Perini Corporation Q4 2008 Earnings Call Transcript

Feb.25.09 | About: Perini Corp. (PCR)

Perini Corporation (PCR) Q4 2008 Earnings Call Transcript February 25, 2009 4:30 PM ET

Executives

Ronald Tutor - Chairman and Chief Executive Officer

Robert Band - President and Chief Operating Officer

Kenneth Burk - Senior Vice President and Chief Financial Officer

Analysts

John Rogers - D.A. Davidson

Richard Paget - Morgan Joseph & Co. Inc.

Steven Fisher - UBS

Avi Fisher - BMO Capital Markets

Operator

Good day, ladies and gentlemen, and welcome to the Perini Corporation fourth quarter 2008 earnings conference call. My name is Michelle and I will be your operator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Kenneth Burk, Chief Financial Officer. Please proceed.

Kenneth Burk

Good afternoon, everyone. Thanks for joining us on Perini's fourth quarter 2008 conference call. With us today are Ronald Tutor, Chairman and CEO and our President, Robert Band.

For our agenda today, Ron Tutor will discuss the highlights of the quarter and Bob Band will share details about prospects and the status of our management services operations. After that, I will review the Company's fourth quarter financial results in detail and provide updated guidance for the fiscal year 2009. Ron is going to come back and make some closing remarks and at that point, we will open up the call for questions.

Before we start, I would like to remind our listeners that our comments today will contain forward-looking statements including statements about future guidance. Management may also make additional forward-looking statements in response to your questions. These types of written and oral disclosures are made pursuant to the Safe Harbor provision contained in the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from anticipated results.

The Company cautions that any such forward-looking statements are based upon assumptions that the Company believes are reasonable but that are subject to a wide range of risk and actual results may differ materially. These risks and uncertainties are discussed in detail in our filings with the SEC including Perini's annual report on Form 10-K for the fiscal year ended December 31,2007, our quarterly report on Form 10-Q for the quarter-ended September 30, 2008, our definitive proxy statement filed on August 6, 2008 as well as in today's news release.

Our statements on this call are made as of today, February 25, 2009, and the Company undertakes no obligation to update any of these forward-looking statements contained in the call whether as a result of new information, future events, changes in expectations or otherwise.

With those formalities out of the way, it is my pleasure to turn the call over to Ron Tutor.

Ronald Tutor

Thanks, Ken. Good afternoon everyone and thank you for joining us on the call today. It is fair to say that we in the construction industry are going through some interesting time. There has never been to my knowledge such a rapid decline in private nonresidential markets followed by an acceleration of government spending in public building with particular emphasis on civil infrastructure work with a significant degree of magnitude.

Fortunately, we are well positioned to deal with this dramatic shift in the construction market. As one of the largest, most diversified general contractors in the US, we believe that we will be able to be one of the leaders in the industry through even this the most challenging of time. During the fourth quarter, we had a loss of $163 million and a diluted loss per share of $3.29. This was the result of the write off of $202.8 million after taxes of goodwill and other intangible assets associated with the current economic crisis and its associated impact on the carrying value of Tutor-Saliba.

As to noncash impairment charge, there is no impact on our liquidity or ability to pursue new business opportunity. Setting the impairment charges aside, this was another good quarter with record revenue of $1.6 billion in record net income of $39.9 million. Pro forma diluted earnings per share were $0.79 for the fourth quarter. The backlog of uncompleted construction work at December 31, 2008 was $6.7 billion.

Currently, we have approximately $2.3 billion of pending awards for which we have received letters of intent or notices from customers we are their preferred contractor. Today, many of our private customers are taking a wait-and-see attitude until the turbulence in the credit markets subside and consumer confidence is restored. For example, most of our gaming and hospitality customers in both the US and Dubai have suspended their plans to start working until they can better estimate demand for their product and see a more normalized and stable credit market.

Therefore, as a result of the delays in economic impacts, we have reclassified approximately $3.6 million of pending awards we announced in the third quarter to longer term prospects. On the other hand, where there is the shift out in private building business, there are more attractive near-term market opportunities in public works for significant major civil works projects all over the country. These times highlight the core strength of our Company as one that is capable of rapidly deploying our skilled resources and equipment in response to changing market conditions or either private or public market opportunities.

