Tutor Perini Corporation Stock

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Second Quarter 2026 Earnings Conference Call. My name is Rochelle, 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, Senior Vice President of Investor Relations. Please proceed.

Hello, everyone, and thank you for joining us. With us today are Gary Smalley, CEO and President; and Ryan Soroka, Executive Vice President and CFO.

Before we discuss our results, I'll 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 contribute to such differences in our Form 10-Q, which we are filing today, and in our Form 10-K, which was filed on February 26, 2026. 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. In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find information and a reconciliation of these non-GAAP financial measures in our earnings release and in our Form 10-Q, both of which can be found in the Investors section of our website.

Thank you. And with that, I'll turn over the call to Gary Smalley.

Thanks, Jorge. Hello, everyone, and thank you for joining us. We had an excellent second quarter, delivering very strong results, highlighted by record revenue and operating income, record operating cash flow of $334 million for the first half of 2026, and meaningfully and sequentially improved operating margins across all segments. Our record cash flow so far this year has been driven by higher volume and solid execution and collections on various large projects that are very profitable.

Our second quarter revenue increased 19% year-over-year to $1.6 billion, driven by contributions from projects that are in the very early stages with significant scope of work remaining. With strong revenue growth, we generated operating income of $118 million, up 54% year-over-year, and produced an outstanding $1.74 of adjusted earnings per share, up 23% compared to the second quarter last year. Ryan will discuss the details of our financial results shortly, including some commentary about our recent successful debt refinancing.

As I mentioned, our segment operating margins were all up significantly this quarter compared to the margins for the first quarter of 2026, as our work continues to ramp up on several of our mega projects. The Civil segment's second quarter operating margin was 15.3%, a very solid performance that exceeded the high end of our anticipated full year margin range for the segment. The Building segment's operating margin was 5.6% for the second quarter on operating income that was up an impressive 39% year-over-year. The Building segment's outstanding margin performance is already approaching the upper end of the range we expect for the segment this year.

And the Specialty Contractors segment continues to deliver solid execution on its current projects with improved operating results. Its operating margin for the second quarter was 2.2%, up nicely compared to the first quarter and with further margin improvement still expected as the back half of the year unfolds. Overall, we are very pleased with the results we are delivering in terms of revenue growth and margin expansion as well as with our substantial earnings and record cash generation.

Now let's turn to the second quarter new awards and backlog. We booked $1.7 billion of new awards and contract adjustments, a book-to-burn of just over 1x, and finished the quarter again with a near-record backlog of $19.9 billion, up slightly compared to the prior quarter. The largest additions to backlog included the following: a $652 million project to modernize and protect critical power infrastructure at Naval Base Guam; $143 million for 2 U.S. Coast Guard projects, a housing project and a Child Development Center project, both in Alaska; $130 million of additional funding for a new pediatric campus electric project in Texas; $114 million for the Jones Hall project at the University of Mississippi; and $106 million for a bridge project in Minnesota.

As we have indicated previously, our strong backlog, which includes 9 mega projects we have won over the past few years with a combined value of about $16 billion, continues to provide us with excellent line of sight for future revenue and earnings over the next several years. We continue to expect that our backlog will fuel higher revenue and earnings, solid profitability and strong cash flow this year and beyond.

Customer demand remains robust, and we continue to have numerous significant project bidding opportunities, particularly in the Indo-Pacific region as well as in California, the Midwest and the Northeast. Overall, we have a massive pipeline of more than $200 billion in potential project opportunities over the next 3 to 4 years, which is about 3x larger than the pipeline we had just a couple of years ago. Many of these opportunities are expected to bid over the next 1 to 2 years, and we are very well positioned to win our fair share.

We will continue to be quite selective in bidding and winning new projects, with our key overall objective being to maximize shareholder value. Consistent with our approach over the last several years, our focus will remain on bidding projects conservatively so that our project budgets reflect safe costs, adequate contingency, favorable contractual terms, and higher margins. As we observe the market, we continue to see limited competition for the larger fixed price work, which should help us achieve our goal of winning important and profitable contracts that enhance revenue, earnings growth, and margin expansion.

Now let's talk about some of the major bidding opportunities we expect to pursue over the next 12 to 18 months. We currently have more than $4.6 billion of Indo-Pacific opportunities with the Federal Government for our Guam subsidiary, Black Construction, including port and harbor improvements on the islands of Palau and Yap, a fueling facilities project at Wake Island, airfield and fueling facilities in Yap, and the Polaris Point submarine pier at Naval Base Guam. In addition, there are more than $1 billion of other opportunities already identified in the region beyond 18 months.

We expect that our backlog will remain strong during the remainder of 2026 and beyond. We still anticipate approximately $1 billion of additional funding later this year for the Midtown Bus Terminal Replacement project in New York. We also have certain Building segment projects currently in the preconstruction phase that are anticipated to advance to the construction phase later this year and beyond. In addition, in the third quarter, we will be bidding various projects, including the $1 billion I-69 ORX Section 2 bridge project connecting Indiana and Kentucky. And in the Indo-Pacific region, Black Construction just last week submitted a bid for the $0.5 billion Palau Port and Harbor improvements project. And later this year, we will bid a multibillion-dollar jail project in Illinois, leveraging our success and experience with our ongoing Brooklyn and Manhattan Jail mega projects.

We will also continue to have several new large healthcare project opportunities and hospitality and gaming opportunities, mostly in California and the Southwest. In 2027, we expect to bid on several multibillion-dollar projects, including the Merced-to-Madera segment of the California High-Speed Rail project as well as the initial contract for the Sepulveda Transit Corridor program in Southern California, a program believed to be valued at approximately $12 billion and expected to be awarded under multiple contracts.

In addition, we have the $4 billion Southeast Gateway, the $2 billion East Side Transit Corridor Phase 2 and the $1.5 billion K Line Extension to Torrance projects, also in Southern California, and on the East Coast, the $3 billion Newark Liberty International Airport Terminal B project in New Jersey, very similar to the award-winning Terminal A project that we recently completed at the same airport. Late next year or early the following year, we expect to bid on the second phase of the multibillion-dollar Midtown Bus Terminal Replacement project in New York, the phase that will demolish the existing bus terminal and build its permanent replacement.

Because of the unprecedented pipeline of opportunities just mentioned and our competitive positioning, we remain confident in our ability to drive backlog growth over the medium to longer term as we also continue to focus on earnings growth, margin improvement, free cash flow, quality, and safety.

Now as we announced today in our earnings release, our Board of Directors has declared a $0.09 per share quarterly cash dividend payable to shareholders on September 3. This is a meaningful 50% increase compared to the previous $0.06 dividend. The increased dividend reflects our continued confidence in the outlook for strong revenue, operating margins, earnings, cash flow, and liquidity over the next several years. Separately, during the second quarter, we repurchased approximately 137,000 shares on the open market for $10 million at an average price of approximately $73 per share. We still have $170 million available under our share repurchase program that was originally authorized late last year for $200 million, and we expect to make additional opportunistic share buybacks in the future to return excess capital to our shareholders.

Finally, let's turn to our outlook and guidance. As I mentioned earlier, I am very pleased with the financial results we have delivered thus far this year, results that were ahead of our expectations. We continue to benefit from favorable macroeconomic tailwinds that are driving strong sustained market demand, which bodes well for future awards growth, earnings, and value creation. Our business is resilient, and we remain confident in our outlook for consistent revenue and earnings growth for the remainder of 2026 and beyond.

Based on our outlook and assessment of the current market, we continue to anticipate double-digit revenue growth and strong earnings in 2026 with even higher earnings expected in 2027, by which time many of our newer large projects in our backlog should be in the construction phase. Because of the favorable outlook and our strong financial results to date, we are raising our 2026 adjusted EPS guidance to the range of $5.15 to $5.45 per share, up from the previous range of $4.90 to $5.30. As usual, our guidance continues to factor in a significant amount of contingency for unknown or unexpected outcomes and developments this year. We also continue to expect strong operating cash generation in the second half of 2026 and beyond due to increasing project execution activities on our newer mega projects and the anticipated resolution of remaining legacy disputes.

Before I hand it over to Ryan to review our financial performance, I want to take a moment to highlight a significant corporate milestone. As some of you may know, Tutor Perini was recently added to the S&P SmallCap 600 Index effective before the opening of trading on July 24. Tutor Perini has also recently been added to various other S&P indices, including the S&P 1000. We view our inclusion in these benchmarks as clear validation of the strong operational progress our team has achieved over the past few years.

Our focus on improved contractual terms, safer costs and more contingency in our bids, effective project execution, and resolving legacy disputes has structurally strengthened our balance sheet and helped us drive unprecedented earnings and cash generation. This milestone marks an exciting new chapter for Tutor Perini as we continue to drive long-term value for our shareholders.

Given all this, I'd like to take a moment to reflect on Tutor Perini's enduring value proposition for investors and why we are so confident in our future trajectory. As we have said before, we continue to benefit from generational investment opportunities to refresh and modernize the U.S. infrastructure. Our ability to capitalize on this exceptional market environment where we see no shortage of opportunities moving forward is evidenced by our recent major project wins. Next, our backlog of $20 billion provides us with clear revenue and earnings growth visibility moving forward.

And finally, we have taken meaningful action to strengthen our balance sheet over the past few years by deleveraging, resolving legacy disputes and through the recent refinancing. As a result, we strongly believe Tutor Perini today is a more compelling value investment opportunity than any other point in our storied history, and our confidence continues to build given the disciplined steps we are taking to create value for our shareholders moving forward.

Thank you. And with that, I will turn the call over to Ryan to discuss the details of our financial results.

Thanks, Gary. Good day, everyone. I'll discuss our results for the second quarter, followed by some commentary on our balance sheet and the assumptions underlying our increased 2026 guidance. All comparative references will be against the second quarter of last year, unless otherwise stated. But first, I'd like to highlight the recent debt refinancing that we successfully completed here early in July.

We're extremely pleased with the outcome of our refinancing by which we replaced our 11.875% senior notes with $400 million of new senior notes at a coupon rate of 6.625%, a 525 basis point reduction, and extended the notes' maturity by 4 years from 2029 to 2033. The coupon reduction will result in annual cash interest savings of $21 million going forward.

We also amended and restated our revolving credit facility, more than doubling our currently unused capacity from $170 million to $350 million, while obtaining substantially improved covenant terms and interest rate spreads and extending the revolver's maturity from 2027 to 2031. Overall, the refinancing gives us a greater capacity to pursue strategic opportunities while continuing to return capital to shareholders. As we disclosed in the 10-Q, the debt extinguishment and refinancing costs we incurred in the third quarter of 2026 will be excluded from our adjusted EPS when we report our Q3 results.

Now to our financial results. As Gary mentioned, we generated a record $334 million of operating cash for the first half of 2026, up 17% compared to the first half of last year. This included strong cash flow of $187 million in the second quarter. Our record first half cash flow was driven by significant volume growth and strong collections on various profitable projects as well as effective working capital management, with only a small amount attributable to dispute resolutions. We expect to continue generating solid cash flow this year and beyond, with most of our cash to be sourced from organic operations and occasionally enhanced by cash collected from dispute resolutions.

Revenue for the second quarter of 2026 was a record $1.6 billion, up 19%, with the growth primarily due to increased project execution activities on certain large high-margin projects in New York, California, Hawaii, and the Indo-Pacific region. Civil segment revenue was $816 million, the segment's highest quarterly revenue ever and up 11%, with the growth driven by increased project execution activities on the Midtown Bus Terminal Phase 1 project, the Manhattan Tunnel, the Kensico-Eastview Connection Tunnel, the Honolulu Rail project and the Apra Harbor Waterfront Repairs project in Guam, all of which have substantial scope of work remaining.

Building segment revenue was $560 million, the segment's highest quarterly revenue since 2011 and up 21%, due to increased activities on the Brooklyn and Manhattan Jail projects as well as on a large healthcare campus project in Northern California. All our major Civil and Building segment projects are continuing to run smoothly. Specialty segment revenue was $261 million, up a very strong 47%, with the segment's growth continuing to be primarily driven by increased activities on various electrical and mechanical projects in New York and Texas. The strong revenue growth drove our second quarter operating income to a record $118 million, up 54% year-over-year.

Civil segment operating income was $125 million compared to $140 million. The prior year included a large favorable adjustment of $28 million. The Civil segment continues to execute extremely well and once again delivered a very healthy segment operating margin of 15.3%, which, as Gary mentioned, is above the top end of the 12% to 15% margin range we expect for this segment and up sequentially from 12.6% last quarter.

Building segment operating income was a solid $31 million, the highest result since 2010 and up 39%, with the strong increase driven by contributions from certain newer higher-margin projects in New York and California, with substantial scope of work remaining. The segment's operating margin was 5.6%, the highest building margin of any quarter since 2012 and up sequentially from 3.5% from the first quarter of this year. The Building segment's margin performance was outstanding and near the upper end of the 3% to 6% margin range we expect for the segment.

Specialty Contractors segment operating income was $6 million for the second quarter compared to a loss from construction operations of $18 million for the same quarter last year. The Specialty segment's operating margin was 2.2% this quarter, up sequentially from 0.3% last quarter and a significant improvement compared to the negative 10.2% for the second quarter of 2025.

Segment's turnaround has been primarily driven by contributions related to the increased volume on the New York and Texas electrical and mechanical projects that I mentioned earlier. Many of these projects are in the early stages and are still expected to ramp up substantially over the next several years. Overall, we are pleased with the improvements that we are seeing in the Specialty segment and expect further margin expansion this year and in the future years as we continue toward our goal of eventually sustaining specialty margins in the 5% to 8% range.

Corporate G&A expense for the second quarter of 2026 was $42 million compared to $68 million last year, with the decrease largely due to a $28 million reduction in share-based compensation expense this year as some of the liability-classified awards that have recently caused elevated share-based compensation expense vested at the end of 2025. Most of the remaining liability-classified awards will vest at the end of this year. So in 2027, we expect that our share-based compensation expense will be significantly reduced compared to this year.

Income tax expense for the quarter was $31 million, with a corresponding effective tax rate of 26.8% for the period compared to $22 million last year with a corresponding effective tax rate of 31.8% in that period. The lower effective tax rate this year is mostly attributable to the lower nondeductible share-based compensation expenses estimated for 2026 relative to 2025.

