- Solid operating cash flow of $21.3 million in Q1
2023
- Sustained backlog of $7.9 billion provides good revenue
visibility
- Significant backlog growth expected in Q2 2023, with more
than $3.2 billion of new awards already booked in the
quarter
Tutor Perini Corporation (the “Company”) (NYSE: TPC), a leading
civil, building and specialty construction company, reported
results today for the first quarter of 2023. Revenue was $776.3
million compared to $952.2 million for the first quarter of last
year. The decrease was largely due to reduced project execution
activities on a transportation project in the Northeast that is
nearing completion, which impacted all three segments, and a
previously reported unfavorable adjustment related to an adverse
legal ruling on a completed mixed-use project in New York, which
impacted the Building and Specialty Contractors segments, as
discussed further below. In addition, the COVID-19 pandemic-induced
customer budgetary constraints, combined with certain political and
other factors, resulted in the Company not being awarded certain
Civil segment projects over the last few years totaling more than
$10.0 billion despite having been the low or preferred bidder. Not
being awarded these projects impacted revenue for the first
quarters of both 2023 and 2022, and most of these projects are
expected to be re-bid later in 2023 or in 2024.
Loss from construction operations for the first quarter of 2023
was $81.9 million, compared to $9.9 million for the same period in
2022. The loss for the first quarter of 2023 was primarily due to
the unfavorable adjustment associated with the aforementioned
adverse legal ruling on a completed mixed-use project in New York,
which pertained to the Company's appeal of a bankruptcy court
ruling on claims against the project's developer and resulted in a
non-cash, pre-tax charge of $83.6 million, of which $72.2 million
impacted the Building segment and $11.4 million impacted the
Specialty Contractors segment. The loss for the 2023 period was
also due to the temporary unfavorable impact to current-period
earnings of $28.0 million from the successful negotiation of
significant lower margin (and lower risk) change orders in the
first quarter of 2023 on a Civil segment mass-transit project in
California. These approved change orders increased the project’s
overall estimated profit but reduced the project’s percentage of
completion and overall margin percentage as of March 31, 2023. This
temporary reduction to earnings is expected to reverse itself over
the remaining life of the project. As a result, net loss
attributable to the Company for the first quarter of 2023 was $49.2
million, or a $0.95 loss per diluted share, compared to net loss
attributable to the Company of $21.6 million, or a $0.42 loss per
diluted share, for the first quarter of 2022.
The Company generated $21.3 million of cash from operating
activities in the first quarter of 2023 compared to $120.7 million
for the same period of 2022. Due to business seasonality, the
Company has only generated positive operating cash for the first
quarter three times since the merger of Tutor-Saliba Corporation
and Perini Corporation in 2008. The positive operating cash
generation in the first quarter of 2023 was driven by solid
collection activities, including collections associated with
certain settlement negotiations that concluded in the fourth
quarter of 2022. The operating cash result for the prior-year
quarter was a first quarter record for the Company, driven by the
timing of certain large collections. The Company anticipates strong
operating cash generation over the remainder of 2023, with
operating cash flow for 2023 expected to exceed the record amount
reported for 2022.
Backlog was $7.9 billion as of March 31, 2023, down slightly
compared to $8.3 billion for the same period last year but level
with backlog at the end of 2022. The most significant new awards
and contract adjustments in the first quarter of 2023 included $224
million of additional funding for a mass-transit project in
California; a $91 million educational facility project in
California; a $75 million military facility renovation project in
Colorado; a $62 million bridge repair project in Minnesota; and $56
million of additional funding for a healthcare project in
California. Subsequently, in the second quarter of 2023, the
Company has been awarded more than $3.2 billion of new projects,
including the $2.95 billion Brooklyn Jail design-build project in
New York and a $222 million construction project at Tinian
International Airport in the Commonwealth of Northern Mariana
Islands.
Outlook and Guidance
“We generated solid operating cash in the first quarter of 2023
and expect that our operating cash flow will continue to be strong
for the rest of this year,” said Ronald Tutor, Chairman and Chief
Executive Officer. Tutor added, "Our backlog stood at $7.9 billion
at the end of the first quarter and has already grown significantly
in the second quarter with the addition of more than $3.2 billion
of new awards, including the $2.95 billion Brooklyn Jail project.
These new projects, together with others that we expect to capture
later this year, will provide a strong foundation for growth and
improved profitability over the next several years. Our bidding
pipeline remains large and active, and we expect it to further
expand as funding from the Bipartisan Infrastructure Law reaches
our customers, enabling them to advance various large, complex
projects that have been long planned."
The Company's first quarter financial results make the
achievement of its EPS guidance for 2023 challenging. Accordingly,
the Company is withdrawing its EPS guidance at this time. However,
the Company believes that certain potential positive events that
may occur later this year could offset much of the negative results
from the first quarter. Therefore, the Company will reassess its
outlook over the coming months and intends to provide updated
guidance when it reports its results for the second quarter of
2023.
First Quarter 2023 Conference Call
The Company will host a conference call at 2:00 PM Pacific Time
on Thursday, May 4, 2023, to discuss the first quarter 2023
results. To participate in the conference call, please dial
877-407-8293 five to ten minutes prior to the scheduled time.