With the addition of our latest acquisition, Keating Building Company, we have strengthened our building operations in the eastern floor with the ability to perform both private and public building work in that region. Keating has a long history of performing outstanding work and we expect to add approximately $840 million of Keating work to our backlog in the first quarter of 2009. Integration with Tutor-Saliba is well underway with specific emphasis now being in placed on centralizing our back office functions through a shared service model. This model will support the integration of Perini business in all of the operating segments.

Our objective is to become a more scalable organization with the ability to support operations on a national level through shared service from one of a number of primary locations. As a result, we expect to significantly reduce our run rate G&A starting fourth quarter of 2009 and first quarter of 2010. We continue to make progress with integrating our civil business and see a number of opportunity to take advantage of our geographic presence in major areas such as New York, Washington DC, California and Florida.

We have established the key leadership team for each of our operating, estimating and equipment management role. We have also begun to experience the benefits of our vertical integration strategy in our building operation. For example, we will be self performing more concrete work in bringing our customers the benefit of our mechanical contracting operation as well as a growing electrical contracting operation. We expect to continue to improve our operating margins as we leverage our resources across all of our building operation.

Now, I would like Bob Band to share more details of prospects to management service.

Robert Band

Thanks, Ron. I will cover an update on pending work, prospects and our international opportunities.

Pending projects of $2.3 billion mentioned earlier by Ron include $2 billion in building work and $300 million in civil work. The building work includes $900 million of gaming, hospitality and condominium projects, $800 million of education and healthcare and $300 million of industrial and government work. The pending civil work is transit system related.

Our targeted private negotiated prospects are largely dependent on economic recovery and availability of financing and in addition, as Ron mentioned, the construction markets in Dubai and Abu Dhabi are undergoing their own economic slowdown. Projects in that region that we were awarded for pre-construction services are now on hold. However, domestic spending on education, healthcare, industrial and government building projects is expected to dramatically increase in 2009. For example, we have identified in our tracking approximately $10 billion in targeted projects in these markets that could be bid and proposed on in 2009 and early 2010.

The stimulus package should be additive to what we see now. The market for public civil infrastructure projects should continue to open up over the course of 2009. Several funding initiatives from the stimulus plan should give way to additional bidding opportunities in our target markets. We estimate the size of our market in civil infrastructure to be in excess of $30 billion in the regions we are now working at. The question is not if, but when the projects will be put on the streets to be bid. We expect significant contributions from our civil work to increase in the second half of 2009.

The estimates range from $10 billion to $15 billion in construction spending over the next several years for the relocation of US Marines from Okinawa, Japan to Guam. We continue to believe the process is proceeding under the agreement between the two countries and includes work in both Guam and Okinawa to be finally completed in 2014. The business outlook for projects in Iraq and especially Afghanistan continues to be attractive for Perini management services and US has recently announced a surge of additional troops targeted for Afghanistan.

Major projects in Iraq are progressing on schedule and include overhead cover, construction projects, hard in housing and other facilities for the US Military and US Department of State. Our runway and taxiway projects in Guam under the US Air Force SATOC program are under construction and on schedule.

With that, I am going to turn the call back to Ken who will give you the financial details for the quarter.

Kenneth Burk

Thank you, Bob. We completed the merger with Tutor-Saliba in the third quarter and accordingly our fourth quarter 2008 results include Tutor-Saliba for full quarter and are included in each of our reporting segments. Our mechanical and electrical businesses are included in our building segment in Black Construction, Tutor-Saliba subsidiary in Guam is including in our management services segment.

As noted in our press release today, our fourth quarter and full year 2008 operating results were significantly impacted by a $202.8 million after tax impairment charge relating the goodwill and certain intangible assets recorded in connection with our merger with Tutor-Saliba. The impairment is specifically related to the current economic crisis and significant changes in our markets which we experienced during the fourth quarter and estimated to continue through 2009.

Impairment charge is noncash and therefore, does not affect our cash position or prospects for new business opportunities. On a pro forma basis excluding the impairment charge or net income would have been $39.9 million for the fourth quarter of 2008 and $127.7 million for the full year 2008. We ended 2008 with a backlog of $6.7 billion, to breakdown by segment; building $5.7 billion, civil $528 million and management services $416 million. In the fourth quarter of 2008, revenues were $1.6 billion, an increase of 29% from $1.25 billion reported in the fourth quarter of 2007. Most of the revenue increase is due to the addition of Tutor-Saliba.

