Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Fourth Quarter 2022 Earnings Conference Call. My name is Joe, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. [Operator Instructions] I will now turn the conference over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.

Hello, everyone, and thank you for your participation. With us on the call are Ronald Tutor, Chairman and CEO; and Gary Smalley, Executive Vice President and CFO. Before we discuss our results, I will remind everyone that during this call, we will be making forward-looking statements, which are based on management's current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially. You can find our disclosures about risk factors that could potentially contribute to such differences in our Form 10-K, which we are filing today. The company assumes no obligation to update forward-looking statements whether due to new information, future events or otherwise other than as required by law. Thank you, and I will now turn the call over to Ronald Tutor.

Thanks, Jorge. Good day, and thank you all for joining us. We delivered very mixed results in 2022 and experienced a challenging year from both a revenue and earnings perspective. Our revenue was down considerably compared to 2021 due to a lack of large new Civil segment awards over the past few years, primarily caused by the effect of the COVID-19 pandemic delaying bids and awards of various large projects and induced significant budgetary constraints for certain customers whose bids came in significantly higher than their budget but still low. These factors as well as political and other factors have resulted in us not being awarded large Civil segment projects where we were the low bidder and the pending awardee that totaled more than $10 billion, which, as I had earlier pointed out, we had been the lower preferred bidder. Most of these projects contributed to revenue decline in 2022 but are expected to be rebid later in this year or in 2024. The lack of new awards has prevented us from replacing revenue associated with certain projects that have completed or are nearing completion. Our lower revenue was all a result of significant delays we faced in 2022 on certain mass transit projects in California occasioned, by, in many ways, acts as the owner of inability to achieve right of ways and easements that further delayed our work performance. Our earnings in 2022 were negatively impacted by significant adverse judgments and settlements, several of which resulted in highly unexpected outcome, along with other significant charges and the impact of increases in unapproved work, all of which Gary will discuss in a moment. To give you a sense of the increases in unapproved work, this occurs when we are in receipt of over $150 million of various owner-initiated changes with entitlements. We are performing the work, however, we have not settled the final costs even though we are being paid in the interim. Unfortunately, from an accounting perspective, that requires that all of those change orders be carried at cost with no margin, which dramatically reduces the earnings for the period, which is nothing more than a deferral until they are actually executed and completed. Gary will talk further about that in detail, but that had a dramatic impact as a part of our loss. As a result, we concluded 2022 with a diluted loss of $4.09 a share, including $1.80 per share for the fourth quarter. To the positive, we generated record operating cash of $207 million for the year, the highest operating cash result since the merger of Perini and Tutor-Saliba in 2008, driven by the resolution of many disputes as well as solid overall collection activities. We anticipate that our cash generation will be even stronger for 2023. While we are certainly disappointed with the various negative impacts to earnings in the fourth quarter and for the full year of 2022, we strongly believe and are optimistic for better performance in 2023 and anticipating revenue growth and a gradual return to profitability. We also continue to make excellent progress resolving other unapproved change orders and claim, which will continue to have a very positive impact on our cash flow. Another positive for 2022 is that we were able to maintain our year-end backlog and $7.9 billion, down modestly compared to our backlog at the end of 2021, although still not recovered from its pre-pandemic level of closer to -- we were over $10 million pre-pandemic.

Yes, just before the pandemic, we're $11.2 billion.