Net income attributable to Tutor Perini for the second quarter of 2026 was $66 million, or $1.23 of GAAP earnings per share compared to $20 million or $0.38 of GAAP earnings per share in the second quarter of last year. Excluding the impact of share-based compensation expense, net of associated tax benefit, adjusted net income attributable to Tutor Perini for the second quarter of 2026 was $93 million, or $1.74 of adjusted earnings per share compared to $75 million or $1.41 of adjusted earnings per share in the same quarter last year. This is a solid 23% improvement in our adjusted EPS compared to last year's second quarter, reflecting the high-margin contributions and outstanding performance we continue to see as we execute our projects and backlog.

Now I'll address the balance sheet. Our total debt stood at $396 million at the end of the second quarter. We ended the quarter with cash and cash equivalents exceeding total debt by $542 million, an increasingly strong net cash position and $435 million better than we were just 1 year ago. Our cash available for general corporate purposes was $424 million at the end of the second quarter of 2026, up 56% compared to $271 million at the end of 2025. Our balance sheet has continued to strengthen, and our large net cash position provides us with ample flexibility to allocate our capital efficiently and strategically.

Finally, let me update you on our latest assumptions underlying our increased 2026 guidance, which are more favorable overall compared to our previous assumptions. G&A expense for 2026 is now expected to be between $380 million and $400 million. Depreciation and amortization expense is now anticipated to be approximately $45 million in 2026, with depreciation at $43 million, amortization at $2 million. Interest expense for 2026 is now expected to be between $42 million and $44 million, of which about $3 million will be noncash.

Our effective income tax rate for 2026 is now expected to be approximately 26% to 29%. We now anticipate noncontrolling interest to be between $70 million and $80 million. We still expect approximately 54 million weighted average diluted shares outstanding for 2026, and capital expenditures are still anticipated to be approximately $125 million to $135 million, with the vast majority of the CapEx in 2026, approximately $75 million to $85 million, being owner-funded for large equipment items on certain large new projects.

Thank you. And with that, I will turn the call back over to Gary.

Thanks, Ryan. To recap, we delivered very strong financial results for the second quarter and through the first half of 2026, marked by record first half operating cash flow, double-digit revenue growth, record operating income, improved segment operating margins, strong earnings and continued near-record backlog. Our backlog, combined with the safe cost with favorable terms approach we have utilized over the past several years and continue to utilize in bidding and winning new projects, provides us confidence in our ability to deliver double-digit revenue and earnings growth and continued strong annual cash flow in 2026 and beyond.

Our business momentum is growing, and our results this year demonstrate the substantial revenue, earnings and cash potential of our solid project execution. The long-term outlook for Tutor Perini remains very bright given the long duration, higher-margin nature of our backlog and the enormous pipeline of bidding opportunities. We expect that the favorable macroeconomic tailwinds and strong public and private customer funding will persist and continue to support vibrant market demand and ample bidding opportunities well into the future. All of this supports our strong belief that Tutor Perini presents a unique and compelling value opportunity for investors.

Thank you. And with that, I will turn the call over to the operator for your questions.

[Operator Instructions] And our first question we will hear from Adam Thalhimer with Thompson, Davis & Co.

Congrats on the great quarter. It sounded like the Civil and Building operating margins were stronger than you expected. Can you give a little bit more color on why that was and your expectations for the back half?

Yes, Adam, really, what's going on is these new projects, the 9 mega projects that we had booked in the last few years or so. Those projects are starting to ramp up, and they're higher-margin projects, and they're really contributing much higher margins than what we're seeing in some of the old work. And as those continue to ramp up and build strength, you'll see this margin appreciation. So going forward, we'll still see solid margins, somewhere in that 12% to 15% range. I know we're a little north of the 15% this quarter. That could happen from time to time. But we still think 12% to 15% is really where you want to plan on us being with the Civil segment.

On the Building side, somewhere in the 3% to 6%, but we aim for the upper end of that 3% to 6%, and that's where we were this quarter with the 5.6%. So expect in the latter half of the year to be in that range, but really toward the upper end of that range. And again, this 12% to 15%, keep in mind that not too long ago, we were talking about 8% to 12% margin. So we've seen a consistent healthy increase there. And down the road, hopefully, we can push that 12% to 15% even higher.

Okay. And then you guys have been really active putting out press releases for, call it, small and midsized jobs. I'm just curious how we should think about the margin profile for those jobs versus your mega jobs?

Yes. Generally, the mega jobs have higher margins. However, it's mixed in with some of these projects. Look, one of those was an AI project and it has -- or a data center project. It has very high margins. So the blend isn't going to be much different from what you're seeing otherwise. It's always a mix of things, but the margins that -- on the projects that you mentioned in these releases, they're healthy margins.

And our next question will come from Min Cho with Texas Capital Securities.

Congratulations on a really strong quarter here. So you obviously had a very nice award in the quarter for Black Construction and it looks like there's some pending bids out as well. Can you talk about Black Construction in general? Just how can that -- I mean, you probably can't double the size of that business at the current capacity, but are you looking to add more scale there? How can that business, which tends to have higher margins, get larger for you? What can you do to make it bigger?

Yes. Min, thanks for the comment and the compliment on the quarter. Look, in our prepared comments, we talked about the potential there over the next 12 to 18 months, we have $4.6 billion of bid opportunities. And then beyond the 18 months, there's already $1 billion of opportunities that we've identified. So we just see more and more potential there. We're looking at adding staff there to continue the expansion. Can we double it? We certainly would like to double it. It depends on our win rate, depends on continued opportunities that come out. We certainly expect to grow it. And the margins are generally healthy there because it is remote.

Some of the work is rather difficult, but we feel that we're the best prepared. We've been in the area the longest. We're really, we'll say, the incumbent there. And we feel like we're the team to beat. We don't win them all, but we're well positioned to win at least our fair share. So we do expect there to be quite a bit of growth in that region.

Excellent. And then just moving to data center opportunities. I know Fisk Electric won the data center project. And it sounds like electricians are becoming a big bottleneck for data center projects. Can you talk about how you're bidding for those projects and kind of what you're seeing in terms of opportunities specific to data centers on the electrical side?

You're exactly right with respect to the bottleneck with electricians being the bottleneck. And that's really where the opportunities that we're looking at. We're going to continue to emphasize the core business. That's where we're doing very well right now. And data centers, we're looking at those being where there is a need, where we have resources. And so primarily in the Texas region is what we're seeing right now where electricians are short, but we have the available capacity to take that on in addition to the other work. So we're seeing healthy margins. And that's the type of data center work that we're pursuing at this point is more on the electrical side.

And our next question, we'll hear from Michael Dudas with Vertical Research Partners.

Gary, maybe you could opine a little bit more. The $200 billion pipeline number was pretty shocking. I'm pretty not surprised. Maybe how it's evolved over the past couple of years. And when you look at that pipeline and look at some of the opportunities ahead of you, how are you positioning how best to which resources, which projects, terms and conditions in that pipeline, what you can convert to a backlog or award and that visibility over the next, say, 12 to 18 months?

Yes, Mike, the $200 billion, if you compare it historically, let's go back the last 6-7 years. It's generally ranged somewhere around $70 billion to $90 billion and up and down a little bit dependent on just the economy and just the pace of the awards. But we've really seen this go from about 2 or 3 years ago, it was about $70 billion. It's gone from $70 billion to $200 billion. So that's the tripling that I mentioned earlier.

And so what happens is there's no way you're going to try to pursue $200 billion or even $70 billion of work. But what it does is you look at the available opportunities and you target the regions, the types of projects where you expect to have the best terms. And you also look at the expected competition. And from those, then we target the best opportunities for us and therefore, the best margins for us. So the fact that it's 3x the total number of opportunities bodes quite well for us because what that means is we can be more selective in the opportunities we pursue and hopefully land, again, our fair share at higher margins.

That's very helpful, Gary. And then maybe for Ryan, a tremendous job on recapitalizing the balance sheet. And just with the strong cash flow first half and what you expect in the second half and now that you've refinanced on the senior note level. The composition of the net cash on the balance sheet, like remind us working capital needs as you're growing the business, the surety positioning and how that plays through and how the balance sheet can continue to support some of the project opportunities to support, I would guess, some pretty good-sized growth in your backlog over the next couple of years.

Yes. So I guess just moving to operating cash, first part of that question. Obviously, record-setting first half. But as we think about the year, the remainder of the year, we're not going to set a new record. It was at $750 million last year. But as we look at the second half, perhaps getting to maybe a second-best outcome for any given year. That's kind of certainly where we're seeing things trending really from the cash being spun off from organic operations and the ongoing projects, in particular, the mega projects.

As we look at the cash on the balance sheet, obviously, roughly, what is it, $424 million available for general corporate use. As we think about that from a capital allocation perspective, obviously, there's the opportunistic share repurchases.

There's a dividend that we increased this quarter, up 50% from the prior quarterly dividend and also kind of investing that cash into the business to continue to grow, but also to get the continued support from our sureties to continue bidding on these larger projects as a sole-source provider. And I think kind of the way I look at it, the last component would really be M&A, which we look at from time to time and look at strategically, whether that's adding geographic presence or incremental resume or skill set that we don't have today.

And next, we'll hear from Liam Burke with B. Riley Securities.

Gary, preconstruction activity is usually a very solid indicator of how the forward activity is going to be or at least give a cadence. But can you give us a sense on where you are on preconstruction activity?

Yes. You're absolutely right. When we look at it over a long period of time, it's greater than 90% hit rate when something is in preconstruction, and we have hundreds of millions of dollars of building opportunities already in preconstruction. And what I said earlier was we will see in the third and fourth quarter and then also into 2027, we will see some of those preconstruction projects that are ongoing. We'll see those manifest themselves into backlog. And as we -- there continues to be other preconstruction work that we're adding as those blossom into full-blown backlog. So our goal is to continue to replace them because they are more secured backlog gives us greater visibility into what the backlog is and what the revenue and profit burn will be going forward.

Great. And Ryan, your cash flow is strong. The balance sheet is in great shape. You're starting to return cash to shareholders. How are you balancing a dividend with share repurchases?

I guess the real short answer is looking at share repurchases opportunistically, and that's going to be from time to time. As we look at the dividend even with the increase, it's still relatively -- I would say, not relatively, but a conservative cash outlay relative to our balance. So that's something that we will continue to monitor, obviously, with the support of the Board from time to time.

I would just add that, look, Liam, this is new to us, right? We haven't paid a dividend in some time. We've never bought back shares until recently. And we have a large amount of cash, and we're going to be conservative in how we administer the cash because for all companies, especially in our industry, it makes sense to have as much cash as you can on hand. And also from a surety standpoint, we're pursuing very large projects. And these large projects, a lot of times, sureties for most companies, they require there to be a joint venture partner in order to ensure the bonding for the projects.

We like to pursue projects without joint ventures as much as we can. And the large cash helps us be able to do that to get the surety approval to pursue the projects with just ourselves. And what that means is when you've got a couple of hundred million or so of profit on these new projects that you're landing, if you don't have to share 20%, 25% with a joint venture partner because the sureties have confidence that you can execute the project. And then as we continue to pursue these large projects with the safe cost that Ryan mentioned and the contingency, then look, it makes a lot of sense to have a healthy amount of cash available.

And one thing that we talked about last quarter, and we kind of talked about a little bit, it's implied with what we're saying about this great operating cash that we're generating is that all of these mega projects that these 9 big projects that we booked, they're all just spawning cash. They're just -- they're all ahead of the cost on cash. The projects are going extremely well. And we're really confident that we're going to deliver those projects at least at the as-sold margins. So we would expect that as those projects get closer to completion down the road, that there will be additional profit that we can take in through the release of contingency.

We're a little early for that because we -- again, we're going to take a conservative approach, but there's more profit, we believe, in those projects than what we're recognizing currently that hopefully, as the risks are mitigated, then they'll drop to the bottom line.

And next, we'll move on to Steven Fisher with UBS.

Congrats on the continued progress. Gary, just to follow up on those comments you were just making about the execution on the large projects. Maybe you could just give us kind of a broader update on how you're staying on top of these 9 major projects. It's a lot to have going on at one time. How are you making sure you are actually really staying on top of all the details there? And particularly how you're managing the inflation, I guess, outside of those 9 projects more broadly? I know you've done sort of locked in a lot of the costs on the large projects, but inflation on sort of the rest of the portfolio.

Steve, we've got a very strong team of people that can execute the projects, and we've trained them on smaller projects and even some of the larger projects that we've had. And that's part of what we've done on programs like the High-Speed Rail, where we've trained individuals that we brought in the company with great experience or maybe they're homegrown. But on projects like High-Speed Rail and Purple Line, we've given them the experience so that now they're starting to branch out a little bit and being able to do more. We've got a lot of systems in place to make sure that the projects are adequately staffed, but we're also monitoring the projects through the same systems. We have other people, senior people involved where they visit the projects and provide oversight to very senior people.

And we even have -- let's bring a name from the past that's still in the present. We have Ron Tutor, perhaps the greatest mind that the industry has ever seen. And Ron helps at times with some of the oversight of these large projects, too, to provide his input and his oversight or his opinions on what he's seen as well. So we feel really good with the infrastructure that's in place as we monitor these projects. And everything we've seen at this point is extremely positive because it gets back to also the terms of the project and the safe cost, the way we bid those projects and also the way we're recognizing revenue on a conservative basis based on the risk that we've identified. So we think that things are going as well as they could be really on those.

And then on the inflation comment, I'm not sure I followed completely the question. Could you maybe refocus me?

Yes, sure. I mean, we're seeing broader inflation in the economy, and it's flowing through a lot of the construction activity. And I know you -- when it comes to the bigger projects, you manage those very carefully upfront, a lot of buydowns and locking in other contracts. So I'm just wondering across the broader part of your portfolio, how are you managing the inflationary risk on sort of just the average project that's not a major mega project?

Yes. Well, it's still the same type of procedures that we use on the mega projects. We still -- there's the buydown that you mentioned. There's also contractual terms that many times protect us on certain inflationary measures. So it's very similar. It's just on a smaller scale.

Okay. And maybe if I could also just ask you about the competitive dynamics. I think you mentioned you're still seeing limited competition for some of these larger projects. It seems like maybe they're seeing a return of maybe some more aggressive regional players on some of them. Do you think those are sort of one-offs? Or is there a broader trend here that we should be keeping an eye on?