International callers should dial 1-201-689-8349.
The conference call will be webcast live over the Internet and
can be accessed by all interested parties on Tutor Perini's website
at www.tutorperini.com. For those unable to participate during the
live call, the webcast will be available for replay shortly after
the call on the website.
About Tutor Perini Corporation
Tutor Perini Corporation is a leading civil, building and
specialty construction company offering diversified general
contracting and design-build services to private customers and
public agencies throughout the world. We have provided construction
services since 1894 and have established a strong reputation within
our markets by executing large, complex projects on time and within
budget, while adhering to strict quality control measures. We offer
general contracting, pre-construction planning and comprehensive
project management services, including planning and scheduling of
manpower, equipment, materials and subcontractors required for a
project. We also offer self-performed construction services
including site work, concrete forming and placement, steel
erection, electrical, mechanical, plumbing and heating, ventilation
and air conditioning (HVAC). We are known for our major complex
building project commitments, as well as our capacity to perform
large and complex transportation and heavy civil construction for
government agencies and private customers throughout the world.
Forward-Looking Statements
The statements contained in this release, including those set
forth in the section “Outlook and Guidance,” that are not purely
historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including
without limitation, statements regarding the Company’s
expectations, hopes, beliefs, intentions or strategies regarding
the future and statements regarding future guidance or estimates
and non-historical performance. These forward-looking statements
are based on the Company’s current expectations and beliefs
concerning future developments and their potential effects on the
Company. While the Company’s expectations, beliefs and projections
are expressed in good faith and the Company believes there is a
reasonable basis for them, there can be no assurance that future
developments affecting the Company will be those that we have
anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: revisions of
estimates of contract risks, revenue or costs, economic factors
such as inflation, the timing of new awards, or the pace of project
execution, which has resulted and may continue to result in losses
or lower than anticipated profit; unfavorable outcomes of existing
or future litigation or dispute resolution proceedings against us
or customers (project owners, developers, general contractors,
etc.), subcontractors or suppliers, as well as failure to promptly
recover significant working capital invested in projects subject to
such matters; a significant slowdown or decline in economic
conditions, such as those presented during a recession; increased
competition and failure to secure new contracts; contract
requirements to perform extra work beyond the initial project
scope, which has and in the future could result in disputes or
claims and adversely affect our working capital, profits and cash
flows; risks and other uncertainties associated with assumptions
and estimates used to prepare our financial statements; failure to
meet contractual schedule requirements, which could result in
higher costs and reduced profits or, in some cases, exposure to
financial liability for liquidated damages and/or damages to
customers, as well as damage to our reputation; inability to
attract and retain our key officers, and to adequately plan for
their succession, and hire and retain personnel required to execute
and perform on our contracts; risks related to our international
operations, such as uncertainty of U.S. government funding, as well
as economic, political, regulatory and other risks, including risks
of loss due to acts of war, labor conditions, and other
unforeseeable events in countries where we do business, which could
adversely affect our revenue and earnings; decreases in the level
of government spending for infrastructure and other public
projects; an inability to obtain bonding could have a negative
impact on our operations and results; possible systems and
information technology interruptions and breaches in data security
and/or privacy; downgrades in our credit ratings; failure to meet
our obligations under our debt agreements, especially in a high
interest rate environment; failure of our joint venture partners to
perform their venture obligations, which could impose additional
financial and performance obligations on us, resulting in reduced
profits or losses and/or reputational harm; the impact of inclement
weather conditions on projects; risks related to government
contracts and related procurement regulations; client cancellations
of, or reductions in scope under, contracts reported in our
backlog; significant fluctuations in the market price of our common
stock, which could result in substantial losses for stockholders
and potentially subject us to securities litigation; public health
crises, such as the COVID-19 pandemic, have adversely impacted, and
could in the future adversely impact, our business, financial
condition and results of operations by, among other things,
delaying the timing of project bids and/or awards and the timing of
dispute resolutions and associated collections; violations of the
U.S. Foreign Corrupt Practices Act and similar worldwide
anti-bribery laws; physical and regulatory risks related to climate
