Q4 2023 Tutor Perini Corp Earnings Call
Participants
Gary G. Smalley; President; Tutor Perini Corporation
Jorge Casado; VP of IR & Corporate Communications; Tutor Perini Corporation
Ronald N. Tutor; Chairman & CEO; Tutor Perini Corporation
Ryan Joseph Soroka; Senior VP & CFO; Tutor Perini Corporation
Abraham Raul Landa; Research Analyst; BofA Securities, Research Division
Kevin Lee
Michael Odell
Steven Fisher; Executive Director and Senior Analyst; UBS Investment Bank, Research Division
Presentation
Operator
Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Fourth Quarter 2023 Earnings Conference Call. My name is Camilla, 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 conference call over to your host for today, Mr. Jorge Casado, Vice President of Investor Relations. Please proceed.
Jorge Casado
Hello, everyone, and thank you for joining us. With us today are Ronald Tutor, Chairman and CEO; Gary Smalley, President; and Ryan Soroka, Senior Vice President and CFO.
Before we discuss our results, I will remind everyone that during this call, we will be making forward-looking statements which are based on management's current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially. You can find our disclosures about risk factors that could potentially contribute to such differences in our Form 10-K, which we are filing today. The company assumes no obligation to update forward-looking statements, whether due to new information, future events or otherwise other than as required by law.
Thank you, and I will now turn the call over to Ronald Tutor.
Ronald N. Tutor
Thank you, Jorge. Good day, and thank you all for joining us. Please pardon my raspy voice. I've got a head cold for a couple of days, but I'll survive.
Before I discuss our results for the year, I'd like to mention for those of you that may not have heard or recall that last November, we announced that our Board of Directors approved the appointment of Gary Smalley, our former CFO as President of Tutor Perini, and that Gary is expected to succeed me as CEO effective January 1 of next year.
Turning now to our results. We had another year of mixed results in 2023, highlighted by record operating cash flow that was nearly 50% better than last year as well as backlog that grew 28% year-over-year to a $10.2 billion figure. We generated $308 million of operating cash and 223 -- in 2023, excuse me, compared to $207 million in 2022, with both years setting records as the highest result of any year since the 2008 merger between Tutor-Saliba and Perini Corporation.
Our earnings in 2023 were challenged due to certain adverse legal judgments or decisions throughout the year, primarily in the Northeast and write-downs that resulted from the expedited settlement or resolution of various disputed matters. Our consolidated revenue was up slightly in 2023 compared to 2022 still dramatically reduced from our typical years prior to the pandemic. We sustained modest revenue growth in the Civil and Building segments, mostly offset by lower revenue in the Specialty Contractors segment.
Ryan will discuss the financials in more detail a bit later. We made excellent progress on claims in dispute settlements in 2023, which helped us to deliver our record cash flow and reduce our unbilled receivables or costs in excess by 17% or $234 million. We expect to continue resolving most of our remaining legacy disputes in 2024 with only a handful going into 2025. And thereby collecting substantial amounts of associated cash throughout this year and a certain amount in next year before all of our legacy issues will be resolved and brought current.
Last week, we began to utilize some of our excess cash generated since the latter part of 2023, to deleverage our balance sheet by paying down our Term Loan B by approximately $91 million, bringing its balance to $276 million compared to its original of $425 million. This paydown was not required until the 1st week in April, but we decided to pay it down early to capture interest savings over the next few months.
Following this paydown, we still have significant cash on hand, which is anticipated to be used for further debt reduction as part of the current refinancing underway. We expect to successfully conclude this refinancing sometime between the middle and end of April.
As I mentioned, our year-end backlog stood at $10.2 billion, up 28%, with strong growth largely driven by the award of the $2.95 billion Brooklyn Jail project in New York; other significant new awards and contract adjustments in 2023 included $788 million of additional funding for certain mass transit projects in California; $287 million of additional funding for 2 large health care projects in California; the $222 million military facilities project at Tinian International Airport in the Northern Mariana Islands; and $127 million of additional funding for a light rail project in Minnesota.
We expect our backlog to grow substantially in 2024 and again in 2025 as we pursue and capture our share of a tremendous volume of available project opportunities, many of which are supported by strong funding that is put in place at the state and local levels as well as the $1.2 trillion Bipartisan Infrastructure Law that was passed in 2021 for which funding is now flowing.