I think at this point, what we said over the last really several quarters in the last few years about the limited competition on the larger projects, we still see that being the case. And we never expect to win all of those projects, and we don't. But we went through a stretch. We won 9 out of 11. But before that, we were about 0 for 4, 0 for 5 on some of the big ones. And so over time, we're going to get our fair share, and we're going to remain vigilant and resilient in approaching these projects very conservatively.

We're not going to try to book projects just because we want projects in the backlog. We want profitable projects with very high margins and backlog. And that $200 billion that we talked about earlier as targeted opportunities over the next, let's say, a year or 2. Those opportunities, the fact that they have grown so much just means that there's more opportunity for us to stay the course, to be patient, and we know that strategy works, and we know that with the -- there's a lot more work that is out there than there are those of us that can do the work. So we might not get the next one, but we know that we're going to get one soon thereafter, and it's going to be our terms.

And there are no further questions at this time. I would like to turn the floor back to Gary Smalley, for closing remarks.

Yes. Thank you very much. I want to thank everyone for your participation today. We look forward to continuing to deliver outstanding results and talking to you next quarter. And we're very comfortable with the progress we've made here at Tutor Perini. We also know that this is really the tip of the iceberg. We have a lot of good things that are still happening, and we look forward to talking in the future and sharing those good stories with you. Thanks again.

Thank you. That does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation First Quarter 2026 Earnings Conference Call. My name is Rob, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. [Operator Instructions]

I will now turn the call over to your host for today, Mr. Jorge Casado, Senior Vice President of Investor Relations. Please proceed.

Hello, everyone, and thank you for joining us. With us today are Gary Smalley, CEO and President; and Ryan Soroka, Executive Vice President and CFO.

Before we discuss our results, I will remind everyone that during today's 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 disclosures about risk factors that could contribute to such differences in our Form 10-Q, which we are filing today and in our Form 10-K, which was filed on February 26, 2026. 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.

In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find information and a reconciliation of these non-GAAP financial measures in the earnings release that we issued today and in the Form 10-Q being filed today, both of which can be found in the Investors section of our website.

Thank you. And with that, I will turn the call over to Gary Smalley.

Thanks, Jorge. Hello, everyone, and thank you for joining us. Before we discuss our first quarter results, we wanted to share with you tragic news regarding the recent incident that affected the Tutor Perini family. A few weeks ago, during Super Typhoon Sinlaku, our offshore cargo vessel the Mariana capsized at sea with a 6-member crew that included 2 of our employees near the island of Saipan in the Northwestern Pacific Ocean. It's an unimaginable loss for all of us at Tutor Perini, and we extend our deepest thoughts, prayers and heartfelt condolences to the crew's families, loved ones and the entire affected community. We have been in close contact with the families to provide them with updates and to offer our support. We remain committed to the families, and we'll continue to work with them to provide whatever support we can.

I would like to express our sincerest appreciation to the U.S. Coast Guard, the U.S. Air Force, U.S. Navy as well as search teams from the Japan Coast Guard and the Royal New Zealand Air Force for their professionalism and tireless efforts during an intensive nearly 2-week search and rescue mission. One of the bodies of the crew was found, but the other 5 were not.

Before proceeding, I will now pause for a moment of silence to honor and remember the crew members and pray for their families and friends.

Thank you. Turning to our usual agenda. We delivered strong first quarter results highlighted by record operating cash flow of $147 million, by far the highest first quarter result ever, which was driven by collections on new and ongoing projects. Our revenue grew 11% year-over-year to $1.4 billion, the highest revenue of any first quarter since 2009, driven by contributions from various larger, higher-margin projects that are in the early stages with significant scope of work remaining. Ryan will get into more of the details of our financial results shortly.

Our backlog remains very strong at $19.8 billion at the end of the first quarter, and we continue to expect that it will fuel much higher revenue and earnings, increased profitability and continued strong cash flow this year and beyond.

The Civil segment produced its highest ever first quarter operating income, which was up 10% year-over-year and delivered a 12.6% operating margin, solid results for our first quarter, which is typically a slower quarter for us due to seasonality.

The Building segment's operating income was up an impressive 56% year-over-year with an operating margin of 3.5%. And the Specialty Contractors segment continues to deliver solid execution on its current projects and improved operating results as evidenced by the fact that they were marginally profitable for the quarter with further improvement still expected as the year unfolds. In fact, we see higher margins ahead for all 3 segments as many newer large projects continue to ramp up.

In the first quarter, we booked nearly $700 million of new awards and contract adjustments. The largest additions to backlog included the following, which are all in California: $186 million of additional funding for the Eagle Mountain Casino Phase 2 expansion project; $97 million of additional funding for a healthcare project that entered the construction phase; and approximately $66 million for 2 mass-transit projects. Our strong backlog, which includes the 9 mega projects we won over the last 1 to 3 years, provides us with excellent visibility for our future revenue and earnings over the next several years.

Recently, one of our major projects, Brooklyn Jail in New York, reached a key milestone. The project held its topping out ceremony marking the completion of the structure steel frame with the placement of the final and highest structural beam. Workers and dignitaries watch that the final beam adorned with the traditional evergreen tree in American flag rose 15 stories to its destination atop the building that when completed, will be a 1 million square foot facility and have 1,040 beds. This project and all of our other major projects are all running very smoothly with solid business execution and strong financial performance.

As I have discussed previously, customer demand remains strong, and we continue to have numerous significant project bidding opportunities, particularly in the Northeast, the Midwest, the West Coast and the Indo-Pacific region. We believe we are all well positioned to continue winning our share of new projects later this year and over the next several years. We will continue to be very selective when we bid future projects, which will continue to enhance and help maximize shareholder value. Our focus remains on bidding projects with favorable contractual terms, limited competition and higher margins.

In addition to vibrant demand across the markets we serve, some of our existing projects are expected to spawn significant incremental work, which bolsters our confidence that our backlog will remain elevated. For example, we anticipate adding approximately $1 billion of additional backlog in the second half of the year for the finished trade scope of work for Phase 1 of our Midtown Bus Terminal Replacement project in New York. Also, some of our Building segment projects that are currently in the preconstruction phase are anticipated to advance to the construction phase later this year and the next year. The largest of these is a multibillion-dollar healthcare project in California expected to begin construction in late 2027, for which we currently only have a nominal amount of backlog.

Let's talk about some of the significant bidding opportunities we expect to pursue over the next 12 to 18 months. They include the multibillion-dollar Penn Station transformation project in New York, for which the U.S. Department of Transportation has recently announced a substantial amount of committed funding and for which the selected development team is expected to be chosen later this month. The $1.4 billion I-535 Blatnik Bridge project in Minnesota, for which the selected contractor is expected to be announced next month; a multibillion-dollar additional segment of the California high-speed rail project bidding later this year; the $1 billion I-69 ORX Section 2 project connecting Indiana and Kentucky, also bidding later this year.

The Sepulveda Transit Corridor program in Southern California believed to be valued at approximately $12 billion and expected to be awarded under multiple contracts with the initial contract expected to be bid next year. The $3.8 billion Southeast Gateway line also in Southern California and bidding next year, and the $3 billion Newark Liberty International Airport Terminal B project in New Jersey, very similar to the award-winning Terminal A project that we recently completed at the same airport.

This enormous number of significant opportunities I just mentioned doesn't even include numerous projects we are pursuing in the Indo-Pacific region, which collectively total more than $4 billion and include military infrastructure improvements at Naval Base Guam, airport and harbor projects on the island of Yap and wharf and harbor improvement projects in the Republic of Palau.

We also continue to have several large healthcare project opportunities on the West Coast and hospitality and gaming opportunities mostly in the Southwest. As a reminder, the majority of these opportunities start bidding and are expected to be awarded in the middle or second half of 2026 or to continue bidding through next year. Due to this timing and the significantly higher revenue we expect to recognize this year for work already in backlog, we continue to anticipate a modest sequential backlog reduction in the near term, followed by resumed backlog growth as we capture our share of major new projects. We are confident in our ability to drive continued backlog growth over the medium to longer term even as we focus on profitability, free cash flow, earnings growth, quality and safety as our primary performance indicators.

As you recall, last November, our Board of Directors authorized our first ever quarterly cash dividend of $0.06 per share, as well as a share repurchase program totaling $200 million. Today, the Board declared another $0.06 quarterly dividend, which will be paid on June 4. And earlier this year, in the first quarter, we completed the first repurchase under our share repurchase program, buying back approximately 278,000 shares on the open market for $20 million at an average price of approximately $72 per share. We expect to make additional opportunistic share buybacks moving forward under this authorization to return excess capital to shareholders.

Next, let's turn to our outlook and guidance. First, I am pleased with the excellent start to the year as we delivered results in line with our expectations. We continue to benefit from favorable macroeconomic tailwinds that are driving strong sustained market demand across all segments, which is a great sign for future awards, growth and value creation. Our business is resilient, and we remain confident in our outlook for consistent revenue and earnings growth over the next several years.

Based on our outlook and assessment of the current market, we continue to anticipate double-digit revenue growth and strong earnings in 2026 with even higher earnings expected in 2027, by which time many of the newer large projects in our backlog should be in the construction phase. Accordingly, we are affirming our 2026 adjusted EPS guidance in the range of $4.90 to $5.30 per share. Our guidance continues to factor in a significant amount of contingency for unknown or unexpected outcomes and developments in 2026, including the possibility of a lower-than-anticipated success rate for future project pursuits, the potential for project delays, slower ramp-ups for our newer projects and any unexpected settlements and/or adverse legal decisions associated with the resolution of disputes. We also continue to expect strong operating cash generation in 2026 and beyond due to increasing project execution activities on our newer mega projects and the anticipated resolution of remaining legacy disputes.

Before I turn the call over to Ryan, I'd like to comment on one of those remaining legacy disputes. Last month, we received an unfavorable legal ruling and were assessed damages of approximately $175 million related to a dispute with our customer regarding the W/Element Hotel in Philadelphia, a building segment project that we completed in 2021, and that opened to the public the same year. We strongly disagree with the ruling and firmly believe it does not reflect the merits of the case. It's respectful to the legal process and since it is ongoing litigation, we will not comment specifically about what we believe to be significant legal flaws in the court's decision.

We do intend to appeal and we'll continue to vigorously pursue all appropriate legal remedies to defend ourselves against the damages awarded to the customer and to collect amounts contractually due to us. The appeal process is likely to take 2 years, perhaps even longer, so this recent development represents another step along the path of an ongoing lengthy legal dispute. As a result of the ruling and after a close review of our claims against the owner and certain subcontractors, we recognized an immaterial charge to earnings in the first quarter.

Thank you. And with that, I will turn the call over to Ryan to discuss the details of our financial results.

Thanks, Gary. Good day, everyone. I will begin by discussing our results for the first quarter, after which I'll provide some commentary on our balance sheet and our 2026 guidance assumptions. All comparative references will be against the first quarter of last year, unless otherwise stated.

As Gary mentioned, we generated a record $147 million of operating cash for the quarter, up 542% year-over-year and well ahead of any first quarter cash flow result ever. I'm pleased to see our cash flow momentum from last year's record year continuing this year.

Our cash flow this quarter was largely driven by collections from newer and ongoing projects, reflecting a significant increase in project execution and improved working capital management with only an immaterial amount attributable to the resolution of disputes. We anticipate that we will continue to generate solid cash flow in 2026 and beyond, with most of our cash to be derived from organic operations, that is, from the new and existing projects and enhanced from time to time by cash collected following dispute resolutions.

Revenue for the first quarter of 2026 was $1.4 billion, up 11%, with the growth primarily due to increased project execution activities on certain large, newer and higher-margin Civil and Building segment projects, especially in the Northeast. This included, among others, the Midtown Bus Terminal Phase 1 project, the Manhattan Tunnel project, the Manhattan Jail and the Newark AirTrain replacement.

Civil segment revenue was $698 million, up 14% due to increased project execution activities on some of the projects I just mentioned, which have substantial scope of work remaining. It was the Civil segment's highest revenue of any first quarter ever, reflecting the solid sustained demand that Gary noted.

Building segment revenue was $473 million, up slightly compared to the first quarter last year, with the segment's revenue growth expected to increase substantially later this year. All our major Building segment projects, including the Brooklyn and Manhattan Jail projects in New York and a large healthcare campus project in California are running smoothly and also have substantial scope of work remaining.

Specialty segment revenue was $219 million, up a solid 24%, with the segment's growth continuing to be primarily driven by increased activities on various electrical and mechanical projects in New York and Texas. The Specialty segment's strong revenue growth began in the second half of 2025, and we expect the growth to continue this year and next year as those projects and other newer mega projects advance.

Our operating income for the quarter was $59 million, down 9% compared to last year. Our operating income was driven by improved contributions from each of our 3 segments, but those contributions were offset by a $23 million increase in share-based compensation expense in the first quarter of 2026 compared to the first quarter of 2025, primarily due to our stock price being substantially higher in 2026 as compared to the same period last year, which affects the fair value of liability-classified awards.

As a reminder, our share-based compensation expense is expected to decrease in 2026 and to decline much more significantly next year as some of these liability classified awards vested at the end of last year and most of the remaining awards will vest by the end of 2026. We are no longer awarding liability classified awards, which should meaningfully reduce earnings volatility starting next year.

Civil segment operating income was $88 million, up 10% and the highest first quarter result ever for the segment, with a corresponding segment operating margin of 12.6%, a very solid result for a first quarter given typical seasonality. The increase in operating income was primarily due to contributions associated with the increased project execution activities on various higher-margin projects that are ramping up, partially offset by an unfavorable adjustment of $16 million in the first quarter of 2026 on a mass-transit project in California due to changes in estimates resulting from ongoing negotiations of change orders, which we expect will generate significant cash once they are ultimately approved. We anticipate continued Civil segment margins in the range of 12% to 15%.

Building segment operating income was $16 million, up a strong 56% with the increase driven by contributions from certain newer higher-margin projects in New York and California with substantial scope of work remaining. The segment's operating margin was 3.5% compared to 2.3% last year, with the improvement primarily driven by contributions related to the increased higher-margin project execution activities I mentioned. We anticipate Building segment margins in the range of 3% to 6%, fueled by continued contributions from certain higher-margin projects.