Yes. We were at $11.2 billion prior to the pandemic. We're now $7.9 billion. So that gives you a sense of how dramatically our backlog has dropped during this period. Keep in mind, however, that our backlog does not yet include the more than $3 billion of significant potential awards, including the New York City Brooklyn Jail project, which we have released now, have we not, Gary, which we'll release their decision to move forward with an award shortly, valued at $2.95 billion; and two hospitality and gaming projects in California, collectively valued at more than $500 million. We were extremely disappointed to learn last week that Accelerate Maryland Partners will not be proceeding with the Maryland Express Lane project, which we believe would have added several billion dollars to our backlog later this year. However, we are hopeful that we will have another chance to pursue this project as it goes out in the future probably as a design-bid-build. Some of the major new awards that we booked in 2022 include $466 million of additional funding for a mass transit project in California, the $260 million Eagle Mountain Woodfibre Gas Pipeline in British Columbia, Canada; $211 million of additional funding for two educational projects in California; $126 million military facilities project in Puerto Rico; and $108 million of additional funding for mass transit project in the Midwest. Not to mention the $107 million Bachelor's Officers Quarter in Guam. In addition, we just announced that we were awarded a new $75 million contract for Phase 3 renovations at the U.S. Air Force Academy, having completed Phase 1 renovations there in 2020 and currently nearing completion on Phase 2. Let me discuss some changes we have implemented to our business strategy in 2022 primarily dealing with the issues on collections and operations in the Specialty Contractors segment in New York. On the collection side, our focus, especially in the latter part of 2022, has been on expeditiously negotiating settlements of certain Specialty Contractors segment disputes in New York to accelerate cash collections and reduce the risk and uncertainty associated with continued lengthy and costly litigation, arbitration proceedings and settlement negotiations. Our new strategic approach to specialty collection in New York has also considered our experience with certain unfavorable legal judgment and decisions in the last year or 2, particularly in New York City, where the possibility of future litigation and arbitration in New York might have a similar outcome. Our new approach intends to reduce our legal expenses as they trend significantly down and allow us to focus more on our successful execution of projects and on growing the business. In implementing this change in collections, we concluded that significant concessions would be required in a number of disputes to facilitate settlements, ultimately agreeing to settle these disputes for amounts less than what had been previously estimated and might have been obtained if the disputes had been litigated to conclusion. As a part of our business strategy regarding the Specialty Contractors segment in New York, we have made certain and significant key leadership changes in 2022 that will have a positive impact on their future operations. First, we replaced virtually all the senior executives of WDF with their experienced company veterans we moved in from other offices with a history of positive contributions. In the latter part of 2022, we appointed one of our most seasoned senior executives, Ghassan Ariqat, who had previous experience in dealing with New York public agencies and customers in his involvement in the managing of our major Hurricane Sandy repairs years ago. Ghassan will provide much closer week-to-week oversight across all our New York City operations in the specialty group and I expect will successfully lead efforts to drive growth, increase profitability, operational improvements, particularly in the specialty segment, and equally important, resolving disputes and collecting cash. In 2022, we also became increasingly more selective in the type of projects that our specialty group will be allowed to pursue and execute in New York with particular emphasis on both Five Star Electric and WDF. And we have implemented certain risk diversification measures aimed at better managing larger components of our electrical work operations that we expect to provide. Finally, because of more limited competition and high customer demand, particularly in the large complex Civil and Building segment projects, since the latter part of 2021, we have been extraordinarily successful in negotiating much improved project contractual terms, which we believe will contribute to a far more equitable allocation of risk by demanding certain delay in event compensation as well as promoting better working capital efficiency in all of our segments. Some examples of these contract improvements and their terms, including obtaining significant mobilization payments to ensure we never finance the cost of the projects, compensation for owner-caused delays when applicable regardless of prior contract terms and simply refusing contracts entirely that even infer consequential damages are available. We are able to do this because all of these very large projects never have more than two bidders. And our position is clear that if you don't fix the contract, we will not bid. As I mentioned earlier, our backlog remains at the $8 billion plus or just under and is expected to grow significantly, hopefully, by the end of the year with significant awards pending. Furthermore, continued strong customer demand translates to a very large and active bidding pipeline with many more opportunities in place, including in Guam to further grow our backlog, providing a solid foundation and hopefully exceeding our record highs of three years ago, which were in excess of $11 billion of backlog. In times like these, it is important to note that our business is largely resilient to the effects of economic downturns. However, no one could have been prepared for the devastating impact of COVID. COVID was a phenomenon that is -- our industry was never prepared to deal with. It's as if we froze immobile for three years waiting for the effects to decline. We believe that our demand for our services will remain very strong and increase meaningfully, as substantial incremental funding from the Bipartisan Infrastructure Fund has already started to flow and should increasingly flow to our customers this year and over the next several years. This should enable our customers to finally move forward with many other large complex Civil and Building projects that have been in the planning and development stages for years and hopefully cure some of the budgetary issues that we have seen derail some of our recent low bids and contract awards. For us, this is not a matter of if we will win our share of significant new civil projects but simply win and how quickly they will commence and ramp up. Our Civil business continues to be our primary focus, and it will continue to be the driver of our future growth and profitability, and it's historically been the part of our business most resilient and successful during economic downturns as well as the pandemic. As I mentioned earlier, the City of New York will be holding a public hearing on March 23 regarding a proposed contract award to Tutor-Perini for the new Brooklyn jail valued at $2.95 billion. We are also awaiting a decision before the end of March on the $1.5 billion JFK Roadways, Utilities and Ground Transportation Center for the Port Authority of New York for which we submitted our bid in January as well as the decision in the coming months on Frontier-Kemper's bid for the $500 million Great Lakes tunnel project. Other larger near-term opportunities include the $3 billion-plus Queens jail for the same city of New York prisons that we are very optimistic about that we will make our proposal in May; part of the replacement, of course, of the Rikers Island prison facility, which has been mandated by the federal government; the $2-plus billion Honolulu Rail Transit project, which we bid in 2020 and were announced as the apparent low bidder even though it was ultimately rejected because it was significantly over budget; and the $1.5 billion Inglewood Automated People Mover Project in Southern California, which will bid between the third and fourth quarter. With the significant pending awards mentioned earlier, combined with these large prospective opportunities, we look forward to growing our backlog in the near term to what will be a new record level, providing a solid foundation for future earnings and success. We anticipate 2023 will be a transitional year for us as we forecast a return to revenue growth and profitability, as we continue to advance various large projects in backlog while preparing for the commencement of pending new significant projects mentioned earlier and the result in increase in our backlog appreciably. Accordingly, our assessment for the current market and business look, we are initiating our EPS and guidance for 2023 at a range of $0.45 to $0.65 with earnings expected to be about 2/3 weighted in the second half of the year. Our guidance range considers our expected pace of backlog conversion and the anticipated volume of new awards. Looking ahead, we expect to have substantially higher EPS performance in 2024 and beyond as we transition out of the depths of the pandemic issues back to a more normal workplace. Thank you. And with that, I'll turn the call over to Gary Smalley to review the financial results.