We are tracking more than $75 billion of opportunities over the next 3 to 4 years and $32 billion of which are expected this year and next. Some of the most significant near-term prospects include the $6 billion dry dock at Puget Sound Naval Shipyard in the state of Washington, the $2.6 billion DTX Transbay Transit Center Project in downtown San Francisco, the $2 billion Honolulu Rail Transit Project, which we had previously been the low bidder in 2020, the $2 billion site's reservoir project in Northern California, the $1.8 billion South Jersey light rail in New Jersey, and again, the $1.5 billion Newark AirTrain for which we had also been low bidder some 2 years ago and the $1 billion Inglewood Transit Connector project in Southern California, which bids this summer.
Regarding our prospective Jail projects in New York City, the owner has just made a formal announcement that the Queens facility was awarded to one of our competitors. So we were also shortlisted with one other team on the Manhattan jail, which would be the most costly endeavor of all the facilities, which will bid an award in the third or fourth quarter.
I could go on and on, and I'm only talking about the mega projects. However, others worth noting are an $800 million Kensico Tunnel, the $800 million Amtrak East River Tunnel rehab, which we've already bid and should hear the results any day, the $500 million Palisades Tunnel in New York and the $750 million Manhattan Tunnel in New York. That and a number of projects in that size, too many to mention.
We are anticipating significant double-digit revenue growth in 2024, with 80% of which sourced by our existing backlog. We are expecting a return to positive earnings in 2024 and significantly higher earnings in 2025 and again, in 2026. Based on our assessment of the current market and business outlook, we are establishing our initial EPS guidance for 2024 in the range of $0.85 to $1.10. As in prior years, our earnings are expected to be weighted more heavily in the second half of the year due to the anticipated timing of large activities as well as a typical business seasonality that is affected by the weather.
Thank you. And with that, I'll turn the call over to Ryan to review the financial results.
Ryan Joseph Soroka
Thank you, Ron, and good afternoon, everybody. I will start by discussing our results for the year, including our record operating cash, after which I will review the fourth quarter. Then I'll provide some commentary on our balance sheet, our 2024 guidance assumptions and our refinancing efforts.
As Ron mentioned, operating cash is one of the major highlights in 2023. For the second year in a row, we achieved a record operating cash flow. And more impressive is the $308 million that we generated in 2023 was an increase of nearly 50% compared to the prior year record of $207 million in 2022. Our strong operating cash was driven by overall solid collection activities including collections related to various settlements and dispute resolutions that we concluded in the latter part of 2022 and into 2023.
Some of these were expedited settlements as we continue with the focus we have begun in the latter part of 2022 on accelerating dispute resolutions and cash collections. In fact, we had a modest net favorable impact to earnings and cash generation in 2023 because of various settlements concluded during the year compared to a significant unfavorable earnings impact related to settlements in 2022.
We expect continued solid cash collections in 2024, much of which will be associated with anticipated resolutions of various remaining disputes, and our cash generation should continue to be strong over the next several years as well. Our continued strong cash generation has already enabled us to begin utilizing some of the excess cash generated over the past several months to deleverage our balance sheet. Something that we had indicated we had planned to do in last quarter's conference call.
As Ron said, last week, we further paid down the balance of our Term Loan B by approximately $91 million, a payment that was not due until the 1st week of April, but a payment that we decided to make early to save on interest expense. After making this payment, we still have significant cash available which is expected to be used for further debt reduction in conjunction with the refinancing of our senior notes.
Revenue for 2023 was $3.9 billion, up slightly compared to $3.8 billion in 2022, primarily due to a lower amount of net unfavorable impacts related to settlements, litigation results and other project charges in 2023 as compared to 2022. Civil segment revenue was $1.9 billion, up 9% compared to last year, primarily due to the absence of certain prior year unfavorable adjustments as well as increased project execution activities on a mass transit project in California and various other projects in Guam and the Northern Mariana Islands.
Building segment revenue was $1.3 billion, up 5% with growth driven by increased activities on various projects in California. The growth in the Civil and Building segment was mostly offset by a 15% decline in the Specialty Contractors segment with specialties revenue coming in at $694 million for 2023, mainly due to decreased activities on the electrical and mechanical components of the completed transportation project in the Northeast.