Specialty Contractors segment operating income was approximately $600,000 for the quarter compared to a loss from construction operations of $7 million for the first quarter of last year. The improvement compared to last year was primarily due to contributions related to increased project execution activities on the electrical and mechanical projects I mentioned earlier. Many of these projects are in the early stages and are expected to ramp up substantially over the next several years. The Specialty segment had a handful of small immaterial unfavorable project adjustments this quarter related to legacy disputes that adversely affected its results for the quarter, though the segment was still profitable and its results reflected a significant improvement year-over-year.

Corporate G&A expense for the first quarter of 2026 was $45 million compared to $18 million last year, with the increase mostly due to the substantially higher share-based compensation expense that I mentioned. Income tax expense for the quarter was $17 million with a corresponding effective tax rate of 30.1% for the period compared to $13 million last year with a corresponding effective tax rate of 23.2% in that period. The higher effective tax rate this year is attributable to the significant increase in share-based compensation expense, which is almost entirely nondeductible.

Net income attributable to Tutor Perini for the first quarter of 2026 was $26 million or $0.48 of GAAP earnings per share compared to $28 million or $0.53 of GAAP earnings per share in the first quarter of last year. Excluding the impact of share-based compensation expense, net of the associated tax benefit, adjusted net income attributable to Tutor Perini for the first quarter of 2026 was $55 million or $1.03 of adjusted earnings per share compared to $34 million or $0.65 of adjusted earnings per share in the same quarter last year. As you can see, our adjusted EPS was up a strong 58% year-over-year, reflecting the high margin contribution and outstanding performance we are seeing from our projects and backlog.

Now I'll address the balance sheet. Our record cash generation enabled us to continue paying down our total debt, which stood at $399 million at the end of the first quarter. We ended the quarter with cash and cash equivalents exceeding total debt by $404 million, a very strong net cash position and $533 million better than we were just 1 year ago when we were in a net debt position. Our cash available for general corporate purposes was $321 million at the end of the first quarter of 2026, up 18% compared to $271 million at the end of 2025. Our balance sheet is stronger than it's ever been, and our solid net cash position provides us with excellent capital allocation flexibility. We anticipate refinancing our existing senior notes by around midyear to secure a more favorable interest rate and extend our debt maturities, which should result in substantially reduced interest expense going forward.

Lastly, all assumptions I provided last quarter pertaining to our 2026 guidance remain unchanged. Thank you. And with that, I will turn the call back over to Gary.

Thank you, Ryan. To recap, we have kicked off 2026 with excellent first quarter results marked by record operating cash flow of $147 million, solid revenue growth, adjusted EPS of $1.03, which was up 58% year-over-year and continued strong backlog of approximately $20 billion. This backlog underpins the confidence we have in our ability to deliver double-digit revenue and earnings growth and continued strong annual cash flow in 2026 and beyond as our newer projects progress through design and into construction.

Our business continues to perform well, and we expect our solid project execution to continue. The long-term outlook for Tutor Perini remains very bright given today's backlog of long-duration, higher-margin projects with improved contractual terms, operational improvements we have made in our Specialty Contractors segment, persistent favorable macroeconomic tailwinds and strong public and private customer funding that is fueling vibrant market demand and numerous major bidding opportunities. And importantly, we also believe that we are getting closer to the time when all of our segments will be firing on all cylinders, which will allow us to demonstrate more fully our growth and earnings potential.

Thank you. And with that, I will turn the call over to the operator for your questions.

[Operator Instructions] Our first question is from Michael Dudas with Vertical Research Partners.

I share my prayers for the family and those families as well. First, Gary, on -- so you talked about several large projects that will be coming up for bid second half of this year, 2027. But maybe you can assess that relative to what projects may be rolling off in some of those regions. And it seems like there's so much business that can be done in the Northeast, especially in New York area, certainly in California. I mean, again, all over, but how you balance like where the opportunities are, your capacity and maybe even to think a little bit more on Guam because you mentioned some pretty large numbers and some opportunities in the Pacific, which certainly should have a pretty good tail given all the money that's been spent over there.

Yes. Great, Mike. First of all, some of these opportunities are already in the hopper, so to speak. They've been submitted. We're waiting on the results. So we should know something as we talk about in some cases, later this month, sometime in some cases, next month. So capacity, look, you should feel -- just rest assured, we're not going to pursue something we can't handle. We do have some work that's winding down in California, and we'll use some of those resources to staff this other work. But all the work we're pursuing, we have people ready and raring to go, and we will execute the work soundly. Yes. So I don't think that should be a concern.

If I would look at what's out there and what we would expect to book, provided we get anywhere close to our fair share, I would say that it's going to be by far a net add. There are just so many opportunities, as you noted. The opportunities that we have as we sit here today and we compare that to the last time we talked, there's more out there. Some of it's moved closer to fruition. In other cases, there are new opportunities that we're pursuing. So the pipeline is rich, and we think we're well positioned for a fair amount of these opportunities. And then if we get to a point, and we would love for this to happen as we get to a point where we can't handle any more, then we'll sit on the sidelines. But we're not there yet. We don't think we will be there at this point. And we look forward to when we get together another quarter or 2 to report on increased backlog as these opportunities come home.

I appreciate that. And my follow-up, Gary, would be, as you assess the margin performance, which again, for Q1 seemed quite solid across the board, but the cadence of it as we move through 2026, is it just a function of ramping up the volume and capacity? And are there some other areas where between the low and high end of those ranges where what could help you achieve those versus maybe pushing them out to, say, 2027?

It's exactly what you said. It's about volume. The first quarter is always a slower quarter for us. It's difficult to estimate what the first quarter is going to be. It's harder than the others because you don't know the extent of -- we didn't know we're going to have all the rain that we had in Southern California, for example. And we didn't know that New York out your way, Mike, I had a trip that I canceled because of the weather being so bad and airport being closed and things of that nature. So you just don't know. But as we progress during -- through the year, the volume goes up, also our margins are expected to go up. These larger projects that we've been booking, they're ramping up right now. They're only going to get stronger as the year progresses. And some of that is the weather, but the other factor is that they're just early in their development. And so they're going to start blowing and going. Some already have and others will gain more momentum as we continue. So I would expect '26 to gain strength each quarter and '27 will just be a follow-on to that.

Our next question is from Judah Aronovitz with UBS.

On for Steve Fisher. The first question, I noticed that you changed the language around 2027 EPS expectations to significantly higher than the upper end of the 2026 guide from just higher. Is that right? And if so, I guess, what makes you more confident now relative to 3 months ago? Can you talk about your confidence level in achieving this level of earnings in '27? And specifically, is the work already in backlog? Or is there still more work to book?

Yes. If we didn't book any more work, '27 is going to be a blowout year as is '26. But there's going to be more work to book, so it will be even better. So what gives us a little bit more optimism or confidence, Judah, as time has gone by. We see how things have developed. We see how the new work is progressing. We see how settlement discussions are progressing. So all those things together make us as confident as we can be.

And look, we didn't -- we affirm guidance. We didn't raise guidance, and that's always something at least as we go forward that you should expect is maybe a raise or at least consideration for it. We did consider it this time because we do feel a lot better about how things are shaping up. But we also want to be conservative in our approach. So yes, we do feel more confident, and it's just the way all the details are coming together right now. We're very pleased with where we are with respect to the execution of all this new work and also very optimistic about building on this great backlog we already have.

Okay. That makes sense. Good to hear. And then my follow-up, relative to inflation, what are you seeing in the business now? And how comfortable are you with your contingencies in areas where you don't have the ability to reindex to inflation?

Yes. Good question because you even indicated that in some cases, you implied that we do have the ability to reindex with inflation, and that is the case. But in those instances where we're still being impacted by inflation as everyone else is, look, we're covered. We're very conservative in how we address contingency, but also we have this buyout that we talked about before on calls where early on we look at firming up commitments with respect to subcontractors and also vendors to make sure that we pass that risk on to them if there's any change in pricing. So we're good with respect to inflation.

Our next question is from Liam Burke with B. Riley Securities.

Gary, your balance sheet is much stronger. Your cash position is great. You're returning cash to shareholders. Does your strong liquidity position allow you to undertake larger projects without having to consider a joint venture partner?

You know what, it absolutely does. And that's what our preference is, of course, because we have great joint venture partners, and we appreciate what they bring to the table. But at the same time, if we can do the work on our own and not have to share 20% or 25% or 30% margin in cash with them, that's the ideal position that we'd like to be in. And certainly, when you're a stronger company as we are now compared to a year ago and the year before that, then that does offer us opportunities to do more things on our own.

Great. And in terms of you're talking about bidding activity and potential projects expanding, is that increasing the competitive field or are things pretty much the same? Part of it is that data center activity has pulled some of the competitors off the projects that you're bidding on?

Yes. I would say that if there is a change, it's -- from last quarter, there's probably not much of a change, to be honest with you. But look, the trend has been to be less competitive and whether it's data centers or just the volume of work, such as what we've talked about. So certainly, there's not going to be more competition, at least in the short term, medium term or even as far as we can see looking out because of all the -- just the magnitude of work and so few of us that can do the complex work that we pursue. So I would say that the competition is probably a little less and would likely be -- continue to be less than what it is currently. But certainly, we don't see new competitors coming into the market right now.

Our next question is from Min Cho with Texas Capital Securities.

My first question has to do with Black Construction. So I know that's a higher-margin business for you. Can you talk about your annual run rate of revenue there and kind of what you have in backlog? And how big do you feel like that business can get? And if you can just talk about any of the bottlenecks to driving more growth from Black Construction?

In the past, what we've really steered away from talking too much about specific business units and what type of -- what they bring to the overall consolidated Tutor Perini. Just, I guess -- but to try to address your question in some way, we're looking at Black. I won't talk about revenue, but I'll talk about backlog. It exceeds $1 billion. And if you look at the run rate, some of their work is 2, 3 years in duration. Other projects are a bit longer, maybe 4 or 5 years. And we're looking to build that. We've got the capabilities there. It's an extraordinary business for us, just very talented workforce. So look for that, it probably won't double, but it could grow significantly from that beginning point.

Great. And then also your recent Army Corps MATOC award to support the energy resilience and conservation investment program. How much of that $2 billion is within TPC's addressable business? And if you can just talk a little bit about the types of construction projects that are expected there?

Yes. All of it is within what we do and what we do well. And the type of work for that's available under that MATOC is it varies. It can be building work, it can be civil work. It can be specialty work as well, specialty contractors work. Our workforce at Black and Guam and the surrounding areas, again, I mentioned before, it was very talented, but we're very diversified. We can do whatever work is that's out there. We also have PMSI as one of our business units. And likewise, they are very equipped in whatever part of the world that they operate to do all types of building work or all types of construction work. Their emphasis is generally more on the building side. But really between the 2 of those entities, we can do just about anything.

Excellent. And if I can just squeeze in one more question. Can you just talk a little bit about Tutor's position currently on pursuing some of the mission-critical and high-tech projects like the data centers or semiconductor campuses?

Yes. So this is something that we're looking at very closely. We do -- we are actually doing some data center work with -- on the specialty side. And we are looking to -- we're exploring ways to expand that currently. So we want to make sure that we don't give up the core market because we know one day that -- and who knows how long down the road that will be, whether it's 5 years or 10 years down the road that the data center work at some point in time probably won't be there, at least not as strong as it is now. So we want to make sure that we're still well positioned to do the work that is our standard bread and butter. But at the same time, the data center work is very exciting for us. We see it as an opportunity that -- where we can expand margins and increase revenue as well. So we're looking at it very closely. And I think not too far down the road, certainly before the year is up, you'll hear more from us as far as maybe new strategy to explore some of that market or at least explore -- we're already doing. And we'll talk more publicly about it at some point, too. We just -- we're not quite there, but we're getting closer.

Our last question is from Adam Thalhimer with Thompson, Davis.

I like Min's question. Can I just keep going on that? Are you thinking that you might look at data center work for other segments or just within the specialties?

Yes. Right now, it's a little too early to get out in front of any more than what I said, Adam. But Specialty is probably where we see the most, we'll say, current type opportunities. And -- but we're looking at other areas as well. And it's something that we're talking about as management. We'll talk more about it with the Board as we learn a little bit more. But certainly, there's a lot of excitement internally as we look at opportunities that could be out there for Tutor Perini.

Okay. Great. The buyback, I was curious, good to see you do $20 million in Q1. How would you like to pace that from here?

Well, it's certainly something that would we buy back at $72 on an average price, right, I think that's right. And so...

Nicely done.

Yes. And we -- there's some -- it wasn't without some debate internally because we're a stock that has grown quite well over the last year or so. And some of us felt a strong conviction to even buy with our own money, such as myself. And I've done that a couple of times in the last several months. So for me, it was pretty easy on the buyback. Now that we're 90-ish or something like that, it's not as compelling for us. But at the same time, we know that we've got a lot of upward trajectory that's to come. And so I think there will be -- we're going to be opportunistic, and I think there will be opportunities in front of us. But we're not really planning it to say, okay, we're going to do X million dollars every quarter or 6 months. We'll just see where the opportunities are and weigh that with the cash needs and how quickly we're building our cash balances and then go from there. So I know it's not a specific answer for you, but we're very aware that we've got a lot of room left with the buyback. We are very bullish on where the -- what the opportunities are right now with -- very bullish on what the share price could continue to do. So either on a personal basis or a company basis, I think there will be more coming. But again, we just don't know exactly when.

Great. Ryan, the refinancing you said is coming in the next few months. Can you give us a sense for the target structure and potential interest rate savings?

Yes, sure. I think at this point, we're looking to refinance the notes 1:1. Maybe they can change a little. We're looking at the interest savings of somewhere between 400 or 500 basis points as we look at the marketplace. Again, a little -- there's still a little bit of volatility out there related to some of the geopolitical issues going on. So that remains to be seen. But I think at the same time, what we also intend to do is take a look at our credit facility, right, and looking to upsize that and extend those maturities. So ultimately, the goal is to refinance the notes with significant interest savings and then extend the maturity and have some -- extend the maturity on the credit facility with a significant extension in maturity as well.

Our goal is to get somewhere with a 6 handle compared to the horrible rate that we have right now on the bonds.

Yes, that would be great. And then last one for me. You gave the margin outlook for the other segments, Ryan, but I didn't hear it for Specialty. I was curious what the range is there that you're working towards? And also, what percent of their work now is for other TPC segments?

Sure. For 2026, we're probably looking in the, call it, 1%, 2% to 3% range. Ultimately, we expect that specialty to get up into the 5% to 8% range. I mean, look, we still have a little bit of overhang with some legacy disputes. That's why I'm kind of tempering 2026 in that 1% to 3% range. And at this point, Specialty's backlog, about 2/3 of it is with -- is on, call it, other Tutor Perini subsidiary projects.