Thank you, Ron, and good afternoon, everyone. I will start by discussing our results for the year, including our record operating cash, after which I will review the fourth quarter. I'll then follow up with some comments on our balance sheet and our 2023 guidance assumptions. As Ron mentioned, we faced significant challenges in 2022 that negatively impacted our revenue and earnings for the year and especially in the fourth quarter. As he also mentioned, operating cash flow was the major highlight of our 2022 results. We generated record operating cash of $207 million for the year, the largest amount of operating cash since the merger of Perini Corporation and Tutor-Saliba back in 2008, which was driven by solid collection activities, including the resolution of certain claims and unapproved change orders. We anticipate that we will again have strong operating cash generation in 2023 due to projected cash collections, both from project execution activities and the resolution of various other outstanding disputes. Revenue for 2022 was $3.8 billion, down 18% compared to 2021, with the decrease driven by various factors, as Ron mentioned earlier, including the lack of major new awards over the past few years that were primarily induced by the COVID-19 pandemic and related customer budgetary constraints as well as delays in 2022 on certain mass transit projects in California. The revenue decline in 2022 was also due to the unfavorable impact of various project adjustments that resulted from certain adverse legal judgments or decisions, significant settlement activity, changes in estimates for project charges net of positive impacts from improved productivity and efficiencies on certain projects as well as some temporary negative impacts due to certain catch-up adjustments that I will discuss in a moment. Civil segment revenue for 2022 was $1.7 billion, down 17% compared to 2021. Building segment revenue was $1.2 billion, down 13% from the prior year. And Specialty Contract segment revenue was $813 million, down 27%. Loss from construction operations for 2022 was $205 million compared to income from construction operations of $227 million for 2021. Our operating income for 2022 was negatively impacted by an aggregate $330 million related to adverse judgments or decisions, significant settlements and changes in estimates for project charges that I mentioned earlier. Of this amount, $148 million was related to adverse judgments or decisions. $85 million was associated with significant settlements, and $97 million was related to various changes in estimates for project charges, net of positive impacts from improved productivity and efficiencies on certain projects. In addition, there were temporary negative project catch-up adjustments that Ron mentioned earlier. These totaled $120 million in 2022 due to increases of unapproved work on various projects as well as the successful negotiation of significant lower margin and lower risk change orders on a Civil segment mass transit project, which are all expected to reverse themselves over the remaining lives of the respective projects. All of the project charges were due to changes in facts and circumstances that were identified in 2022. In certain cases, the changes in facts and circumstances resulted in changes in estimates to their expected recoveries for certain disputed matters, which were identified as part of the implementation of the new collection strategy and were primarily related to the Specialty Contractors segment in New York. For further details, I refer you to our 10-K which we are filing today, where you will find information regarding the material impacts within these categories. In addition, our reduced revenue in 2022 contributed to a decline of approximately $58 million in income from construction operations for the year. Civil segment income from construction operations was $21 million in 2022 compared to $266 million in 2021. Building segment income from construction operations was $7 million compared to $29 million last year, and Specialty Contractors segment reported a loss from construction operations of $168 million in 2022 compared to a $10 million loss in 2021. The $330 million of adverse judgments, settlements and changes in estimates for project charges in 2022 negatively impacted the Civil, Building and Specialty Contractors segments by $128 million, $22 million and $180 million, respectively, while the $120 million of temporary negative project adjustments affected the Civil, Building and Specialty Contractors segments by $77 million, $3 million and $40 million, respectively, with about half of the Civil segment impact due to the successful negotiation of change orders on the civil project in California that I just mentioned. Clearly, we had a challenging and disappointing year overall from an earnings perspective. But as Ron mentioned, we anticipate a return to revenue growth and positive earnings in 2023 with significantly better results expected in 2024 and thereafter. Corporate G&A expense in 2022 was $62 million compared to $58 million in 2021. Other income in 2022 was $7 million compared to $2 million in 2021 with the increase primarily due to interest earned on federal income tax receivable balances. Interest expense in 2022 was $70 million, essentially level compared to our interest expense in 2021. We reported an income tax benefit of $75 million in 2022 due to our significant pretax loss for the year and associated effective tax rate of 28.1%. This compared to income tax expense of $26 million in 2021 and an effective tax rate of 16% that year. The higher tax rate in 2022 was actually beneficial such it provided additional tax benefit to help offset the impact of our pretax loss for the year. Net loss attributable to Tutor Perini was $210 million or a loss of $4.09 per share in 2022, compared to net income attributable to Tutor Perini of $92 million or $1.79 of earnings per diluted