On a reportable segment basis, revenues from our building segment were $1.39 billion, an increase of 19% from $1.16 billion in the fourth quarter of 2007. Revenues from our civil segment were $118 million, up 129% from $52 million reported in the fourth quarter of 2007. Management services were $95 million for the quarter, up 207% from $31 million a year ago primarily as a result of higher volume of work in Iraq and the addition of Black Construction.

Our total gross profit increased 77% to $110.2 million from $62.2 million in the fourth quarter of 2007. This increase is primarily due to the increase in revenues noted before and our improved operating performance by our civil segment.

General and administrative expenses were $44.8 million, up 59% from $28.2 million in the fourth quarter of 2007. This was primarily due to the addition of Tutor-Saliba. Total G&A expenses were 2.8% of revenues compared with 2.3% in the fourth quarter of 2007. After a $224.5 million pretax impairment charge, we had a loss from construction operations of $159.1 million in the fourth quarter of 2008.

The pretax impairment charge is broken down as follows; building $197.6 million, civil $6 million and management services $20.9 million. Excluding the charge, we had income from construction operations of $65.4 million compared to income from operations of $34 million in the fourth quarter of 2007. Overall, we increased our margins from 2.7% to 4.1% year-over-year.

Breaking down income from construction operations by segment before the impact of the impairment charge, the building segment income for the quarter was $39.7 million, an increase of 15% from $34.5 million in the fourth quarter of 2007. This increase was due primarily to the higher revenues as discussed earlier.

Civil segment income from construction operations was $14.5 million in the fourth quarter of 2008 compared to a loss from construction operations of $5 million in the fourth quarter of 2007. The addition of Tutor-Saliba made a positive impact along with improved operating performance from both our New York civil and Cherry Hill operations.

Management Services income from construction operations was $17.7 million in the fourth quarter of 2008 compared to $10.9 million in the fourth quarter of 2007. This increase reflects the significant increase in revenues noted before including the positive impact of the addition of Black Construction.

Other income was $2.9 million in the fourth quarter of 2008 compared to $5.8 million in the fourth quarter of 2007 due primarily to lower interest income. Interest expense increased $2.4 million in the fourth quarter of 2008 from $400,000 in the fourth quarter of 2007 due primarily to debt assumed in conjunction with the merger with Tutor-Saliba and more expense extensive equipment financing in 2008.

The provision for income taxes was $4.4 million compared to $16.5 million in the fourth quarter of 2007. Even though we had a loss before income taxes in 2008, the provision for income taxes was necessary due to the non-tax deductible nature of the goodwill portion of our impairment charge. Due to the impairment charge recorded, net loss was $163 million in the fourth quarter of 2008 compared to net income of $22.9 million in the same quarter a year ago. Again, on a pro forma basis excluding the impairment charge or net income would have been $39.9 million for the fourth quarter of 2008.

Diluted loss per share was $3.29 in the fourth quarter of 2008 compared to $0.83 for the same period of 2007. On a pro forma basis, excluding the impairment charge or diluted EPS, it would have been $0.79 for the fourth quarter of 2008. For the full year, we recorded record revenues of $5.66 billion, up 22% from last year. Year 2008 marked our third consecutive year of record revenues. Due to the impairment charge recorded, net loss for the year was $75.1 million compared to net income of $97.1 million a year ago.

On a pro forma basis excluding the impairment charge, our net income for 2008 would have been a record $127.7 million and our full year EPS would have been $3.67. Looking at our balance sheet at December 31, 2008, our working capital stood at $225 million, down from $293 million at December 31, 2007. This represents the current ratio of 1.13 to 1.

As mentioned lat quarter, the decrease in working capital reflects the reclassification of our auction rate securities. As of December 31, 2008, we had $386.2 million in cash and cash equivalents compared to $459.2 million at December 31, 2007. We recorded $92.1 million in cash from the merger with Tutor-Saliba. We generated $126 million in cash from operations in 2008.

However, our cash balance decreased due primarily to investments in the auction rate securities, $66.8 million for purchases of property and equipment, $38.7 million for repayments of debt, $58.7 million for the repayment of shareholder notes arising out of the merger with Tutor-Saliba and $31.8 million for purchases of our common stock under our authorized share repurchase program.

At December 31, 2008, long-term debt stood at $61.6 million excluding current portion. We had $137.1 million available under our revolving credit facility plus an additional $110.6 million available under a supplemental standby line of credit for incremental liquidity support should we need it while we await opportunities to liquidate our investments in auction rate securities.