We reported a reduced loss from construction operations of $115 million in 2023 compared to a $205 million loss in 2022. Our results in both years were negatively impacted by net unfavorable adjustments on various projects, primarily due to changes in estimates resulting from recent negotiations, settlements and legal judgments on certain disputed claims and unapproved change orders. Civil segment income from construction operations for 2023 was $199 million, up substantially compared to $21 million in 2022. The strong improvement was driven by certain current year net favorable adjustments as well as higher volume on the projects I mentioned earlier and also the absence of significant prior year unfavorable adjustments.
The Building segment posted a loss from construction operations of $91 million in 2023 compared to income from construction operations of $7 million in 2022. The loss in 2023 was largely attributable to an adverse legal ruling in the first quarter of 2023 on the completed mixed-use project in New York that resulted in a noncash pretax charge of $83.6 million, of which $72.2 million impacted the Building segment and $11.4 million impacted the Specialty Contractor segment as well as an unfavorable adjustment of $14.6 million in the 2023 fourth quarter on a government building project in Florida due to increased costs associated with an external subcontractor.
The Specialty Contractor segment posted a loss from construction operations of $145 million in 2023 compared to a loss of $168 million in 2022. The reduced loss from construction operations was primarily due to the reduced negative impact of various unfavorable adjustments in 2023 as compared to 2022.
We were significantly challenged once again in 2023 by charges in the Specialty Contractors segment related to various settlements and negotiations, partly due to our focus on expediting dispute settlements and cash collections in New York, a focus that began in the latter part of 2022. You can, of course, find further information about the various charges that negatively affected our results in 2023 and 2022 in our 10-K, which was filed today. Note that the majority of the remaining larger disputes are expected to be resolved in 2024.
Corporate G&A expense was $75 million in 2023 compared to $62 million in 2022, with the increase primarily due to higher compensation-related expenses charged to corporate in 2023 that were previously charged to the segments as well as higher outside professional fees. Other income was $17 million compared to $7 million last year, primarily due to a gain on sale of property in 2023, and interest expense for 2023 was $85 million compared to $70 million for 2022 with the increase driven by higher borrowing rates in 2023 on our revolver and Term Loan B.
We reported an income tax benefit of $55 million in 2023 due to our significant pretax loss for the year and an effective tax rate of 30.1% compared to a larger tax benefit of $75 million with an effective tax rate of 28.1% in 2022. As we return to profitability in 2024 and in future years, the net operating losses generated in 2022 and 2023 will help reduce our cash outlays for future income taxes.
Net loss attributable to Tutor Perini for 2023 was $171 million, or a loss of $3.30 per share compared to a net loss of $210 million or a loss of $4.09 per share in 2022. It was certainly another disappointing year for us in 2023 from an earnings perspective. But as Ron mentioned, we anticipate double-digit revenue growth and a return to positive earnings in 2024 with substantially stronger earnings expected in 2025 and 2026.
Now let's turn to the fourth quarter results. Revenue for the fourth quarter was $1 billion, up 13% compared to $907 million for the fourth quarter of 2022. Civil segment revenue was $459 million, up 5% compared to $440 million last year. Building segment revenue was $376 million, up 15% from $327 million last year, and Specialty Contractors segment revenue was $186 million, up 33% compared to $140 million last year. The revenue improvement across our business was largely attributable to fewer charges in the fourth quarter of 2023 compared to the same quarter of 2022 for judgments and settlements.
Increased activities on certain Civil segment projects in British Columbia and California, along with various Building segment projects in California and New York also contributed to the revenue growth for the fourth quarter of 2023. Civil segment income from construction operations for the fourth quarter of 2023 was $28 million, up substantially compared to $9 million for the same quarter last year. The strong improvement was primarily driven by the absence of prior year favorable charges on certain projects in the Northeast and California.
The Building segment posted a loss from construction operations of $7 million for the fourth quarter of 2023 compared to a loss of $2 million for the fourth quarter last year. The larger loss in the fourth quarter of 2023 was primarily due to a current year unfavorable adjustment on a government facility project in Florida, partially offset by improved performance on other projects.