share in 2021. The decline was mostly due to the various factors I mentioned earlier that drove our loss from construction operations in 2022. Now for the fourth quarter results. Revenue for the fourth quarter of 2022 was $907 million, down about 13% compared to approximately $1 billion for the same quarter last year. The decrease was primarily due to reduced project execution activities on certain projects that are completed or are nearing completion as well as negative impacts associated with some of the previously mentioned adverse judgments, settlements and changes in estimates for project charges, particularly in the Specialty Contractors segment. Civil segment revenue for the fourth quarter of 2022 was $440 million compared to $519 million for the fourth quarter of 2021. Building segment revenue was $327 million compared to $277 million for the same quarter last year. And Specialty Contractors segment revenue in the fourth quarter of 2022 was $140 million compared to $241 million last year. Loss from construction operations for the fourth quarter of 2022 was $97 million compared to income from construction operations of $56 million for the same quarter of last year. The largest driver of the decrease was the underperformance in the Specialty Contractors segment, which was mostly the result of the various factors I mentioned earlier. The Civil segment had income from construction operations of $9 million for the fourth quarter of 2022 compared to $78 million for the fourth quarter of 2021, while the Building segment had a $2 million loss compared to a $9 million of income from construction operations for the same quarter of last year, with Specialty Contractors segment reporting an $86 million loss from construction operations in the fourth quarter of this year compared to a loss of $16 million last year's fourth quarter. For the fourth quarter of 2022, adverse judgments, settlements and changes in estimates for project charges totaled $142 million and impacted the Civil, Building and Specialty Contractors segments by million $44 million, $12 million and $86 million, respectively, while temporary negative project adjustments were rather nominal in the quarter. Corporate G&A was $17 million in the fourth quarter of 2022 compared to $16 million for the same quarter of last year. Interest expense for the fourth quarter of 2022 was $20 million compared to $17 million in last year's fourth quarter, with the increase principally due to higher interest rates compared to the same period last year. We had an income tax benefit of $28 million for the fourth quarter of 2022 compared to an income tax benefit of $700,000 for the prior year fourth quarter. And the corresponding effective tax rate was 24.2% for the fourth quarter of 2022 compared to 1.6% for the comparable quarter last year. Due to the various factors that I mentioned, net loss attributable to Tutor Perini for the fourth quarter of 2022 was $93 million or a loss of $1.80 per share compared to net income attributable to Tutor Perini of $29 million or $0.57 of earnings per share for the same quarter last year. As for our balance sheet, our net debt as of December 31, 2022, was $699 million, down 12% compared to $791 million as of December 31, 2021. The decline was due to a lower level of debt and a higher level of cash on hand at year-end 2022. With regard to our credit agreement, due to the weak earnings performance in 2022, but especially for the fourth quarter of the year, we worked closely with our lenders and finalized amendment that increased our maximum reliable net leverage ratio to 3.5:1, was previously 2.75:1, for the fourth quarter of 2022, with a further increase to 3.75:1 for the first quarter of 2023, after which we'll step down to 3:1 for the second quarter, 2.5:1 for the third quarter and 2.25:1 for each quarter thereafter. As of December 31, 2022, we are in compliance with the covenants under our credit agreement, and we expect to continue to be in compliance in the future. Debt reduction remains our primary near-term focus for the use of cash. As I mentioned on our last earnings call, on or before April 7 of this year, 2023, we plan to make a significant excess cash paydown on the outstanding balance of our Term Loan B, which is required by the terms of the debt agreement based on the cash generation that we had in 2022. Based on the amount of our operating cash in 2022, this paydown will be $44 million. Looking beyond the Term Loan B paydown and depending on how quickly and to what extent we generate excess cash, we may consider other capital optimization strategies later in the year. Finally, as Ron mentioned earlier, our initial 2023 EPS guidance is in the range of $0.45 to $0.65, which we believe is prudent given our expectations for the year but which also consider some amount of uncertainties such as the timing of anticipated awards and subsequent ramp-up of new projects. Here are some key assumptions factoring into our guidance. G&A expense for 2023 is expected to be between $250 million and $260 million. Depreciation and amortization expense is anticipated to be approximately $47 million in 2023 with depreciation of $45 million and amortization of $2 million. Interest expense is expected to be approximately $81 million, of which about $4 million will be noncash. The higher interest expense expected in 2023 is primarily due to higher interest rates, partially offset by a lower anticipated average outstanding debt balance. Our effective income tax rate for 2023 is expected to be between 22% and 24%. We expect noncontrolling interest to be between $40 million and $45 million. We are forecasting 52 million weighted average diluted shares outstanding for 2023. And lastly, capital expenditures are expected to be approximately $45 million to $55 million, of which about $15 million will be owner funded and project specific. Thank you. And with that, I'll turn the call back over to Ron.