There are no further questions at this time. I would like to turn the floor back over to Gary Smalley for closing comments.

Thank you, everyone, for your participation today. We look forward to continuing to deliver excellent results and to speaking with you again next quarter. Thanks again.

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

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation's Fourth Quarter 2025 Earnings Conference Call. My name is Latanya, and I will be your coordinator for today.

[Operator Instructions]

As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to your host today, Jorge Casado, Senior Vice President of Investor Relations. Thank you. You may proceed.

Hello, everyone, and thank you for joining us. With us today are Gary Smalley, CEO and President; Ron Tutor, Executive Chairman; and Ryan Soroka, 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 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.

In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find information and a reconciliation of these non-GAAP financial measures in the earnings release that we issued today and in the Form 10-K being filed today, both of which can be found in the Investors section of our website.

Thank you. And with that, I will turn the call over to Gary Smalley.

Thanks, Jorge. Hello, everyone, and thank you for joining us. Tutor Perini had a tremendous year in 2025, perhaps our best year ever. Our results were highlighted by a record $5.5 billion of revenue, a return to strong profitability that produced $4.29 of adjusted earnings per share, a fourth consecutive year of record operating cash flow with $748 million of cash that shattered last year's record. This enormous cash generation was largely due to the contributions from new and ongoing projects and our record revenue is driven by double-digit backlog growth that we expect will fuel even higher revenue and earnings, increased profitability and continued strong cash flow in 2026 and beyond.

A year ago on our earnings call, I shared some of my top priorities as Tutor Perini's then newly appointed CEO, which included a sustained focus on cash, the return to profitability and providing ambitious yet reasonable earnings goals, all with the goal of significantly increasing short- and long-term shareholder value. I'm pleased to report that we have delivered on each of these priorities, which together have helped us to achieve unprecedented share price performance and record returns for our shareholders.

There's a lot of enthusiasm here at Tutor Perini and among investors and other business partners about the progress we have made and especially about what the future holds. So it continues to be an exciting time to be a Tutor Perini shareholder, and we want to thank those of you who are shareholders for your support.

Our revenue growth accelerated progressively throughout each quarter of 2025, and our record revenue was primarily driven by contributions from various larger, higher-margin projects. As many of these projects continue to ramp up, we expect they will generate further double-digit revenue and earnings growth over the next 2 years. The Civil segment, our highest margin segment, generated more than $2.8 billion of our total revenue in 2025, the highest ever annual revenue for the segment. Consolidated operating income was up significantly in 2025, driven by our larger, higher-margin projects as well as significantly less negative impacts on earnings from legacy dispute resolutions as compared to 2024.

In addition to generating record annual revenue, the Civil segment produced its highest ever annual operating income and operating margin in 2025. The Building segment's operating income for 2025 was its highest since 2011. And importantly, the Specialty Contractors segment returned to profitability in the second half of 2025 ahead of expectations. We see higher margins ahead for the Building and Specialty Contractors segments and sustainably strong margins for the Civil segment as many newer large projects continue to ramp up.

We concluded 2025 with a robust backlog of $20.6 billion, up 10% year-over-year and had a solid book-to-burn ratio of 1.34x for the year. Our backlog growth was driven by $7.4 billion of new awards and contract adjustments that we booked during the year, the largest of which included the $1.87 billion Midtown bus terminal replacement Phase 1 project in New York, the $1.18 billion Manhattan Tunnel project, also in New York, the UCSF Benioff New Children's Hospital in California valued at approximately $1 billion, a $538 million health care project in California, $241 million of additional funding for the Apra Harbor Waterfront repairs project in Guam, a $182 million military defense project in Guam, the $155 million Diego Rivera Performing Art Center at City College of San Francisco, $131 million of additional funding for an electrical project in Texas and an electrical project at Cook Children's Medical Center in Texas valued at more than $100 million.

Looking back a bit further, over the past 3 years, we have won 9 mega projects totaling approximately $16 billion, each valued at approximately $1 billion or more. Three of these were among our major awards of 2025 and all but one were awarded since the summer of 2024. These projects all have very healthy margins, more favorable contractual terms and longer durations than many other large projects we have booked in the past. They also provide us with excellent visibility into our future revenue and earnings over the next several years.

We believe our backlog will remain strong in 2026 and beyond. We anticipate booking approximately $1 billion into backlog later this year for the finished trade scope of work for Phase 1 of the Midtown bus terminal project in New York City. And earlier this month, we received $204 million of funding for the Eagle Mountain Casino Phase 2 expansion project in California, a project that was originally awarded and announced last summer. In addition, our subsidiary, Rudolph and Sletten was recently selected for a large new multibillion-dollar health care project in California, which is currently in the preconstruction phase. We expect to book significant additional backlog as this and several other Building segment projects also currently in the preconstruction phase advance to the construction phase over the next several years.

Furthermore, we continue to see numerous major bidding opportunities for our Civil and Building segments, many of which should include significant work for our electrical and mechanical business units within the Specialty Contractors segment. Our most significant bidding opportunities over the next 12 to 18 months include, a program believed to be valued at approximately $12 billion for the Sepulveda Transit Corridor, the $3.8 billion Southeast Gateway Line and the $700 million Metro Gold Line Foothill extension, all 3 of which are in California as well as the multibillion-dollar Penn Station transformation project in New York, the $3 billion Newark Liberty International Airport Terminal B project in New Jersey, very similar to the award-winning Terminal A project that we recently completed, the $1.4 billion I-535 Blatnik Bridge project in Minnesota and the $1 billion I-69 ORX Section 2 project connecting Indiana and Kentucky.

There are also several large hospitality and gaming opportunities we are pursuing, mostly in the Southwest of the United States. In addition, we continue to have significant Indo-Pacific opportunities driven by the federal government's Pacific Deterrence initiative. Black Construction, our Guam-based subsidiary, has been tremendously successful winning various new projects throughout the region and continues to be well positioned to capture additional major projects over the coming years.

We remain highly selective as to which opportunities we will pursue with a continued focus on bidding projects with favorable contractual terms, limited competition and higher margins. Due to the timing of our significant prospective opportunities, most of which start bidding around the middle of 2026 and continue through the first half of next year. And because of the significantly higher revenue we expect to recognize for work already in backlog, we anticipate a modest backlog reduction in the near term, followed by resumed backlog growth as we capture our share of major new projects. So expect a bit more lumpiness in our backlog as we move forward with growth still expected over the medium to longer term rather than the steady backlog increases we have seen virtually every quarter over the past 2 years.

That said, growth remains a priority for us in this environment, and we believe we can scale up resources as necessary. While our civil business is expected to continue to drive most of our future growth and profitability as it typically does, a substantial proportion of our Building segment backlog is operating at significantly higher margins than what we have seen historically. For example, our 2 New York City Jail mega projects carry margins that are consistent with large complex building projects of a fixed price nature. In addition, today's large health care campus projects are more technically complex than more traditional commercial office building projects in the past and therefore, also command higher margins.

Last November, our Board of Directors authorized our first ever quarterly cash dividend of $0.06 per share as well as a share repurchase program totaling $200 million. And today, the Board declared another $0.06 quarterly dividend, which we paid on March 26.

Next, let's turn to our outlook and guidance. Tutor Perini continues to benefit from favorable macroeconomic tailwinds that are driving strong sustained market demand for construction services across all segments. We believe these tailwinds will persist due to the substantial amount of funding that is in place and because our country has for decades and until recently, inadequately funded and prioritized the types of substantial infrastructure investments being made today.

Based on our assessment of the current market and business outlook, we anticipate double-digit revenue growth and strong earnings in 2026 with even higher earnings expected in 2027, by which time newer large projects should be in the construction phase. For 2026, we expect adjusted EPS in the range of $4.90 to $5.30. As we did last year, we have factored into our guidance a significant amount of contingency for unknown or unexpected outcomes and developments in 2026, including the possibility of a lower-than-anticipated success rate for future project pursuits, the potential for project delays, slower ramp-ups for our newer projects and any unexpected settlements and/or adverse legal decisions associated with the resolution of disputes.

We also continue to expect strong operating cash generation in 2026 and beyond due to increased project execution activities and the anticipated resolution of remaining legacy disputes. We have continued to chisel away at our remaining legacy disputes and made excellent progress in 2025, resolving certain long-standing matters. We are already off to a strong start this year, having recently reached an agreement in principle regarding one of our larger disputes related to a long completed project. We believe that we will finalize a settlement agreement in the coming days, which will not have a material impact on our earnings. However, the settlement is expected to result in the collection of approximately $40 million for Tutor Perini in the near term. Because of our tremendous backlog and ample bidding opportunities, the outlook for Tutor Perini remains incredibly positive even beyond 2026.

Thank you. And with that, I will now turn the call over to Ryan to discuss the details of our financial results.

Thanks, Gary. Good day, everyone. I will start by discussing our results for the year, after which I will review the fourth quarter and then provide some commentary on our balance sheet and our 2026 guidance assumptions. All comparative references will be against the same period of last year, unless otherwise stated. Operating cash flow was certainly one of the most noteworthy highlights of 2025. As Gary mentioned, we generated a new record operating cash flow of $748 million for the year, up 49% compared to the previous record of $504 million for 2024. This was our fourth straight year of record operating cash, and it was driven by strong collections on newer and ongoing projects, reflecting a significant increase in project execution and improved working capital management with less contribution from dispute resolutions in 2025 compared to previous years.

We expect that we will continue to generate strong cash flow in 2026 and beyond, with most of our cash to be generated from organic operations, that is from new and existing projects and occasionally enhanced by dispute resolutions. Revenue for 2025 was $5.5 billion, up 28% with the robust growth primarily due to the increased project execution activities on certain large newer civil and building segment projects in the Northeast, Hawaii and Guam. This included, among others, the Newark Airtrain replacement, the Midtown Bus Terminal Phase 1 project, the Brooklyn and Manhattan jails, the Honolulu Rail project and the Apra Harbor Waterfront repairs project in Guam.

Civil segment revenue was $2.8 billion, up a solid 34% due to increased project execution activities on certain large, higher-margin projects in the regions I just mentioned, all of which have substantial scope of work remaining. It was the Civil segment's highest annual revenue ever, reflective of the robust sustained demand that Gary noted, we are seeing for our services. Building segment revenue was $1.9 billion, up 15%, primarily due to increased activities on the Brooklyn and Manhattan Jail projects in New York and a large health care campus project in California, all of which also have substantial scope of work remaining. The Building segment delivered its highest annual revenue since 2020.

Specialty Contractors segment revenue was $844 million, up a strong 43% with the growth primarily driven by increased activities on various electrical and mechanical components of some of the large civil and building projects I mentioned. The Specialty segment revenue really started to show strong growth in the second half of 2025, and we expect this growth to continue this year and next year as these and other newer projects advance. Our operating income was driven by higher margin contributions from various Civil and Building segment projects as well as the absence of certain net unfavorable adjustments that impacted our results last year. Operating income was up significantly despite a $110 million increase in share-based compensation expense tied to the near tripling of our stock price in 2025, which affected the fair value of liability classified awards.

Our share-based compensation expense is expected to decrease in 2026 and decline much more significantly in 2027 as some of these liability classified awards have now vested and most of the remaining awards will vest by the end of 2026. We are no longer issuing liability classified awards, which should meaningfully reduce earnings volatility. Civil segment operating income for 2025 nearly tripled to $391 million compared to $138 million in 2024, with a segment operating margin of 13.7% for the year within the range of 12% to 15% that we had expected. It was the segment's highest ever operating income and operating margin of any year.

The strong increase was primarily due to contributions related to the segment's increased project activities that I mentioned and the absence of certain prior year net unfavorable adjustments. Earlier in 2025, we recorded favorable adjustments that resulted from the settlement of certain change orders and changes in estimates due to improved performance and a favorable project closeout on a domestic mass transit project. These were mostly offset by an unfavorable adjustment in the fourth quarter, which was mostly noncash and associated with the settlement of a legacy dispute on a tunneling project in Canada.

Building segment operating income was $58 million, a substantial turnaround compared to the operating loss of $24 million in 2024. The segment's margin for 2025 was 3.1% compared to a negative 1.5% last year. The significant improvement was driven by contributions related to the increased higher-margin project activities I mentioned and the absence of certain prior year unfavorable adjustments. We anticipate Building segment margins in the range of 3% to 6%, fueled by contributions from certain higher-margin projects. The Specialty Contractors segment returned to profitability in the second half of 2025, ahead of expectations, but posted a slight operating loss of $7 million for 2025 compared to a loss of $103 million in 2024.

The significant improvement was primarily due to contributions related to the increased activities I mentioned on the electrical and mechanical components of certain Civil and Building segment projects. Many of these projects are in the early stages and are expected to ramp up considerably over the next several years. The improvement was also driven by the absence of certain prior year unfavorable adjustments on several completed projects.

Corporate G&A expense was $211 million in 2025 compared to $110 million in 2024, with the increase primarily due to the substantially higher share-based compensation expense that we had in 2025, as discussed earlier. Income tax expense was $61 million in 2025 with an effective tax rate of 30% for the year compared to a tax benefit of $51 million with an effective tax rate of 29.3% in 2024. Net income attributable to Tutor Perini for 2025 was $80 million or $1.51 of GAAP earnings per share compared to a net loss attributable to Tutor Perini of $164 million or a loss of $3.13 per share in 2024. Excluding the impact of share-based compensation expense, net of the associated tax benefit, adjusted net income attributable to Tutor Perini for 2025 was $229 million or $4.29 of adjusted earnings per share compared to an adjusted net loss attributable to Tutor Perini of $124 million or an adjusted loss of $2.37 per share in 2024.

Now let's turn to the fourth quarter results. We had a solid turnaround performance across all segments in the fourth quarter in terms of revenue, operating income and margins. As Gary mentioned, our revenue growth accelerated sequentially throughout 2025 with particularly strong growth in the second half of the year that is continuing into 2026. Revenue was $1.5 billion, up 41% compared to $1.1 billion for the fourth quarter of 2024. Civil segment revenue for the quarter was $732 million, up 32%. Building segment revenue was $512 million, up 45% and Specialty Contractors segment revenue was $263 million, up 63%. The strong growth was due to the increased project activity, as I mentioned earlier, on various projects that are ramping up and have significant scope of work remaining.