The supplemental line of credit will reduce dollar for dollar as we liquidate our positions in auction rate securities. This line was recently extended to December 31, 2010. Stockholders equity increased $770 million to $1.14 billion from $368 million at December 31, 2007. This was primarily due to the equity issued in connection with the merger with Tutor-Saliba.

We believe that our current financial position and credit arrangements provide us with the adequate resources to meet our liquidity and working capital requirements and implement our business plans in the future.

For fiscal 2009, the Company is lowering our guidance for revenues and diluted earnings per share to a range of $5.5 billion to $6 billion and $2.60 to $2.80 respectively. This guidance is reflective of current economic conditions including the challenges in the credit market and the associated impacts on funding for new construction start in the near term.

I will now turn the call back over to Ron for his closing comments.

Ronald Tutor

Thanks, Ken. The fourth quarter marked the 13th consecutive quarter of record revenues for Perini. In spite of the current challenges and speculations in the markets, we are extremely well positioned geographically reported by our expertise and abilities as a true builder of large complicated buildings and more importantly, civil projects for the public and private sector. We are also fortunate to have a strong balance sheet and backlog award to carry us through these challenging times.

With the stimulus package now in place, we should be able to capture our share of business that will begin to fill the void of private, gaming and hospitality work that has been put on hold or deferred until economic conditions improve. There is a vast level of major civil works currently being bid in the United States in many of the areas where we consider our self one of the strong competition in a limited group of contractors able to build those projects. That was even prior to the stimulus package being introduced by the government.

We think our strength in civil works will more than carry us through the difficult next, what we consider to be the next two years of difficulty that is facing everyone in our country.

That concludes our prepared remarks. Bob Band, Ken Burk and I will now take your questions.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from the line of John Rogers with Davidson.

John Rogers - D.A. Davidson

First thing is can you just tell us if there were any major projects that came out of backlog? Were there a lot of smaller projects, because it looks like you pulled two things out of the building side that were not there previously?

Kenneth Burk

No, we have not taken anything out of the backlog, John. Basically what we saw was just the burn off of contracts volume in the fourth quarter.

John Rogers - D.A. Davidson

Okay, so it is just all burn off?

Kenneth Burk

Yes.

John Rogers - D.A. Davidson

Okay. And then the second thing is you guys, I know Bob, in your comments you mentioned some of the market opportunities. You gave us some size on that. Can you tell us roughly what those markets look like a year ago? I mean the $10 billion in opportunities in the civil side for instance that you identified. I mean is that flat with the year ago, up, down, kind of what..?

Ronald Tutor

This is Ronal Tutor, if I can lie that up. A year ago, we were finding ourselves looking for civil work to bid both at Tutor-Saliba and Perini. This year in 2009, we are inundated with major projects all over the country. We have probably the most extensive jobs out to bid that we are tracking and presently bidding that I have ever seen in my career and that does not include the works supported by the stimulus package.

So we believe the civil market in the US in the large complicated bridge, roadwork, and highway work will be such if to be a dramatic increase over 2008 or even 2007.

John Rogers - D.A. Davidson

When do you expect these, the actual awards start to come?

Ronald Tutor

Maybe for one award right now on a project, we are a little better. We are bidding another major project this week; another one, next week. We are literarily working six and seven days a week in our civil group bidding two and three major projects a month and the competition is never more than two or three bidders. So we expect this to be at significant civil year a major breakout.

John Rogers - D.A. Davidson

Okay and just final question, City Center, can you give us an update there just kind of where that project is schedule wise and everything?

Ronald Tutor

We are scheduling to complete in phases between the work that Perini has probably between end of summer and the latest completion is December 16 [via REO ville].

John Rogers - D.A. Davidson

Okay and Cosmopolitan 2010?

Ronald Tutor

In the first quarter of 2010.

Operator

Your next question comes from the line of Richard Paget - Morgan Joseph & Co. Inc.

Richard Paget - Morgan Joseph & Co. Inc.

I am wondering if maybe you could elaborate on some of the timing or at least what you guys expect with the stimulus package. I mean it sounds like the big awards that you are working on now are keeping you pretty busy. I mean what are your people on the ground hearing of how the mechanism of this money is going to get spent? I mean, is it all going to kind of rush out at once and it is going to be difficult to track everything just given all the geographies or is there going to be some orderly method in what state?