Thanks, Gary. To briefly recap, we recorded operating cash of $207 million in 2022 and ended the year with a reduced backlog flat at $7.9 billion with the clear expectation that in 2023 we will book significant new awards, especially since we just announced the potential of the New York City prison award at $3 billion. We also expect our cash generation will continue to be significantly stronger in 2023 as trial dates, continuing negotiations and mediation will force those results to take place finally after years of delay. We have many prospective project opportunities that we will be pursuing this year and next, driven by consistently solid demand for our construction services and further bolstered, as I referenced earlier, the new funding forthcoming from the Bipartisan Infrastructure Law. We look forward to a return to revenue growth and profitability in 2023 and significantly more in 2024 and beyond as we extricate ourselves from the results of the pandemic and the resolve of all these disputes currently being accomplished. Thank you. On that, I will turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from the line of Tony Christ with Odyssey Investments. Please proceed.

Thank you. Well, congratulations on the future. This is an early congratulations, but the future does seem to mitigate everything that's happened in the past. But I can't begin to tell you how often COVID has come up in the blame position in just so many instances and so many calls. That said, I want to ask, if you look toward -- if you have anything in the future looking toward doing projects on other state levels possibly with muni bonds, possibly areas other than California and New York and even Maryland, all of which are very debt ridden, and I'm talking about the future.