The Specialty Contractors segment posted a loss from construction operations of $24 million in the fourth quarter of 2023 compared to a loss of $86 million in the fourth quarter of last year as 2023 had fewer unfavorable adjustments than in the prior year. In corporate G&A expense in the fourth quarter of 2023 was $19 million compared to $17 million for the same quarter last year. And other income for the fourth quarter was $5 million compared to $2 million last year.
Interest expense for the fourth quarter of 2023 was $21 million compared to $20 million last year. Income tax benefit was $3 million in the fourth quarter of 2023 compared to an income tax benefit of $28 million for the same quarter last year. Net loss attributable to Tutor Perini's for the fourth quarter of 2023 was $48 million or a loss of $0.91 per share compared to a net loss of $93 million or a loss of $1.80 per share in last year's fourth quarter.
Now I will address the balance sheet. Our net debt as of December 31, 2023, was $519 million, down $180 million or 26% compared to our net debt of $699 million at December 31, 2022, with a significant reduction due to our record cash flow in 2023. As of December 31, 2023, we are in compliance with the covenants under our credit agreement and expect to continue to be in compliance in the future.
Next, I'll provide some assumptions regarding our guidance. G&A expense for 2024 is expected to be between $265 million and $275 million. Depreciation and amortization expense is anticipated to be approximately $54 million in 2024 with depreciation at $52 million and amortization at $2 million.
Interest expense for 2024 is expected to be approximately $83 million, of which about $10 million will be noncash. Our effective income tax rate for 2024 is expected to be approximately 22% to 24%. We anticipate noncontrolling interest to be between $55 million and $65 million. And we expect approximately 53 million weighted average diluted shares outstanding for 2024. And capital expenditures are anticipated to be approximately $25 million to $30 million, with about $5 million to $10 million of that being project-specific and owner funded.
Finally, as Ron mentioned, we are working to refinance our senior notes. We believe that our strong cash flow in 2023, continuing solid liquidity to date in 2024, recent and further anticipated debt reductions and current credit market liquidity will allow us to complete a refinancing transaction by the end of April.
Thank you. And with that, I'll turn the call back over to Ron.
Ronald N. Tutor
Thanks, Ryan. To recap, we delivered another year of significant operating cash flow, strong backlog growth and made the necessary progress in settling and resolving the various disputed matters in 2023, but our earnings were negatively impacted by certain charges associated with these resolutions as well as some negative court verdicts that were unanticipated.
We believe that our operating cash flow will again continue to be strong in '24, in particular and also in 2025. As we resolve frankly, the balance of the remaining legacy disputed matters, most of which will be accomplished by the end of this year and collect a substantial associated cash there, too.
We expect double-digit revenue growth in 2024 as we continue to be in a strong bidding environment. And that, of course, is reflected on our EPS guidance. We believe there will be even significantly higher earnings in 2025 and '26 as these new contract awards begin to generate the significant revenue associated with design build.
Our backlog is anticipated to grow this year significantly and next as we are tracking and expect to capture certainly our share or more of the $32 billion of major near-term opportunities with at best limited competition. Finally, we have begun to utilize some of our excess cash that we have been accumulating to continually reduce our debt, having paid down the term loan and having the cash available to reduce our bonds. We expect to successfully conclude our refinancing by the end of April. Gary is here with us to participate in any questions.
Thank you, and I'll turn the call back to the operator.
Question and Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Steven Fisher with UBS.
Steven Fisher
Good to see the balance sheet continuing to improve. I wanted to just maybe start with unpacking the fourth quarter a little bit. We still had losses in 2 out of the 3 segments. And can you just maybe break down for us how much of that was projects that had some new charges on them versus what the sort of the resolutions of claims were that were impacting losses. It seemed like maybe there was a building project in Florida in the Building segment driving that, but I wasn't sure if there was any other kind of new project losses there and similarly in the Specialty segment.
Ronald N. Tutor
Well, the building project in Florida we find ourselves with an unbonded sub that we've had to finance through to the completion of this work so as to not impact our performance. And candidly, we don't think there's any way to get the money back. So we took the hit. In the Specialty Group, we had continued significant write-downs on the Newark job, by both our mechanical and electrical subsidiaries. And Gary, if you could elaborate on anything beyond those that are specific to the fourth quarter, that's what I recall.