Civil segment operating income was $72 million for the fourth quarter of 2025, up very substantially compared to $4 million of operating income for the fourth quarter of 2024. The significantly lower-than-normal operating income and margin in the 2024 period was due primarily to a temporary earnings reduction of $32 million that resulted from the successful negotiation of significant lower margin and lower risk change orders on a West Coast project. The Civil segment's operating income and margin for the fourth quarter of 2025 would have been substantially higher had it not been for the unfavorable adjustment I mentioned earlier.

Building segment operating income was $11 million for the fourth quarter of 2025 compared to a loss from construction operations of $41 million for the fourth quarter of 2024. The improvement was driven by contributions from certain higher-margin projects as well as the absence of prior year unfavorable adjustment on a government building project in Florida. Specialty Contractors segment operating income was $11 million for the quarter, with a margin of 4.4% compared to a loss of $20 million in the fourth quarter of 2024. The segment's performance has continued to improve significantly as their involvement in our large civil and building projects grow. We expect the segment to eventually and consistently generate margins in the 5% to 8% range. For the fourth quarter of 2025, net income attributable to Tutor Perini was $29 million or $0.54 of GAAP EPS compared to a net loss attributable to Tutor Perini of $79 million or a GAAP loss of $1.51 per share in last year's fourth quarter. Adjusted net income attributable to Tutor Perini for the fourth quarter of 2025 was $58 million or $1.07 of adjusted earnings per share compared to an adjusted net loss attributable to Tutor Perini of $78 million or an adjusted loss of $1.49 per share in the fourth quarter of 2024.

And now I'll address the balance sheet. In 2025, we paid down our total debt by 24% and reduced our CIE by 13%. The CIE reduction was mostly driven by billings and collections, including those associated with the resolution of various previously disputed matters. Our CIE is expected to continue to decrease over time as we resolve the remaining legacy disputes. Due to our record cash generation, we ended the year in a healthy net cash position with cash and cash equivalents exceeding total debt by $327 million as compared to our $79 million net debt position at the end of 2024. Cash available for general corporate purposes was $271 million at the end of 2025. Overall, our balance sheet is healthier than it's ever been, and our solid net cash position provides us with excellent capital allocation flexibility.

Lastly, I'll provide some assumptions regarding our guidance for modeling purposes. G&A expense for 2026 is expected to be between $400 million and $410 million. Depreciation and amortization expense is anticipated to be approximately $50 million in 2026, with depreciation at $48 million and amortization at $2 million. Interest expense for 2026 is expected to be between $40 million and $50 million, of which about $3 million will be noncash. Our effective income tax rate for 2026 is expected to be approximately 27% to 30%. We anticipate noncontrolling interest to be between $75 million and $85 million. We expect approximately 54 million weighted average diluted shares outstanding for 2026. And capital expenditures are anticipated to be approximately $125 million to $135 million, with the vast majority of the CapEx in 2026, approximately $75 million to $85 million being owner-funded for large equipment items on certain large new projects. Thank you.

And with that, I will turn the call back over to Gary.

Thank you, Ryan. In summary, we had our best year ever in 2025, marked by record operating cash flow, record revenue that grew 28% year-over-year, strong operating income and profitability with record annual results for our high-margin Civil segment as well as robust year-end backlog of $20.6 billion that was up 10% year-over-year. With this tremendous backlog, we are confident in our ability to produce double-digit revenue and earnings growth and continued strong annual cash flow in 2026 as our newer projects progress through design and into construction.

The outlook for Tutor Perini remains very bright over the next several years as we continue to benefit from favorable macroeconomic tailwinds and strong public and private customer funding that is fueling sustained market demand and numerous major bidding opportunities. As I mentioned earlier, it's an exciting time to be with Tutor Perini, whether as an employee, an investor or other business partner.

Thank you. And with that, I will turn the call over to the operator for your questions.

[Operator Instructions]

The first question comes from Steven Fisher with UBS.

Sorry for the background noise here. Congratulations on a very strong 2025. Just a couple of questions to start off on the guidance. Wondering if you could just talk about the coverage you have in your backlog on the outlook. I would think it would be pretty strong in light of all the bookings that you have. But just curious if there's any particular things you need to see still happen and get booked to hit the numbers.

And then just from a cadence perspective, first quarter tends to be fairly light relative to the full year due to seasonality, and we've obviously had some pretty tough weather here in parts of the country in the first quarter. So I'm just curious if there are any expectations you want to set there?

Yes, Steve, thanks for the congrats. This is Gary. Yes, first of all, we've got great visibility into the to the results for 2026 and really beyond. There's not much that has to happen for us to hit the numbers that we've represented. There are going to be some additional awards that could enhance things, and there's some built-in awards that we're expecting that technically, we'd need to hit the numbers, but it's going to happen. It's not like we're expecting some large projects to come our way in order to be able to hit 2026. As far as the seasonality, you're right, Q1 is usually light for us. It's typically the way it goes. It will be the same this year.

What's happened primarily in New York with the large snowstorm. That hasn't really -- it's not going to have much of an impact. We've got contingency for that. We've also budgeted expecting Q1 to be light. And then I might as well throw in Manhattan Tunnel. We're back working after about a 2-week suspension. And that's all accounted for in the guidance as well, accounted for by -- with contingency. So we feel good.

That's great. And then just from a backlog perspective, it sounds like you expect some, I think, lumpiness was the word that you used. But you did cite some potential larger awards in the second half of the year. Just curious, should we be expecting some net burn this year on the backlog? Or do you think there's still enough opportunity to kind of keep it steady at the levels kind of where we are now? And then maybe the bigger picture question is just on -- maybe on the civil side, is there any kind of view you have on kind of where we are in the cycle of bigger projects? I know this is an area where you've had relatively limited competition recently. I'm just kind of curious where you think we are in sort of the bigger picture cycle there.

Sure, Steve. Look, taking the last part first, we've got good visibility again on a lot of these larger projects for civil. We think that they're on pace to what we are expecting and making good progress on things. And we don't disclose every large project that's out there, just the biggest ones and the ones that are most likely to happen in the near term. We've got -- the first part of your question again, remind me...

Yes, do you think it will be net burn in the backlog this year?

Look, we think at the end of the year, we should be -- our plan shows us a little north of where we are currently. I want to introduce the lumpiness concept because we've kind of spoiled everyone, I think, to some extent because over the last 2 years, almost every quarter, we've grown backlog. And it didn't happen this particular quarter with a modest adjustment on a percentage basis. And I just want everyone to know that it could be lumpier than it has been over the last couple of years where every quarter, we seem like we're hitting a new record. But the pipeline is rich. There's a lot of really strong work out there.

Look, we won 9 out of 11 of the large awards over the last 1.5 years or so. I don't know if we'll continue that win rate, but we should have a good win rate because we target those projects that we think suit us best and where we think we have a good chance of winning. So I think it all adds up to backlog growth. And whether it's by the end of the year or into next year, it's coming, I can say that. But it's hard to predict exactly when those projects are going to hit backlog. But I wanted just to emphasize that it could be a little bit lumpier than it has been, but it's -- we're going to see growth. And I guess the last is we're going to be generating revenue at an all-time record. 2025 was a record '26 '27 as we go forward, even going to be higher. So it just means that to sustain backlog, you have to have significant awards. So again, that's the reason for the words of caution.

The next question comes from Alex Rygiel with Texas Capital.

Gary and Ryan, very nice quarter. Congratulations. A couple of questions. Gary, can you go a little bit deeper on sort of the improvement in contract terms on new awards and talk about what that means longer term for Tutor Perini?

Yes, we'll do. Look, in the past, when the competition was heavier for these projects that we pursued, the larger projects, we wanted to change contractual terms, but we were unable to because there's always somebody else that would have accepted the terms and taken the contract. Now what we've been able to do with the limited competition is to work with our customers, our owners in order to drive better payment terms, better terms with respect to no damages for delay, especially in New York, just damages, provisions also on differing site conditions, things that in the past could and sometimes did impact us in a negative way and things that like no damage for delay is something that just the way the statute is written, it's tough to work around in court if you happen to go to court.

So now eliminating that provision of the contract is certainly beneficial. So I think what you'll see is less disputes as we go forward. And then -- and part of that is just because it's really a clarification of terms. But also I think that we will less likely end up in court because the pendulum is more -- swung more toward our side, more in the middle so that I think you'll get negotiations and meaningful negotiations before you go to court, preventing you from having to go to court.

And then secondly, I believe as it relates to Rudolph and Sletten, just from a clarity standpoint, did you say it was looking at a multibillion-dollar health care facility. So maybe expand upon that. And then any commentary about opportunities over the next handful of years as it relates to high-tech manufacturing and reshoring?

Yes. So first, on the multibillion-dollar project, it's a confidential project, so we can't say a whole lot about it. It's -- the multibillion-dollar side, it's closer to $2 billion than anything above that. But we really can't offer much on that other than we're in preconstruction. And usually, when something is in preconstruction, our history shows us a 90% plus chance of heading to construction down the road. So that's what we expect that when we think that will end up as a construction contract for us. the timing of which some of that will come in this year, but probably the majority of it is going to be in 2027. And then could you elaborate on the -- your second question?

And then are you seeing developing opportunities from large manufacturing facilities, fab plants and whatnot and how that might play out over the next handful of years?

No, not really. Of course, that doesn't hit us on the civil side. But on the building side, the focus right now is on health care, some educational facilities and some multipurpose facilities, hotels, casinos, things like that. But that's really where our focus is.

The next question comes from Adam Thalhimer with Thompson, Davis.

Congrats on the strong year. I wanted to start -- can you give more color on the Canadian project? And how much was the negative impact to Civil in Q4?

Yes. In Q4, I think it was $42 million, as I recall. And that's a consolidated joint venture. That's the joint venture portion of it. And there was, call it, a dozen, $12 million or $13 million earlier in the year. That's behind us. It's roughly offset by a Midwest project that really of the same magnitude, maybe a little bit more that we recognized over probably the last 3 quarters. of the year. So anyway, it's one of our larger disputed items. We just felt that it was better to resolve that one than to proceed down the path of litigation.

Yes, absolutely. And then how many legacy jobs are left to settle?

Yes. Let's just say about a dozen. It's -- and there are some yes, we've got around a dozen. And those are of some significance. There are some cats and dogs out there that are smaller amounts that are less meaningful. And as Ryan was just noting here, he's right, we started with about 50. So we've gone from about 4 dozen to a dozen, and we're making progress on some of the others. As you heard, one was just cleared within the last 1.5 weeks. So we'll continue that focus. We're optimistic that some turn favorably for us, right? Some are write-ups, not write-downs. And we hope that's the case with what we have left, but time will tell. But in the meantime, we've tried to put away -- put aside contingency, not just for that, but a lot of other unknowns. So we think that we have enough contingency to cover any unexpected delays, anything that is just not forecasted, including the potential for any write-downs due to litigation outcomes.

Okay. So it really was a great quarter if you strip that out. And then...

Yes, it was.

And then I wanted to ask, so you brought up -- you made a comment about 2027 construction starts. And I don't expect you to give '27 guidance, but just hoping you could expand on that and what you are trying to say about the 2027 visibility.

Yes. And Adam, you just said it was a great quarter. given that, well, look, even with that write-down, it was a great quarter. I think that shows the strength of what we're building here with this new work that we have. And that new work carries us past '26 into '27. And you're right, we don't guide multiyear, but '27 is going to be better than '26. I think that's clear. We've said last year around this time, we're saying '25 is going to be good, '26 is going to be better and '27 is going to be better yet, and there's nothing that's changed from that guidance.

The next question comes from Liam Burke with B. Riley.

Ryan, you are bidding on larger and larger, more complex projects. Is there any risk of being resource constrained? And how would that affect your bidding process?

Yes. I think at this point, we certainly haven't seen any of the constraints on resources. It's probably important to point out that the majority of our labor is sourced from the union halls. And so we've got agreements in place, whether project-specific or with the union itself for that labor to be supplied. So from our perspective, the day-to-day craft workers, we don't see any constraints, and we don't really see that going forward.

And from a management standpoint, I think we've talked in the past about that's really where our focus has been because the unions have always done a great job providing us skilled labor when we needed it. But as we've grown, we've been very aggressive and in fact, in a constant recruiting mode to bring in the project managers, project executives that are needed to manage this work. And we feel that we're well equipped there. We're always looking. Anyone out there listening, you want to apply, we're always looking. But at the same time, we think that we're already staffed at an appropriate level for future growth.

Great. And you mentioned in your earlier comments that the specialty margins could be in the, we'll call it, mid-single-digit range. It's a business that's traditionally been marginally profitable at best. Is it the same game plan as building and civil? Or is there something different about the business where you're going to have a pretty meaningful change in profitability?

Yes. Look, I think what's happened is we have been able to weed out some of the poor contracts that we've had with the poor contractual terms and lower margin work. Now we have higher-margin work, better terms. A lot of the litigation, a lot of the disputes are behind us there, most of them. And so look, if you look at the last 2 quarters of 2025, I think what was a 2.7% operating segment margin and then 4.4% operating margin for the segment in just those last 2 quarters. That's the trend we're on right now. That's what the current work is producing.

And so our 1% to 3%, it's really -- it's got contingency in there. We know that the work that we have in hand is going to be in that mid-single-digit range. But then we want to make sure that we hedge it a little bit with any unexpected outcomes. But we feel real good as we clear '26 that we're going to see that 5% to 8% range that we've talked about for some time.

The next question comes from Michael Dudas with Vertical Research.

Gary, just so as we enter into 2026, you talked about the 9 mega projects, $16 billion in backlog. So as we move forward through 2026 and '27, how do we assume that the project -- the revenue conversion you'll be seeing over the next couple of years will be coming from the enhanced T&C, better backlog or better margin backlog that has been booked and certainly on the targets that you have out into the market, I'm assuming there are similar targets relative to the margin expectations you have currently? Or is there some range or some opportunities there elsewhere going forward?

Look, I think that margin will only build over time, and that's probably with all segments as these 9 -- the big 9, as we'll say, continue to move into full production. So I think that will certainly have a positive impact on earnings, but also on revenue generation. And as those projects continue to mature and continue to progress, we'll see, I think, some margin enhancement. And look, the new work that we're looking for, we -- as you get more work, and this has been our strategy, we have been, I will say, I don't know if I guess it's more aggressive on margin, but expecting larger margin. You start to fill your coffers. And every time we get another project, we raise margins next time, and it depends a little bit on competition.