Ronald Tutor

Well, where the stimulus is going so far is they have set aside and I do not recall the number I am going to get, $70 billion and they are going to the state and they are going to projects that are already designed and they are putting it out in the market place wherein the states that have the projects of consequence ready to go and lack funding. They are going to push it out in the market place.

It is too early to tell how well organized they will be but one of the things they have to understand was only a handful of major contractors in the country for the large complicated work. They are going to have to put it out at some reasonable bait over the next 12 months. But as busy as the civil work sector is right now, it is going to be significantly increased with the stimulus package in.

The whole goal of it is to find projects ready to bid, not start at two year pre-designed, pre-planning process that gets to workout if the bid is ready.

Richard Paget - Morgan Joseph & Co. Inc.

Now, do you have the ability to shift some of your building assets into the civil arena?

Ronald Tutor

Without a question. Most of our engineering staffs and supervision, concrete supervision, grading supervision, we can move into the civil sector so long as we augment them with our experienced civil managers and build up and basically tie them together, not all of them but enough of them to make an impact since we intend to dramatically increase our civil operations.

Richard Paget - Morgan Joseph & Co. Inc.

And then getting to the acquisition market, are you increasingly seeing targets becoming more distressed and maybe expectations that they had six months ago that they might be coming back and saying well maybe…

Ronald Tutor

Well, candidly our approach is we do not talk to distressed companies that are marginal. The only kind of companies that I like to look at are ones that are excellent with good track record and solid balance sheet and whatever their reasons they are ready to sell but not because they are distressed. Distressed companies, we do not need.

Richard Paget - Morgan Joseph & Co. Inc.

Okay, but even if it was not strong company say six months ago that fit that criteria, I mean I am sure there is plenty of that might have a just…

Ronald Tutor

These kinds of companies we look at are not highly leveraged. They have limited debt if any and a downturn in the marketplace for them would mean they just would not make as much money. If a downturn meant they went for making money to losing money then that would be something that would not be interesting. We do not see anybody and we are not, we have one more potential acquisition we are looking at very carefully and excited about. Other than that, we are no longer in the acquisition market.

Richard Paget - Morgan Joseph & Co. Inc.

Okay, and Ken sorry, could you just repeat the breakdown of backlog again?

Kenneth Burk

Sure. There was a $5.7 billion for building, hold on one second here…

Ronald Tutor

A $528 million for civil and…

Kenneth Burk

It was $528 million for civil and $416 million for management services.

Operator

Your next question comes from the line of Steven Fisher - UBS.

Steven Fisher - UBS

Clearly, it sounds like the outlook in civil is pretty robust for you guys. Can you just give us a sense maybe in the aggregate of how much gaming backlog you expect to burn in 2009? I am just kind of wondering what the gap on the building side you have to fill in 2010 could be with civil work.

Ronald Tutor

I would say the gaming side of 2010 is probably $2.5 billion and it is just about right.

Robert Band

Yes, I think that is a fair estimate.

Ronald Tutor

That is a fair estimate and I believe out of that $2.5 billion, we will probably be able to replace a $1.2 billion to a $1.3 billion of it and the rest will be gone.

Steven Fisher - UBS

Okay, so $2.5 billion was the gaming revenues in 2009?

Ronald Tutor

Right.

Steven Fisher - UBS

Okay and you can replace half of it but at a much higher margin?

Ronald Tutor

No, I think the margins will be no higher in the building work. Civil work will be the area that when we significantly increase our civil revenue, we have to remember we make about four times the margin on our civil revenue that we do in our building.

Steven Fisher - UBS

Right, that was what I meant. So, in that regard, I mean two quarters in a row of 12% to 13% of the civil business, is that the normal rate of the business?

Ronald Tutor

Yes, we should be able to do that or better.

Steven Fisher - UBS

Is the work on the stimulus coming out of that expected to be incrementally competitive such that the margin might be less effective?

Ronald Tutor

Well as I have said before, unlike the building business where there is lots of companies that perceive themselves to be builders, the heavy construction business when you get the $300 million and up, it is rarefied stratosphere that there is not such thing as new entrants and other than a couple of foreign companies that have fought US subsidiaries. There are not 10 major heavy construction companies in the United States that can build those projects so it is the same competitors without any on tray and so far we have not seen any diminishing margins in the large work.