Gary G. Smalley
Yes. Ryan, I'll let you go ahead.
Ryan Joseph Soroka
Yes. To go on top of what Ron said, we did continue to struggle in the Specialty Contractors segment. There was also a mechanical project in the Northeast that also took a charge during the fourth quarter. And that's also specifically disclosed in Form 10-K.
Steven Fisher
Okay. I'll dig those out. Maybe then if we could follow up with the Civil. It seems like there was maybe nothing in particular there. Was there anything in particular that was weighing on the margins there relative to what I think is the potential for kind of double-digit margin in the business? Is it just still trying to rebuild the book of business and improve the utilization there plus the seasonality? Or is there anything else in that segment weighing margins in the quarter?
Ronald N. Tutor
We're just coming back from COVID in 2 years of virtually nothing happening in the Civil business, no disputes. It's like the world stopped, and it's back going again. And even though we were a low bidder on over $11 billion worth of work in the last 18 months none of which got awarded as over budget. They're all coming back on the market, and we really expect to get a significant share of this new work. So we think our backlog is going to break every record in our revenue. We'll go back to where it was and more.
Steven Fisher
Okay. So maybe we can move on to the guidance. And the double-digit growth, can you just give us a sense of how that breaks out by segment? Are you expecting double-digit growth in each of the segments in 2024? And kind of each quarter through the year? I mean, I guess you said more back-end weighted, but maybe I guess just starting with the segment level.
Ronald N. Tutor
I'll give you my sense first, and then Ryan, you can chip in with your knowledge of the numbers that I'm sure better than mine. The Civil business will continue to grow, particularly as we add new work, and it's very strong with no issues anywhere. The Building business is turning around dramatically, not only the prison in New York, but Rudolph and Sletten is in the process of transferring from preconstruction activities, major contract awards we expect to see next year. So there's no question the Building business will go back to very significant profitability. And the Specialty business is simply restricted and continuing to be reduced to where other than Fisk in Texas, most of the work they do is either with us or our subsidiaries in servicing the parent company and not out in the overall marketplace.
Ryan Joseph Soroka
Perfect. I agree with Ron on that.
Steven Fisher
Okay. And to what extent does your guidance include or exclude the impact of any settlement? How should we think about that? And then I guess my last question is, are you expecting to incur losses in any quarter of the year?
Ronald N. Tutor
No, it's not by quarter. It's really -- we have made certain allowances for potential settlements and adverse judgments that we think are very safe. But it's important to note that we believe that we're coming back to a reasonable degree of profitability with the years to follow significantly better because, frankly, there will be no more litigation and/or disputes to try to settle or to settle for less than what we're entitled to.
Gary G. Smalley
Steve, this is Gary. If I could just add to that. Another way to look at that is any amount that's recorded right now is where we think it's going to end up. So we don't think that we have any charges, at least not that we know of. But it's hard to predict what settlement activity will be and what litigation outcomes might be, even though we think it's likely or probable to be at the positions we are at. And then with our history of not always hitting guidance, we want to make sure that we built enough contingency to make guidance more reasonable and safer to hit. So -- we think there's adequate contingency there. And as Ron had noted before, we expect '24 and '25 to be years where all these things go -- get behind us, and we're not talking about these in a couple of years from now.
Steven Fisher
Gary, are you expecting to be profitable in the first quarter?
Gary G. Smalley
Yes. Our plan is to be profitable in each quarter. And when you ask Ron, as Ryan noted, Ron's answer was spot on with respect to growth. I'd look at it this way. Growth really strong in Civil, quite strong in Building as well and not quite as strong, but still respectably -- at a respectable level in Specialty. And as both you and Ron noted, we'll gain strength as the year progresses due to our seasonality, but we do expect out of the gate to be modestly profitable.
Operator
Our next question comes from the line of Kevin Lee with Western Alliance Bancorp.
Kevin Lee
Just one quick housekeeping. I know in previous quarters, you guys have disclosed or quantified the charges that you guys had to take in any given quarter. Is there a number of any chance for those noncash charges or project impairments for Q4?