Well, we look at all the major opportunities all over the country, and we make judgments based on, we think, our biggest strengths. For example, we don't typically bid large projects in the Southeast because it's a nonunion area, and we're a union contractor, which makes it extremely difficult for us to compete in a nonunion atmosphere. We are a major player in the Midwest through Lunda Construction. We work up and down the West Coast, and we work out of our New York office in the Mid-Atlantic states and even New England for that matter. So I think we cover most of the areas where large, complex projects step forward. So one of the issues that we've been dramatically hurt by, as I reiterated in the call, was, my goodness, we've been low bidder on just about $11 billion worth of work in the last 24 months that was all tossed because it was over the owner's budgets, and they were unable to finance their own work. That's more low bids than we've lost in the history of the company over 50 years in the last two. So to say that we're pleased that it appears the curse of the pandemic is behind us. The court systems have finally opened up after being frozen immobile for over two years, so everything points to a much better future than the abysmal 2022 year, which is the culmination of everything. So we agree with you. It looks much better in the future. We think we'll be a beneficiary of it. But we continue to press to settle and collect our monies because we see that as a key to generate cash, settle our claims and move on.

Do you feel that a lot of that $11 billion will be coming back up in the next two years?

It will all come back. It isn't like they've thrown the projects away. For example, we've talked to the state of Maryland. We had no knowledge that our developer was going to cancel it. They're already talking about Phase 1, which was the major bridge in 1/4 of a mile of roadways at $700 million or $800 million, they expect either in the latter part of this year, the first quarter next year. We were a low bidder on the Newark AirTrain at $2.8 billion. The owner has broken it up. They're outbidding the transit system and railcars now. They expect the main guideway contract, which we were low bidder on, to advertise fourth quarter this year, probably award the first quarter next year. The heart job, we were initially low at $2.8 billion two years ago. We're back out qualifying with the bid going in later this year. So they're all coming back. It's just they got pushed back two and three years, which, of course, killed our revenue and any projections we had.

And of course, we have to recompete on those when they have come back.

You'll keep us notified on any bids, of course, and I wish you all the best. Sounds like an exciting year.

Thank you so much.

Thank you.

Our next question comes from the line of Dhruv Ohri with Vibrant Capital. Please proceed.

Hi, guys. Thank you for all the good color. Just a quick one for me. Have you repaid any debt between the end of 4Q and today's call?

No. At this point, we have not. But we do have the Term Loan B payment, the mandatory $44 million I mentioned earlier that is coming up within the next month, actually within the next three weeks. So we'll be paying that. But the rest of the debt has not been paid down, no.

Got it. Thanks guys.

Thank you.

Thank you. Ladies and gentlemen, there are no further questions at this time. I'd like to turn the call back to Mr. Ronald Tutor for closing remarks.

Thank you, everyone, for joining us. Hopefully, the future will bear much better results as we move forward, and of course, we'll keep you posted on any major events as is appropriate. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.