So I can't say that there's a limit on that, or there's no limit on that and that we'll continue to grow margins forever. But right now, that's the world we're living in where -- and that's what our focus is.

And the clients are getting more -- maybe they don't like it, but getting more comfortable with that environment given the tightness in the market?

Yes. I guess that's one way to say it, Mike. I'd say another way is they like what we do. They like us. They like the performance that we provide. They like the quality. They like the timeliness of the work. And then you combine that where the competition, in some cases, is not bidding or in some cases, we're clearly the best product and whether that's on the quality of the work or quality and price. And so I think those factors, we're bidding on work. It's not that they're just handing it away -- hand it out and they're giving it to us and they don't want to. I think we've got a good future here. We're -- the past is driving the future in the past is just solid execution. And yes, we're raising margins, but that's the market that we're in. And we'd be foolish not to with -- as we survey the competition and look at what's in front of us.

Well said, Gary. Ryan, with the tremendous job you executed here with the balance sheet over the last several years, how is that going to help with business and opportunities going forward in the size of projects and maybe being more sole source versus potential partners? And how do you look at a more -- the optimal size of the balance sheet or what kind of recapitalization can we see given where you are with the debt, the maturities and the cash we're going to have and even further that you're going to be generating in the next few years?

Yes. All good questions. I'll try to answer them in order. Just starting with the balance sheet and looking at the debt that we have out there today, 11.8% is a tough coupon to swallow, obviously, and certainly something that we're looking to refinance probably midyear or so is the expectation for some significant interest savings. We're hopeful for a 500 basis point reduction. As far as the level of debt, we're comfortable at that 400-ish mark, in particular, if we extend that out longer term. So we have that liquidity certainty and also that longer-term liquidity view. As it relates to obviously, the operating cash and free cash that we've kicked off over the past 3 years at a record pace.

Obviously, that having that cash on hand also gives a better long-term liquidity view and for other stakeholders like the sureties, giving them confidence to -- as we look at some of these future opportunities to bid that sole source as opposed to having to get a JV partner. In 2026 alone, we're talking about, what do we say, $75 million to $85 million of noncontrolling interest. We'd sure like to keep that in-house.

And I think that's a great answer. Let me just throw something else out there that we haven't really talked a whole lot about. And earlier in the call, we talked about better contractual terms. I mentioned less litigation. Look, there's -- we spent a lot of money over the last several years on litigation expense. And as we have progressed the last couple of years, we're seeing that amount come down. We expect to see that come down even further. Legal expenses are something that, of course, are necessary in business and certainly in this industry. But I think you'll see less and less legal expenses from us, and that's only going to drive profit improvement too.

That's not a terrible thing, isn't -- just to clarify, Ryan, your interest expense guidance doesn't assume any refinancing recapitalization, correct?

So we did broaden the range. And so...

Okay.

Sorry...

Half the year...

Yes, yes. So I mean what we've assumed a refinancing, call it, roughly midyear.

Just wanted to clarify that.

Thank you. At this time, I would like to turn the floor back to Gary Smalley for closing remarks.

Thank you all again for your interest and participation today. We look forward to continuing to deliver strong results as we go forward. We'll talk to you again next quarter. Thank you.

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

Good day, ladies and gentlemen, and welcome to Tutor Perini Corporation's Third Quarter 2025 Earnings Conference Call.

My name is Julian, and I'll be your coordinator for today.

[Operator Instructions]

As a reminder, this conference call is being recorded.

[Operator Instructions]

I will now turn the conference over to your host today, Mr. Jorge Casado, Senior Vice President of Investor Relations. Thank you. Please proceed.

Hello, and thank you all for joining us. With us today are Gary Smalley, CEO and President; Ron Tutor, Executive Chairman; and Ryan Soroka, Executive Vice President and CFO. Gary and Ryan will review the details of the quarter and provide some commentary regarding our outlook and guidance.

Ron is here to help answer any project-specific questions as he remains involved in the setup of our newer major projects.

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 contribute to such differences in our Form 10-K, which we filed on February 27, 2025, and in our Form 10-Q that 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.

In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures in the earnings release that we issued today and in the Form 10-Q that is being filed today, both of which can be found in the Investors section of our website.

Thank you. And with that, I will turn the call over to Gary Smalley.

Thanks, Jorge. Hello, everyone, and thank you for joining us. As I mentioned during our last 2 earnings calls, it certainly is a great time to be a Tutor Perini shareholder.

Our business and correspondingly, our stock has performed extremely well this year, yet we are just at the start of what we expect will be a very strong period of double-digit revenue growth, increased profitability and solid cash generation over the next several years.

With what we continue to see on the horizon, there remains tremendous opportunity ahead for further substantial shareholder value creation.

Now let's talk about our third quarter performance. Tutor Perini delivered excellent results for the third quarter, once again setting new records across various key metrics. Our operating cash flow was extraordinarily strong for the quarter at $289 million and $574 million through the first 9 months of 2025, setting new records for both respective periods.

The strong cash flow was almost entirely driven by collections from newer and ongoing projects. Our third quarter cash flow was the second best for any quarter ever, and our cash flow through the first 9 months of this year is already well in excess of last year's full year record operating cash flow.

With what is now our fourth consecutive year of record operating cash generation, the cash on our balance sheet is quite healthy. We plan to continue building our cash position until our general corporate purpose cash reaches a level at which we can comfortably initiate one or more strategic capital allocation alternatives, most likely in the form of a recurring dividend and/or a share repurchase program.

Tutor Perini has been benefiting from favorable macroeconomic tailwinds, which are driving strong sustained market demand for construction services across all segments. We believe that these tailwinds will persist due to the tremendous amount of federal, state and local level funding that are now in place and because our country has for decades and until recent years, neglected to adequately fund and prioritize the types of substantial infrastructure investments being made today.

We have continued to be successful in capitalizing on major project opportunities, adding $2 billion of new awards and contract adjustments in the third quarter, which increased our backlog to a new record of $21.6 billion, up 54% year-over-year.

Backlog for both the Building and Specialty Contractors segments also set new records. Our book-to-burn ratio for the third quarter was 1.4x. I'll provide further details on some of our new awards shortly.

Our third quarter revenue was strong, up 31% year-over-year, and revenue for the first 9 months of 2025 was the highest since 2009, achieving record quarterly and first 9 months revenue performance for the Civil segment and the best performance since 2020 for the Building segment.

Operating income was up significantly this quarter despite a further substantial increase in our share-based compensation expense that resulted from the dramatic growth in our stock price, which has nearly tripled since the end of last year, reflecting our continued strong operating performance driven by contributions from various newer, higher-margin projects in the Civil and Building segments.

I will note that while we expect our share-based compensation expense to be higher than previously anticipated for the full year of 2025, it is still projected to decrease considerably in 2026 and further in 2027 once certain awards have vested.

The Civil segment continues to perform at record levels, delivering its highest segment operating income ever for both the third quarter and first 9 months of the year with strong margins that are sustainably above the historical range for the segment.

The Building segment's operating income for the first 9 months of 2025 was the highest since 2011. And importantly, the Specialty Contractors segment returned to profitability this quarter ahead of expectations.

Adjusted earnings per share for the third quarter, which excludes the impact of share-based compensation expense, net of the associated tax benefit was $1.15, up significantly compared to the adjusted loss per share of $1.61 reported for the third quarter last year, again, demonstrating our strong core operating performance and contributions from various newer, larger and higher-margin projects, many of which are just ramping up.

Our GAAP EPS was $0.07 for the third quarter, a substantial improvement compared to a loss of $1.92 per share for the same quarter last year. Overall, our business continues to perform extremely well this year, significantly better than we anticipated at the start of the year.

The newer, larger projects I mentioned are expected to drive very substantial growth, strong profitability and solid cash flow over the next several years.

Now taking a closer look at our new awards in the third quarter, the largest of these included the UCSF Benioff New Children's Hospital in California, valued at approximately $1 billion, a $182 million defense system project in Guam and $155 million education facility project in California. We also listed several other smaller new awards in our earnings release today.

Looking ahead, we believe that our backlog will remain strong as we continue to see numerous major bidding opportunities for our Civil and Building segments, many of which should also include a significant role for our electrical and mechanical business units within the Specialty Contractors segment.

Our most significant new project opportunities over the next several years are primarily located in California, New York, the Midwest and the Indo-Pacific region.

Among these opportunities are several building segment projects currently in the preconstruction phase that are expected to advance to the construction phase, a few later this year and others over the next 2 years.

We have well over $25 billion of upcoming bidding opportunities over the next 12 to 18 months, the largest of which include the $12 billion Sepulveda Transit Corridor, the $3.8 billion Southeast Gateway Line and a $2 billion replacement hospital, all of which are in California as well as the $5 billion Penn Station transformation project in New York, the $1.4 billion I-535 Blatnik Bridge project in Minnesota and the $1 billion I-69 ORX Section 2 project connecting Indiana and Kentucky.

In addition to these billion-dollar plus projects, we have an even firmer opportunity that is on the near-term horizon. We expect to add approximately $1 billion to backlog by second quarter of next year for the finished trade scope of work for Phase 1 of the Midtown Bus Terminal in New York City.

Recall that we were awarded the first part of Phase 1 of the bus terminal project last quarter for an announced value of $1.87 billion. We also continue to have significant Indo-Pacific opportunities, largely driven by the federal government-specific deterrence initiative Black Construction, our Guam-based subsidiary has had tremendous success in winning various new projects throughout the region and continues to be well positioned to capture additional major projects over the coming years.

We remain highly selective as to what opportunities we will pursue with a continued focus on bidding projects with favorable contractual terms, limited competition and higher margins. We are pursuing projects that will highlight Tutor Perini's differentiated approach, depth of operational talent and history of outstanding project execution.

Based on our outstanding performance to date and strong confidence in the results we expect to deliver for the fourth quarter, we are raising our guidance for the third consecutive quarter.

Our adjusted EPS for 2025 is now expected to be in the range of $4 to $4.20, up from our previous guidance of $3.65 to $3.95.

Importantly, the outlook for Tutor Perini remains very positive beyond 2025. We still anticipate that our adjusted EPS in '26 and '27 will be significantly higher than the upper end of our increased guidance for 2025, and we expect strong operating cash flow for the rest of this year and beyond.

Finally, I will reiterate and expand a bit on what we have said earlier this year regarding the broader macro environment.

We still do not anticipate that tariffs will have a significant impact on our business. We also do not currently foresee the risk of any of our major projects in backlog being canceled, delayed, defunded or otherwise materially impacted by the administration's targeted funding cuts or by the recent federal government shutdown, including our work on the first phase of the California high-speed rail project or any of our projects in New York.

We have had discussions with our customers, and they have confirmed that our projects are funded and authorized and they are not expected to be adversely impacted. So for us, it continues to be business as usual at this time on all of our major projects.

Thank you. And with that, I will turn the call over to Ryan to discuss the details of our third quarter results.

Thanks, Gary, and good afternoon, everyone. I will start with a discussion of our third quarter results, after which I'll provide some commentary on our balance sheet and our latest 2025 guidance assumptions.

All comparative references will be against the same quarter of last year, unless otherwise stated. Revenue for the third quarter of 2025 was $1.42 billion, up 31% year-over-year. Civil segment revenue was $770 million, up 41%.

Building segment revenue was $419 million, down slightly compared to last year, but expected to increase substantially over the coming quarters. Specialty Contractors segment revenue was $226 million, up a very strong 124%.

Our revenue growth for this quarter continued to be driven by increased project execution activities on various newer, larger and higher-margin projects that all have substantial scope of work remaining.

These included the Midtown Bus Terminal Phase 1 project in New York, a new hospital project in California, the Brooklyn and Manhattan jails, the Honolulu Rail project, the Manhattan Tunnel, the Newark AirTrain replacement and the Kensico-Eastview Connection Tunnel. All of these projects are in their early stages and are expected to ramp up substantially over the next several years.

Civil segment income from construction operations was $99 million in the third quarter of 2025, up substantially compared to a loss of $13 million.

Last year's third quarter loss was due to a significant charge that resulted from an adverse arbitration decision on a completed bridge project in California, which we are appealing.

The improvement this quarter was otherwise driven by contributions related to the strong revenue growth from higher-margin projects that I mentioned for the segment. Civil segment operating margin was solid at 12.9% for the third quarter of 2025 and 15.1% through the first 9 months of 2025, both well ahead of the segment's historical 8% to 12% range and in line with our expectations for 13% to 15% for this year.

Building segment income from construction operations was $14 million in the third quarter, also up considerably compared to a loss of $4 million last year, which was mostly due to a charge we took during last year's third quarter for the settlement of a legacy dispute on a completed government facility project in Florida.

The profit increase in the current year quarter was primarily due to contributions related to the increased project execution activities I mentioned. Building segment operating margin was 3.4% for the third quarter of 2025, in line with expectations.

We believe this margin will continue to increase over the next several quarters as volume from certain higher-margin projects growth.

Specialty Contractors segment income from construction operations was $6 million for the third quarter, reflecting an earlier-than-anticipated return to profitability and compares to a loss of $57 million last year. The improvement was primarily due to the absence of certain prior year unfavorable adjustments as well as the current year contributions related to the segment's very strong revenue growth with increased project execution activities on various newer projects across diverse end markets. Specialty Contractors segment operating margin was 2.7% for the third quarter of 2025.

Other income for the third quarter was $7 million compared to $4 million last year. Interest expense was $14 million, down 36%, compared to $21 million last year because of our significant debt reduction since last year.

Income tax expense for the third quarter was $15 million with a corresponding effective tax rate of 44.6% compared to an income tax benefit of $34 million last year with a corresponding effective tax rate of 27.5%.

We trued up our tax provision again this quarter, and our new projected effective tax rate for 2025 is now higher than previously anticipated, entirely due to the significant increase in share-based compensation expense that Gary mentioned and the fact that nearly all of that higher expense is nondeductible.

On a GAAP basis, net income attributable to Tutor Perini for the third quarter of 2025 was $4 million or $0.07 of earnings per share, a result impacted by the further increase in our share-based compensation expense, but still a substantial improvement compared to the net loss attributable to Tutor Perini of $101 million or $1.92 loss per share in last year's third quarter.