Steven Fisher - UBS

Okay so you expect to see less than 10 bidders on…

Ronald Tutor

I would say in average job, there are three. That is 10 in the entire country.

Robert Band

That is for the size of projects that we go after. So, we are not in the commodity construction business at the lower levels.

Steven Fisher - UBS

Right, that is helpful. On the management services side of the margins because they ramped down but I think you indicated last quarter that that would happen when you hit the start of the most recent round of overhead coverage systems. So is that where we are today kind of starting that next round and then maybe in the second quarter of 2009, we could see the margins ramp up again if the execution is like it has been in the past?

Robert Band

That could work that way, Steve. Overall for 2008, our margins in the management services side of the income from operations level before impairment charge were over 20% so we are very well satisfied there.

Steven Fisher - UBS

Okay and then the last question for me is, I am wondering if you can give us some sense in the timing of the Keating acquisition. Why now? Was it simply is available at the right price and what do you expect the trend in revenues to be in 2009?

Ronald Tutor

It was really something that I have been working on with Ken and Bob since the first quarter of 2008 and it just took that long to close and the idea behind the Keating transaction is we had had an east coast presence for as long as Perini has been in business that we had closed our Boston building office. We did not have any operation in the east other than that we run out of our west coast office in Phoenix and I wanted to have a major presence in New England, New York and the Eastern region that when Keating became available, although it took a long time to get done, we thought of filling that void with talent, a large backlog and a proven record of 30 years in the business. Mr. Keating had elected to stay on for five years. It is a well managed, motivated business that we think will significantly enhanced our east coast building presence.

Operator

Your next question comes from the line of Avi Fisher - BMO Capital Markets.

Avi Fisher - BMO Capital Markets

Can you breakout the Tutor-Saliba contribution to backlog, Ken, to revenues please?

Kenneth Burk

We do not, Avi as you recall, we do not provide the detailed backup in that regard. That is all built into each of the segment. So we really are maintaining our reportable segments with building, civil and management services.

Avi Fisher - BMO Capital Markets

Okay, could you provide some color then on kind of what kinds of projects are in civil? I mean just some examples of them, if there is any ones that standout that is maybe over $75 million or $100 million?

Ronald Tutor

We are not really bidding with very few exceptions anything less than $150 million unless that it is add-ons or adjacent to existing job. For example, we built the Tutor the BART [COM] extension and finished it four or five years and that was $700 billion. BART is currently out to bid at $250 million below gate track job in northern California. They were bidding at the end of March; right behind it is the $400 million Warm Springs line for BART. We are bidding a $350 million designed, built bridge in Washington DC in April. We are bidding a $350 million to $450 million steel erection project in New York City. We were looking at $1.2 billion design to build highway in Utah. It goes on and on. There is an $800 million highway complex in South Florida that we are bidding with local partners.

That is the kind of major civil work that we are looking at in literarily all over the country.

Avi Fisher - BMO Capital Markets

Right, I appreciate that and what about the $528 million currently in civil backlog? I mean can you just give us a color on what kind of projects those are and what phase you are in there?

Ronald Tutor

We have two bridges in New York that we are in finish stages. We have project called Harold Structures that we started a matter of months ago that is about $130 million that is ongoing. We have a $70 million contaminated material removal project at Tutor-Saliba. We are just wrapping up the I-80 ramp into the Bay Bridge.

Avi Fisher - BMO Capital Markets

How about that [peer project too?]

Ronald Tutor

It is the number, and we have, that is right, we are going to joint venture on large [peer project] to $120 million with the Navy in Washington DC and excuse the state of Washington in Bremerton. It is the distribution of work in civil just like we always do.

Avi Fisher - BMO Capital Markets

Okay, well a lot of it is kind of a new just injected into backlog recently so I wanted to get some color on what kind of stuff that was.

Ronald Tutor

Looking for 2009, there will be a dramatic increase in our civil backlog with the work we are looking at bidding which we think is right down our competitive alley.

Avi Fisher - BMO Capital Markets

Maybe I misheard but Bob mentioned $300 million in civil in the pipeline, so I am just trying to..?

Ronald Tutor

It is a pending award.

Avi Fisher - BMO Capital Markets

Oh that is a pending award, not sort of the…

Ronald Tutor

That is a pending award that we hope to get awarded probably in March now.