Ryan Joseph Soroka
Yes. So again, the more significant and material items are going to be disclosed in the K. So in the segment footnote as well in the MD&A. So I think we touched upon the 2 largest earlier, related to the Building segment project in Florida and a mechanical project in the Northeast.
Gary G. Smalley
And as far as the -- like the aggregate total, we do that for the year, but there's no fourth quarter disclosure that's required in the case. So you'll only see the aggregate of, let's say, settlements or judgments or things like that for the year.
Kevin Lee
Okay. And lastly, maybe if you could talk about kind of the project flows that you guys are seeing out there. I know there have been -- there were quite a few projects, namely the one -- the toll road in Maryland that got broken up. Could you maybe speak about the flow of infrastructure spending, I guess, the funding that comes with that? And if you're seeing that in terms of the progress with current RFPs and projects that you're bidding on, if -- what timing of those should be like and if when we might anticipate hearing words of such sort?
Ronald N. Tutor
We're bidding all the time. And we're waiting any day for the $800 million Amtrak Tunnel that we bid 2 months ago. We're going to be bidding the Inglewood billion-dollar transit project in the second quarter, the heart job at $2 billion at the end of the second quarter. Just we are bidding these major jobs as significant with never more than 2 other bidders and in most cases, 1 other bidder. So the competition is diminished and it's certainly seen as an opportunity. And we're still hopefully going to be attacking the jobs we've already been low out. And there's an unprecedented number of large projects hitting the marketplace where the competition is very limited.
Operator
Our next question comes from the line of Michael Odell with MidOcean Partners.
Michael Odell
I just wanted to dig in a little bit, if I look at your billings in excess of cost liability and compare that to either backlog or revenue seems to be at historical levels and nearly double in the other time in history, to me, would imply a fair amount of over billing. Has something structurally changed in the business? Or should we expect this portion of working capital reversed to more normalized levels?
Ronald N. Tutor
Well, the way to explain it is simple. We have basically argued with and successfully been able to dictate higher mobilization payments on the fear we don't work on our dollars. We work on the owners. And in most cases, the projects have put much higher mobilization payments anywhere from 8% to 10% when most jobs have nominal 1% to 3% mobilizations. That and the fact we, as most contractors, try to stay ahead of the owner's money. On the theory, there's no reason for us to invest our capital to build an owner's project. So that's about the simplest way to sum it up. And I think that trend will continue.
Michael Odell
Okay. So you don't expect that to reverse?
Ronald N. Tutor
No.
Michael Odell
And then just as you think about the refinancing, what do you think the optimal leverage is for the business in the near term and then more over the intermediate term just given a lot of your peers have delevered to net cash or very low leverage position. And how does that go into how you structure a refinancing?
Ronald N. Tutor
Well, we hope to reduce the bond issue principle significantly. We've reduced the term loan. And from what we're projecting in cash flows over the next 2 to 3 years, there's no reason not to reduce our leverage to seasonal lows. The interest rates are so terrible that there's no reason to borrow if we're going to generate this level of cash flow because the company is well financed as we speak. So the additional cash generated over the next 2 years, I can't think of a better way to use it than to reduce debt further, particularly at these absurd interest rates. And I might add as well as to drag the interest is on our earnings.
Operator
Our next question comes from the line of Abe Landa with Bank of America.
Abraham Raul Landa
And also thanks for that update on finance and I have a few more. You did note that the markets are strong, high yield, a lot of money is being raised also on the private side. Maybe can you just talk a little bit more about your framework around kind of what you think your optimal debt looks like, especially in light of kind of cash collections expected to be strong this year and next year?
Ronald N. Tutor
Sir, you want to speak to that? I assume that means currently in the second quarter refinancing as opposed to future that you're looking at.
Gary G. Smalley
Abe?
Abraham Raul Landa
Yes. I mean, I was more looking at like -- what's the structure of it? What is your debt structure going to look like? Is it going to be bonds? Is it going to be loans? I mean, especially like in light of the fact that you don't want to pay high interest rates, you kind of noted that and that you kind of expect cash collections this year, next year, et cetera.