Adjusted net income attributable to Tutor Perini was $62 million or $1.15 of adjusted earnings per share for the third quarter, up very substantially compared to an adjusted net loss attributable to Tutor Perini of $85 million or an adjusted loss of $1.61 per share for last year's third quarter.

For the first 9 months of 2025, adjusted net income attributable to Tutor Perini was $171 million or $3.22 of adjusted earnings per share, also up very meaningfully compared to an adjusted net loss attributable to Tutor Perini of $46 million or an adjusted loss of $0.88 per share for the same period last year.

As you can tell, our business is performing well with core operations performance driving very solid earnings this year and reflecting a dramatic turnaround compared to last year. As Gary mentioned, our operating cash flows for the third quarter and first 9 months of 2025 were record-breaking at $289 million and $574 million, respectively.

We expect that our operating cash for the full year of 2025 will shatter last year's record and will represent our fourth straight year of record cash generation. We also anticipate that our cash flows will continue to be strong well beyond 2025, driven by organic cash collections, that is from new and existing projects and occasionally enhanced by collections associated with dispute resolutions.

Next, I'll address our balance sheet. Our total debt at September 30, 2025, was $413 million, down 23% compared to $534 million at the end of 2024.

Our cash balance has grown substantially this quarter due to our record operating cash flow, and it continues to significantly exceed our total debt now by $283 million.

Our cost and estimated earnings in excess of billings, or CIE, declined again this quarter and is at the lowest level it has been since the first quarter of 2017. CIE has declined by $95 million or 10% since the end of last year, mostly driven by the resolution, billing and collection of various disputed matters as opposed to project charges.

Our CIE is expected to continue to decrease as we resolve the remaining legacy disputes.

Finally, here are our latest updated assumptions regarding our increased earnings guidance. G&A expense for 2025 is now expected to be between $410 million and $420 million, with the increase from our previous assumption due entirely to increased share-based compensation expense as our share price has continued to climb.

Depreciation and amortization expense is now anticipated to be approximately $50 million in 2025, with depreciation at $48 million and amortization at $2 million.

Interest expense for 2025 is still expected to be approximately $55 million, of which about $5 million will be noncash.

This $34 million or 38% lower than our interest expense of $89 million in 2024. Our effective income tax rate for 2025 is now expected to be approximately 30% to 32%, higher than previously anticipated due to the increase in share-based compensation expense, nearly all of which is nondeductible.

We still anticipate noncontrolling interest to be between $75 million and $85 million, significantly higher than last year due to increased contributions from certain joint ventures.

We still expect approximately 53 million weighted average diluted shares outstanding for 2025. And capital expenditures are now anticipated to be approximately $170 million to $180 million, with the vast majority of the CapEx in 2025 estimated at approximately $120 million to $130 million to be owner-funded for large equipment items on certain large new projects such as tunnel boring machines. Thank you. And with that, I will turn the call back over to Gary.

Thank you, Ryan. In summary, we delivered extraordinary results for the third quarter that exceeded expectations with record operating cash flow, continued strong revenue growth, solid operating income and profitability across all segments and strong bottom line earnings as well as backlog that climbed to a new all-time record of $21.6 billion.

This record backlog should enable us to produce strong double-digit revenue growth and significantly higher earnings in 2026 and 2027, while serving as a catalyst for continued strong annual cash flow as our newer projects progress through design and into construction.

Our excellent performance to date, combined with our confidence in the results we expect to deliver for the fourth quarter, has enabled us to raise our 2025 EPS guidance for the third consecutive quarter.

The outlook for Tutor Perini is very bright over the next several years as we continue to benefit from favorable macroeconomic tailwinds and strong public and private customer funding that are fueling sustained market demand for our services.

Finally, and just to reiterate, despite the dramatic growth we have seen this year in our stock price, I still believe we have tremendous opportunity ahead for further substantial shareholder value creation.

Thank you. And with that, I will turn the call over to the operator for questions.

[Operator Instructions]

And our first question comes from Adam Thalhimer with Thompson Davis & Company.

Great quarter.

Thanks Adam.

Can you give a little more color on specialty turning positive? What drove that? And what's your expectation for the next few quarters?

Yes, Adam, look, what's really driving specialty performance is the work that we have, the non-claim resolution or dispute resolution work is just going extremely well. We're making a heck of a lot of money, and that is the work that we're primarily doing is for Tutor Perini, but also the work that we're not doing for Tutor Perini is just doing extremely well.

So we have a quarter that had very little noise from dispute resolutions, and that's what's really driving it. So whenever we have quarters like that throughout the business, but especially for specialty at this point, you're going to see much improved results.

Does the specialty revenue trend up from the Q3 level?

Yes. It will because keep in mind that most of the work that they're doing is for these larger projects that we've been announcing awards of over the last 1.5 years or so. And as those projects continue to ramp up, their participation will continue to ramp up. So their revenue is going to go up significantly, particularly New York-based revenue.

And then can you just level set us lastly on how many of the legacy disputes are remaining?

Yes. The -- we're looking at about a dozen, let's say, of any significance. There's some cats and dogs, odds and ends out there, too, but 10, 12 of any significance.

And our next question comes from the line of Liam Burke with B. Riley Securities.

As you move on with better terms and better margins on these contracts rolling over as we can see in your operating margins, is your bidding activity staying robust? Or have you been seeing less interest in certain areas?

No, it's still very robust. We've got a load of work that's coming up in different geographies, really led by New York still and a lot of things happening in California.

We still have Indo-Pacific that's looking very strong as well as the Midwest. So we're -- in all of our major geographies, there's still a really strong pipeline of work yet to be bid.

Great. And I don't want to keep harping on specialty contractors, but you had a pretty nice quarter in awards and the announcements, which we really don't hear a lot about. Is there something changing in terms of the amount of awards that specialty contractors are getting?

No, not really. Just keep in mind, though, for these larger projects, particularly in New York that we've been announcing, their participation is very strong in each one of those projects. So that means that as the backlog was building for the whole company, the specialty backlog, particularly in New York, has also been building.

And this is higher-margin work for them than what they've seen in the past. So expect higher margins to be reported as we move forward.

And our next question comes from the line of Min Cho with Texas Capital Securities.

Congratulations on another strong quarter and guidance raise. So you went through your $12 billion kind of near-term bid pipeline pretty quickly. I know the awards and backlog can be kind of lumpy from time to time.

But based on that pipeline and just the timing of the pipeline, do you -- could you exit the fourth quarter at another record? Or are we expecting something a little bit more flattish?

Yes, it's probably a little bit more flattish in the fourth quarter. It's going to be lumpier. Lately, it's been every quarter, it seems increased new record, new record, new record. And we're not going to see that going forward in the short term.

We may have new records, but it won't be consistently quarter after quarter. So a little bit lumpy, but flattish over the short term -- short to medium term anyway.

Right. It's still just at very high levels. That's great. Also kind of going back and maybe, Ryan, on the specialty contracting business, nice to see it back in the black. By 2026, could you kind of be at your target of 5% to 8%? Or given what's in the pipeline, do you expect that could take a little bit longer?

Yes. I think there's certainly potential to get up to that 5% to 8%, in particular, looking forward as these newer projects ramp up and that are obviously coming along with the significant civil work and building work.

So I think as those revenues and margins come through, I think you're going to see those margins continue to elevate.

Excellent. And then just finally, Gary, so obviously, the directional outlook for 2026 is still to be up substantially from the high end of '25. But from even the last quarter, are you feeling better or the same about 2026? And if you can just talk about what's maybe changed?

Yes, I would say at least as good, if not better. What's happening is we continue to have exceptional results in resolving the things of the past.

And so that certainly is helpful. But also as we go forward, we're seeing more clarity on the work that we were booking. We've been able to do a better job in negotiating what we call buyouts. So in other words, we offload risk to vendors and subcontractors.

And for these lump sum projects, we've done a better job than what we thought. So everything is -- and then the early performance is also really better than what we thought. So I would say that we expect -- we just are more bullish now over '26 and even '27 than we were before.

But it's always been very high expectations. And so we still have those, but with a little bit more.

The next question comes from the line of Michael Dudas with Vertical Research Partners.

Not sure who's had a better year due to Tutor Perini or Dodgers.

That's a good question.

You could ponder that offline. Gary, you've talked a couple of the response to the questions about the bookings that you're looking at and the bidding activity. There's several and they're large. How do you look at that relative to like where your business is today, what regions, your capacity, the ability to kind of continue to execute at this high level?

And is this -- is the market set up for maybe not in the next few quarters, but maybe in the next 12 to 30 months to have another uptick in what the backlog can be and what the visibility can be out, say, to the end of the decade?

Yes. It certainly can have an uptick as we progress through these bids. It really depends on the timing of when the bids come to fruition and then, of course, our success rate. But there are some large projects that you've heard. We like our chances.

As far as capacity, we're not going to overextend ourselves. We're very disciplined in the approach. We still have capacity for more, but we also are working off projects, too.

So as projects get worked off, we have staff that become available, and we insert those individuals, those key leaders where we need them most. So we feel really good about where we're staffed and we feel good about what the long-term prospects of this backlog can look like.

I appreciate that. And then my follow-up is, Gary, I mean, the cash performance has been outstanding. It goes without saying. Maybe as we think about it, you're going to need some cash to grow the business, I'm assuming, as these projects ramp up and on the cash cycle.

And you did mention about what to do once you get to this certain level on cash. And maybe you could share a little bit about what you're thinking, maybe the Board might be thinking internally on this concept and over how much more, what kind of level is required to maybe start thinking about that in a more tangible thought process?

I won't give you an exact time line, but I will say that it is a topic of conversation every time we get together with the Board and the next time is next week.

And I think that we're unanimous in believing up until the latest conversations is that it would be prudent to continue to accumulate more cash because of exactly what you said. There's -- we still have to look at future needs for the cash.

So we'll be conservative. We'll be intelligent with what we do. And as far as the timing, I won't -- we won't have a spoiler alert at this point because we got to get through the meeting next week.

And then we'll -- if there's any news, then we'll roll it out as soon as possible.

But look for continued conservatism and just caution to make sure that we have excess cash rather than needing to draw down on some revolver or anything.

That makes perfect sense. And just a quick follow-up on the bidding opportunities. Are you bidding on those by yourself?

Or are there any joint venture partners in many of these projects? I'm assuming most of them are going to be on your own? Or is there some that you might join with some partners?

Yes, it's a mix. When the projects get as large as the ones that we are talking about, it's likely that there's a JV partner. But look, we do very well with respect to surety support, being able to deliver projects ourselves without the need for others to participate.

We also have capabilities internally that we don't always need help. But these are huge programs. So look for, we'll say, a good -- many of those to have a JV partner. And then we'll rely on our experience with our JV partners in the past. We've always had very successful JVs and would look to go back to our established partners.

And our final question comes from the line of Steven Fisher with UBS.

Congratulations also on the cash generation there. Just curious on that point, what's the outlook for sort of the mobilization payments or upfront payments that you're getting? Is that now mostly kind of happened as your sort of backlog is flattening before this next wave? And is cash going forward for the next handful of quarters going to be more related. It's just sort of ongoing project burn?

Yes, there's -- most of the mobilization payments have happened. There's still a couple of fragments to go. I would look at cash continue to be strong, not as strong as what we had in the third quarter, that's just really phenomenal, the $289 million.

So it will still be very strong compared to where we've been historically. And we look for continued strong cash going into '26 and '27 and beyond that, too.

That's helpful. And just in terms of impactful margin momentum, I mean, clearly, going in specialty from negative to positive is important. But on the scale of dollars, it's maybe not as big as what could happen with the Building segment.

So just trying to get a sense of the -- both the timing and the magnitude of that momentum in the building side. And so maybe you can help me with this in terms of as we think about the revenue mix of the Building segment over the next couple of years, what percent of that do you think is going to be sort of the typical lower-margin GC work with a lot of the subcontractor pass-throughs versus the larger prison type projects where you've got more -- a higher margin profile.

Is this going to be like you think 50-50 within that segment or more weighted towards those kind of fixed price projects like the prison type thing?

Yes. Yes. Look, as always, our margin profile is dependent on a large mix of work. A good bit of the work that we're doing now is the -- you mentioned the prisons, but it's work like that, that is higher margin.

Even the traditionally lower margin work that we're doing now, some of those projects are showing increased margins, too. So without giving you an exact percent, the mix is better than it's ever been.

Certainly, the fixed price work impacts that, but also the complexity of some of the work that we're doing and the absence of bidders, not even talking about the fixed price work, that's helping us to demand higher margins there, too. So that's why we're so bullish on building margins being improving because the content of this newer work that's higher margin is just going to feed the margin growth in the Building segment.

Makes sense. And then just a quick follow-up there is when do you think you'll hit the point where the Building segment margins are really reflecting the solid burn on all the work that's gone in there? Is that sort of a 2027 time frame? Or could it be sometime before then?

No, I think you're going to see by mid-2026, you're going to see a significant impact and it's going to be improved by the time you get to 2027. But '26, I think the latter part of '26 is going to look much better than where we are even now with the elevated margins in '25.

And then I guess the last question here, I suppose I have to ask on the government funding side. You mentioned, Gary, that the government shutdown and the budget cuts aren't going to have an impact.

I guess I'm curious to hear what you think about the dynamics with the mayor elect in New York City here versus the Trump administration and what that could mean for ongoing projects and perhaps importantly, something like Port Authority, which you have, it sounds like another slug coming. So what do you think about those dynamics and how they could play out?

Yes. Look, it's hard to predict what the future might hold, but we're not expecting any significant impacts. And you mentioned the Port Authority. Look, the Port Authority is not a city agency. It's a state agency between 2 states, New Jersey and New York. And we don't -- we just don't anticipate any impacts and nor do our owners, our customers. We're having active dialogue with them as developments occur. And so far, we don't see any impact at all.

And with that, that does conclude the question-and-answer session. I would now like to turn the floor back over to Gary Smalley for closing remarks.

Well, thank you, everyone, again, for your interest and participation today. We look forward to continuing to deliver strong results going forward as we have for the first 3 quarters of this year.

Look, we appreciate your support and confidence in the improvements that we are making and your patience for those of you who have been with us for a long time.

For those of you who have been in wait-and-see mode, that's okay, I get it. But we believe that there's still a lot more good to come. So get on board, there's still time. And look, we look forward to talking to you again next quarter. Thank you very much.

Thank you. With that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.