the first half of this year. Lastly, let me review the assumptions related to the 2018 guidance that Ron provided. We still expect revenue growth in 2018 for our Civil and Building segments and for the company overall. For the remainder of 2018, the Civil segment's operating margin should be continued to be in the 10% to 12% range and the Building segment's operating margin should be 2% or better. For the Specialty Contractor segment, we still expect that by the end of 2018, their operating margin should approach the lower end of the 5% to 7% range. As I noted earlier, we still anticipate an effective tax rate of 29% to 30% for 2108. We also forecast that there will be approximately 51 million diluted shares outstanding, interest expense for the years now estimated to be around $62 million of which $12 million would be noncash. Depreciation, amortization expense is still estimated at $55 million. We now expect that our G&A for 2018 will be approximately level with last year's G&A instead of increasing modestly although the G&A margin this year will still be lower than last year's, due to anticipated revenue growth. And finally, we also now anticipate that non-controlling interest in 2018 will be approximately $10 million to $15 million compared to $6 million in 2017. With that Ron, I'll turn the call back over to you.

Thank you, Gary. The outlook still remains very favorable for our long term growth and improved profitability, well supported by our record backlog and the continuing opportunities and lack of competition we face regularly and a market demand and funding that continues to flow in my opinion almost beyond the capacity of our industry. I continue to be confident that we will deliver the stronger performance through the remainder of this year and even a better year next year most assuredly. With that, I'll turn the call over to the operator for questions-and-answers and thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Alex Rygiel with B. Riley FBR. Please proceed with your question.

Thank you. Nice quarter, Ron.

Thank you.

Your guidance was turned a little bit at the top end for as it relates to the EPS range for 2018. So I'm curious what your thoughts are with regards to what changed in the last sort of three months and has given you a little bit more of a cautious view on the earnings power of the company in 2018?

My primary concern is we have a very profitable contract in High-Speed Rail and the earnings capacity contained within that contract has not diminished. I'm just now beginning to push the agency to releases to go forward with the work. And the only unpredictability is the amount of revenue and the costs associated with that we can generate in the balance of this year. And enormous amount of the work's been shifted in the next year. And the reason I pulled back the upper limits was strictly an issue of being able to perform the work necessary on High-Speed Rail to support my initial analysis. Having said that, we are now generating revenue and cost on Purple Line 2 and that's beginning to increase and the Newark Terminal is significant and we're going full bore with no delays on an accelerated pace. And then we were just awarded the Purple Line 3 Tunnels, another high margins civil job which we hope to start by October 1. So all of this high margin major work just continues to make me more optimistic. But my only hedge is the timeframes in which will generate that revenue and profit to make otherwise long statement shorter pull back the upper-end and feel some degree of confidence that we will still make the lower-end.

And Ron, can you comment a little bit upon through your view on how the recent tariffs and risk of future tariffs could impact your P&L as well as your customer spending plans?

The tariffs even though they're not certainly defined and the biggest area that affects us is steel. Many of our jobs have by America requirements, so where the tariffs affect this when they drive the Chinese steel up and make no bones it's Chinese steel, then it enables U.S. factories to raise their prices. So it hasn't cost impact but let's say for example, our Purple Line Station 2 project which is a $1.371 billion had a total of $31 million worth of steel in the entire job. I believe we protected ourselves, bought the steel before any of this, but I believe the grand total of impact on that amount of steel today would be between $3 million and $4.5 million. So although it's talked about a lot, it really truly does not have a dramatic impact. And to give you another example on the Newark Terminal, we awarded a $77 million steel contract on Newark Terminal to a local subcontractor who is buying American steel and have no edges on tariff and in fact guaranteed price. So we're always wary of the tariffs but so far it's really had no impact on us.

Thank you very much. Good luck.

Thanks.

Our next question comes from the line of Steven Fisher with UBS. Please proceed with your questions.

Hi, Steven.

Hi, Ron. Gary, I think you may have given some color on the revenue expectations for the second half of the year, but I am sure I got it. I'm just wondering if could kind of frame what you think the second half revenues would be versus the first half? And we've now had four quarters in a row of double-digit backlog growth, so just kind of curious when that just started to translate into double-digit revenue growth?