Ronald N. Tutor
Well, in the short term, we paid the term loan from $420 million to $260 million, give or take a million. We intend to reduce the bond issue when we reset the bonds, be it private or public, but significantly less than the $500 million. And that's current. So that takes place in 60 days. So as we continue to collect cash, there's no reason to even stay with those levels of debt, we'll reduce it as it's appropriate given the liquidity needs and the excess of cash.
Gary G. Smalley
And as far as how that looks structurally, Abe, it really depends on -- it's a little too early for us to know that right now. We're looking at all options, and we're progressing down different paths. And so we'll know a little bit more in maybe a couple of weeks. But if it's on the public side, we expect, as Ron said, a much reduced bond issuance and if it's on the private side, then it could take a lot of different forms with respect to that loan and we're not taking off the books the possibility of a complete recapitalization. It really depends on the demand out there and the terms. So again, we're looking at all options right now.
Abraham Raul Landa
That was very thorough. And you answered my follow-up question on potentially the term loan. I guess, you also provided your costs in excess of billings. Good to see that trend lower. Longer term, where do you expect those -- what's like a normalized level of cost in excess of billings and when do you expect to reach those levels?
Ronald N. Tutor
Assuming we get our revenue back up to $5.5 billion or more, which was where it was and should be back there, hopefully, within the next 12 to 15 months. I think a normalized amount of CIE is always going to hover around 5% of revenue. So if it was me to project $250 million to $300 million of cost in excess disputed matters, however you want to classify, would be something reasonable. Ours got out of control, exacerbated by a 2-year hiatus in the courts, thanks to COVID, where our world just stopped as they accumulated and didn't resolve. Conversely, by the end of this year, we expect CIE to be reduced dramatically from where it is even now. Everything is finally coming to an end. The owners either have a trial date or they're asking for mediation. It can't be stalled off anymore.
Gary G. Smalley
Yes. So Abe, as Ron was saying, the -- is 5%, that's really more focused on those things that are a dispute resolution. And we're always going to have a little bit of CIE that is more timing related or short term being negotiated with unapproved change -- change orders that are not being disputed...
Ronald N. Tutor
There's 3 components to it.
Gary G. Smalley
So the 5% is the -- really the disputed bucket that Ron mentioned.
Abraham Raul Landa
And then as expected something on top of that to maybe like 10%, something like 500, 600, something like that maybe...
Ronald N. Tutor
No, no. 5% for disputes, I had no more than 2% for timing and open changes in negotiations. See, the disputed claims is always the lion's share of it. So if you wanted to add another $100 million on top of $250 million to $300 million, that should be the maximum.
Abraham Raul Landa
That's very clear. And last one is just you kind of mentioned that there's $32 billion of projects out there with limited competition. You're kind of saying typically, you only see 1 to 2 bidders. I mean what have you seen as your typical like win rate? And then given the limited competition, how do you expect go forward that's going to change your longer-term margins, working capital requirements, changes in disputes, et cetera, anything to help us think about the company going forward?
Ronald N. Tutor
One of the things that has happened in the last 3 years. And unfortunately, we got practically everything we bid over a period of 14, 15 months, it resulted in $11.5 billion of new work, all of which got rejected, over budget, all of which is coming back out to bid. What we've also done given the limited competition, we are going to every owner because once you get over $1 billion, there's only 2 or 3 companies, including foreigners in the U.S. that can even pivot, let alone do it. So we go into their terms and we dictate changes in terms on the theory. If you have any onerous terms, you either change them or you won't bid. And they're usually faced with 2 bidders. If 1 of them withdraws, they only get 1 bid. So we've been able to affect almost every change that is required on onerous contract terms that heretofore in the past, when they had 4 or 5 bidders on every job, the onerous -- "Well, then don't bid if you don't like our contract." Well, the worm has turned.
Abraham Raul Landa
And do you have like a typical win rate? Or is it given 2 to 3, it's 50% or upwards, something like that?
Ronald N. Tutor
I can't give you win rate. I would say, if we took all the $1 billion and up that we bid, I could probably dig it out, but I'd guess we're a 50% win rate or better.
Operator
Thank you. There are no further questions at this time. I would like to turn the floor back over to CEO, Ronald Tutor for closing comments.
Ronald N. Tutor
Thank you so much for your patience. Hopefully, we've given you information that's helpful and until the next quarter. Thank you.
Operator
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