Avi Fisher - BMO Capital Markets

Got you, good that is helpful. Have you already seen, it sounds like have, but have you already seen [lettings] or RFPs tied to the stimulus?

Ronald Tutor

No. We have not seen anything that was tied to the stimulus package. Typically public works jobs do not go out to bid until they are funded. With the stimulus package just passed now, they are moving the money around trying to make deals with the state to see what goes. Every time a project comes out with us, funding is in place. Now, when I mentioned all these projects we are looking at, that is with committed capital. The stimulus package projects have not hit the street yet.

Avi Fisher - BMO Capital Markets

Right, when do you expect them to, is that 1Q or 2Q?

Ronald Tutor

I am going to say by April, May, by the end of bargaining with the states and discussions of who gets what. As our Governor in California said “If they cannot use the money elsewhere, he will take it all.” They got an enormous amount of work ready to bid but not fund…

Robert Band

And also the timeline if they do not or unable to…

Avi Fisher - BMO Capital Markets

Yes, they lose it.

Ronald Tutor

They lose it so yes, you take it, and you got to put it out.

Avi Fisher - BMO Capital Markets

Right but are those with my understanding that that is within the stimulus; there really are not many large sized-ready-to-go projects?

Ronald Tutor

Well the stimulus, you are missing, the stimulus does not determine the projects. They go to the state. The states determine what they have got and how to use it. So that is all I am aware of. You will not get $70 billion out in the state unless you have large projects.

Avi Fisher - BMO Capital Markets

Okay, I appreciate the call; also did you have any bookings in the quarter? When I sort of back out the bookings calculation, it seems to imply there were not too many new awards in the quarter.

Robert Band

There were not too many awards in the quarter. We had some contract adjustments up and down but very few awards during the quarter and a couple in the education field specifically but there was not much more.

Avi Fisher - BMO Capital Markets

Got you, any color on how much backlog is left in the Cosmo and City Center projects?

Ronald Tutor

Cosmo has, I am going to guess…

Robert Band

We have between the two projects; it is about $2.9 billion as of December 31, 2008.

Avi Fisher - BMO Capital Markets

Right and any color on, this is the question that I am hearing a lot is anything with the size of the MGM receivables, how much of your receivables are associated with MGM?

Robert Band

MGM has been paying on schedule.

Ronald Tutor

They are paying on schedule and they typically bill in the range of $200 million a month.

Avi Fisher - BMO Capital Markets

And what was the value of the Guam SATOC?

Robert Band

The Guam work, the taxiway and the runway add up to about $56 million.

Avi Fisher - BMO Capital Markets

When do you expect it to complete?

Robert Band

That will run on for 18 months or so.

Avi Fisher - BMO Capital Markets

Got you and the burn rate for the Keating, you said you added $800 million, you will add I should say $800 million in backlog in 1Q 2009 from Keating.

Kenneth Burk

Yes, $840 million is what we are estimating right now.

Ronald Tutor

We are predicting $600 million in revenue this year.

Kenneth Burk

That is for the full year.

Avi Fisher - BMO Capital Markets

And that is typical sort of seasonal, summer is a little faster, winter and fall a little slower?

Ronald Tutor

Yes.

Avi Fisher - BMO Capital Markets

And I guess this will be the last question. Finally, you include McCarran in your building segment but should it or does it or will it have similar margin dynamics as your civil business?

Ronald Tutor

In a word, yes.

Avi Fisher - BMO Capital Markets

How come we are not seeing that yet?

Ronald Tutor

Well we just started. There are no currently any billing.

Robert Band

The McCarran job is a very good example of really where we are headed from a public work building standpoint in our vertical integration strategy. Good example which is going to carry a higher margin because of our self-performed work, our mechanical operation. All of those things we feel pretty strongly about it in terms of our business model going forward.

Avi Fisher - BMO Capital Markets

Alright and when does it reach ramp?

Ronald Tutor

We ramped up revenue probably February was the first month. We commence steel erection in March. We will probably at that point be on a very significant monthly billing. All of last year, all we did was mobilized and bring engineering and staffs. There was no physical work started on site until the end of December. We are now ramped up going forward until starting… I would say the first week of March; we will be at a major roll.

Operator

That concludes the question-and-answer session as well as your conference call for today. Thank you for your participation and have a great day.

Robert Band

Thanks everybody.

Ronald Tutor

Thanks.

Kenneth Burk

Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!