Actually first part of your question Steve, we expect that the revenue growth in the latter part of the year the third and fourth quarter of 2018 is going to happen, is going to be significant. We expect that the growth that we see in the third and fourth quarters will overcome the reductions that we saw in the first half of the year. This is optically for the Civil and the Building segments, so and overall for the company. As far as the higher backlog and when we anticipate that to kick into higher revenue, we expect that to be right away as far as double-digit revenue. Latter part of this year early next year is when we expect to start to see double-digit backlog keeping revenue growth.

Okay. That's helpful. And then I guess to sort of focus the revenue in the second half on Building and Civil, what about the Specialty side of it, when do you think that could flip it becoming positive?

Ron, do you want to take that one?

The Specialty side is not as predictable as the Civil or Building however. All of these major civil awards when you see Newark Terminal, we sign a $1.371 billion contract, we turn around an award $360 million of high margin sub-contracts to Five Star Electric and WDF. We signed up Purple Line 2 at $1.337 billion and we award $210 million to Fisk Electric and Desert Mechanical. So almost every one of these major wards although the prime contract ghost us, it has a significant secondary impact on our major sub-contract. So as our revenue ramps up and our profitability follows, it stands to reason with the level of margins that I review in their proposals, they will follow and should also exhibit substantial growth both in margin and revenue.

Okay. That's helpful. And then Gary, cash flow, it sounds like you're looking for free cash in excess of net income, to what extent does that include any potential legal settlements within matter that or is that sort of flow of profitability?

Yeah no, this is just the flow of profitability what we're looking at and also collection of some of our unbilled will impact that also but that's not necessarily tied to legal settlements.

Okay. And then can you just sort of give us an update on what you experience in the quarter on any legal activity and what you expect in the next quarter or so?

We've settled two or three smaller issues in New York in a range of $3 million to $4 million nothing consequential, we have a $75 million claim teed up in California or a public agency is written us a letter talking about their desire to immediately settle, they've asked for more information, we said we'll give it to him, we in the midst of a structured disputes review board presentation in New York. On another very significant claim with New York Transit, we expect to prevail in the DRB. That should hopefully be prior to the end of November at which time we've been assured by transit management that they will abide by the decision of the DRB and settle that. I go to a mediation and I believe it's September, I can't recall it's either September or October on the insurance company issues on SR99. And again we have our lawsuit with washed out which is supposed to dry in June of 2019. And by the way, the insurance case has been postponed from October of this year to February of next year. So the entire SR99 litigates and/or settles in 2019. We're in trial now as we speak, on the Nova Tutor Perini claim on the Navy Pier job in Seattle that's been ongoing for five years, we've got 4 million in unbilled attached to that. We should have a decision by the end of October. That's enough I could go on forever, but it's all –unfortunately there is so many of them that they're all teed up and one of the key elements is that the this year we're not adding to it, we're closing out. So we put an end to this madness and not being paid.

Is anything go against you this quarter?

No.

Okay. All right. Thanks very much.

Which is always good news.

Our next question comes from the line of Sean Eastman with KeyBanc Capital Markets. Please proceed with your questions.

Hi, gentlemen. Congrats, nice job this quarter. I guess for me just I've been hearing that it's really only been recently that a lot of the fast stack funding momentum has hit the market for contractors. So I'm just curious your commentary was obviously bullish but I'm just curious if you guys are seeing an acceleration in the bidding environment on a civil side or are more of the same? And sort of based on those market conditions, I'm hoping to get some color on what you expect in terms of the backlog trajectory through the second half of the year obviously really strong bookings in the first half, but I'm wondering if we could see that backlog continue to trend up?

Well, I would hope so we're bidding in two weeks the Purple Line 3 stations, we very aggressively beat our peers on Purple Line 2, we then beat them on Purple Line 3 Tunnels. I'd be very disappointed if we didn't beat him in the stations. So with any good fortune at all, we're looking at $1.6 billion the end of this month. Unfortunately, we won't know until December, January which is a result of their process and how they award. We have a $1.5 billion project in New York, we have another one at LaGuardia [ph]. One of our issues right now is we continue to increase the backlog is the constant debate of how more much more work can we really handle. And if I had a target I would like to think crossed the $10 billion backlog threshold, but how much we go beyond that is a real debate within our own management because all of these major projects require a lot of talent to run and we've had very good fortunes over the last 20 years running major projects successfully. But when you run out of people, you just don't pick up that quality on the street. So that's the only negative I can expect backlog to cross that threshold if not by the end of the year first quarter next year which from our standpoint will be a very desirable place to be particularly in light of the increased margins. But we can't continue to grow at that same rate indefinitely.

And I think that's a good answer. So just speaking to reaching TPC's capacity the industry getting there as well. I am just curious where those labor resources in town, resources are the tightest at a particular part of the country a particular type of person. I'm just curious where you're starting to bump up against that kind of capacity level?

It isn't really geographic because the labor force being a union contractor virtually everywhere but a few pockets in the south. We have not had an issue running out of the Union Workman for help. And when we think the unions are strained and the quality of help is not there, we simply increase our labor estimates and hedge against those failures. The difficulties in the qualified management because when you look at billion dollar jobs in I run most of our biggest jobs, the challenge intellectually and technically as such very few companies and very few individuals that have the capacity to run those jobs successfully. It's really not geographic because our management as I am are in airplanes all the time. So if we get a job in Iowa, I may move ten families from California, Nevada and Iowa and they're mobile. The real challenge is in addition to our own training programs and our own people in-house is constantly recruiting more management from outside, increasing our investment and training. So as this work continues to grow in an interest - in an industry absolutely limited in its capacities and abilities. That's a challenge. And that's my biggest concern.

Yeah. Thanks, Ron. And lastly for me, just drilling down on the specialty segment, still struggling a little bit this quarter, it sounded like perhaps it was a bit of a kind of utilization issue. I was just curious if we could get an update on the past back towards that 5% level, kind of what's in plan, what happens between what we're seeing this quarter and that 5% target?

Well, I think it's entirely appropriate to expect an even demand that we reach that level or more. I never thought the 7% was unreasonable, but I suppose we should walk before we run. We have - and I hate to use the term, but we basically almost worn out the bad work we inherited from the early times of the transactions. And I expect by the end of this year although we have some very profitable work ongoing, some of the negatives we will worn out and put behind us. So I really expect to start 2019 in the Specialty Group with an enormous backlog of very profitable work which I expect them to fully deliver the levels we've talked about namely 5% to 7%.

Okay. Thanks so much for the responses and congratulations again.

Thank you.

[Operator Instructions] Our next question comes from the line of Bill Newby with D.A. Davidson. Please proceed with your questions.

Good afternoon and again congrats on the quarter.

Thanks.

I guess presently surprised by the building margin in the quarter. As we see Newark York start to ramp more and become a bigger mix there, I mean we can see those pushed higher at the end of the year in 2019?

In the Building Group?

Yeah.

Let me say that I never look for anything significant out of the Building Group. However, I will remind you that in a moment of weakness I bequeath half of Newark to the Building Group. And the margins on Newark will be such that it will distort upward the Building Group's profitability. And the key element is I don't want anybody believe that that can be sustained in the typical CM model that currently resides in our Building Group. They would just be the beneficiary of their 50% interest in a highly profitable new Newark Terminal. So they are admired in their 1.5% to 2.5% with the exception of Newark which could have an explosive impact on their earnings for the three years of its work then I'll go back to the 1.5% to 2.5%.

I appreciate that Ron, I guess is there any guidance you can give us, we tried think about the upper end of that range to the next three years?

Not at this point, but we'll look at that. And I would certainly hope by the end of the year, we'll project. And I think the biggest single element that we're working on constantly is the resolving collections of the enormity of our unbilled receivables. And that is really key as we settle and close and reduce any potentials for write downs. As we project forward we've got to close out and collect that money. So I think by the end of the year, we'll certainly have our arms around 2019 with really a pretty good handle on 2020 because we've been a beneficiary of such large awards that extend over three to five additional years, there's a degree of predictability.

Appreciate that. I guess just one more for me on the backlog. Ron, you mentioned I mean the goal of $10 billion by end of this year early 2019 is it, do you have enough capacity on the civil business to sustain the current mix there, I means so that I guess another words, should civil still be 55% of the backlog if you hit the $10 billion?

Probably. The real driver of backlog will always be the civil business. It's an arena we're dominant, we're major player. The building business is so competitive and the fees are so poor. It's very dangerous to look for a great degree of revenue when your margins are razor thin. So we will always be driven by our civil backlog as well as our civil capacity on a same token that's where the limits come in. So I don't know whether I confused you, but I think what I try to say is the 10 billion backlog is reasonable and if we went from $8 to $10 in 18 months, don't look for us to go from 10 to 12 over the next 18.

I appreciate it. Thanks for the color and congrats again on the quarter.

Thanks.

There are no further questions in the queue. I would like to hand the call back to management for closing comments.

Thank you everybody for your patience until we meet again.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.