change; impairment of our goodwill or other indefinite-lived
intangible assets; the exertion of influence over the Company by
our chairman and chief executive officer due to his position and
significant ownership interest; and other risks and uncertainties
discussed under the heading “Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2022 filed on March 15,
2023 and in other reports that we file with the Securities and
Exchange Commission from time to time. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
Tutor Perini
Corporation
Condensed Consolidated
Statements of Operations
Unaudited
Three Months Ended
March 31,
(in thousands, except per common share
amounts)
2023
2022
REVENUE
$
776,300
$
952,154
COST OF OPERATIONS
(800,469
)
(901,809
)
GROSS PROFIT (LOSS)
(24,169
)
50,345
General and administrative expenses
(57,776
)
(60,252
)
LOSS FROM CONSTRUCTION
OPERATIONS
(81,945
)
(9,907
)
Other income, net
6,417
3,697
Interest expense
(21,513
)
(16,492
)
LOSS BEFORE INCOME TAXES
(97,041
)
(22,702
)
Income tax benefit
48,112
3,889
NET LOSS
(48,929
)
(18,813
)
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
267
2,821
NET LOSS ATTRIBUTABLE TO TUTOR PERINI
CORPORATION
$
(49,196
)
$
(21,634
)
BASIC LOSS PER COMMON SHARE
$
(0.95
)
$
(0.42
)
DILUTED LOSS PER COMMON SHARE
$
(0.95
)
$
(0.42
)
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING:
BASIC
51,551
51,107
DILUTED
51,551
51,107
Tutor Perini
Corporation
Segment Information
Unaudited
Reportable Segments
(in thousands)
Civil
Building
Specialty
Contractors
Total
Corporate
Consolidated
Total
Three Months Ended March 31,
2023
Total revenue
$
378,224
$
229,291
$
196,748
$
804,263
$
—
$
804,263
Elimination of intersegment revenue
(28,354
)
362
29
(27,963
)
—
(27,963
)
Revenue from external customers
$
349,870
$
229,653
$
196,777
$
776,300
$
—
$
776,300
Income (loss) from construction
operations
$
18,012
$
(70,209
)
$
(12,448
)
$
(64,645
)(a)
$
(17,300
)(b)
$
(81,945
)
Capital expenditures
$
15,065
$
2,017
$
444
$
17,526
$
270
$
17,796
Depreciation and amortization(c)
$
6,981
$
457
$
619
$
8,057
$
2,351
$
10,408
Three Months Ended March 31,
2022
Total revenue
$
460,742
$
355,978
$
230,864
$
1,047,584
$
—
$
1,047,584
Elimination of intersegment revenue
(69,947
)
(25,330
)
(153
)
(95,430
)
—
(95,430
)
Revenue from external customers
$
390,795
$
330,648
$
230,711
$
952,154
$
—
$
952,154
Income (loss) from construction
operations
$
(967
)
$
9,464
$
(3,894
)
$
4,603
(d)
$
(14,510
)(b)
$
(9,907
)
Capital expenditures
$
11,175
$
2
$
638
$
11,815
$
213
$
12,028
Depreciation and amortization(c)
$
17,000
$
401
$
502
$
17,903
$
2,335
$
20,238
______________________________________ (a)
During the three months ended
March 31, 2023, the Company’s income (loss) from construction
operations was negatively impacted by an adverse legal ruling on a
completed mixed-use project in New York, which resulted in a
non-cash, pre-tax charge of $83.6 million ($60.1 million, or $1.17
per diluted share, after-tax), of which $72.2 million impacted the
Building segment and $11.4 million impacted the Specialty
Contractors segment, as well as an unfavorable adjustment of $28.0
million ($22.2 million, or $0.43 per diluted share, after tax) for
a Civil segment mass-transit project in California, which resulted
from the successful negotiation of significant lower margin (and
lower risk) change orders that increased the project’s overall
estimated profit but reduced the project’s percentage of completion
and overall margin percentage as of March 31, 2023.
(b)
Consists primarily of corporate
general and administrative expenses.
(c)
Depreciation and amortization is
included in income (loss) from construction operations.
(d)
During the three months ended
March 31, 2022, the Company’s income (loss) from construction
operations was negatively impacted by $25.5 million ($18.3 million,
or $0.36 per diluted share, after tax) due to an adverse legal
ruling on a dispute related to a completed Civil segment bridge
project in New York and an adverse impact of $17.6 million ($13.9
million, or $0.27 per diluted share, after tax) for a Civil segment
mass-transit project in California, which resulted from the
successful negotiation of significant lower margin (and lower risk)
change orders that increased the project’s overall estimated profit
but reduced the project’s percentage of completion and overall
margin percentage as of March 31, 2022.
Tutor Perini
Corporation
Condensed Consolidated Balance
Sheets
Unaudited
(in thousands, except share and per share
amounts)
As of March 31,
2023
As of December 31,
2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ($166,416 and
$168,408 related to variable interest entities (“VIEs”))
$
282,695
$
259,351
Restricted cash
19,946
14,480
Restricted investments
88,240
91,556
Accounts receivable ($69,197 and $54,040
related to VIEs)
1,140,592
1,171,085
Retention receivable ($157,729 and
$187,615 related to VIEs)
563,967
585,556
Costs and estimated earnings in excess of
billings ($83,546 and $83,911 related to VIEs)
1,299,786
1,377,528
Other current assets ($29,553 and $33,340
related to VIEs)
132,321
179,215
Total current assets
3,527,547
3,678,771
PROPERTY AND EQUIPMENT ("P&E"),
net of accumulated depreciation of $510,604 and $505,512 (net
P&E of $28,773 and $22,133 related to VIEs)
441,606
435,088
GOODWILL
205,143
205,143
INTANGIBLE ASSETS, NET
69,983
70,542
OTHER ASSETS
232,499
153,256
TOTAL ASSETS
$
4,476,778
$
4,542,800
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt
$
66,228
$
70,285
Accounts payable ($33,540 and $36,484
related to VIEs)
471,938
495,345
Retention payable ($44,481 and $44,859
related to VIEs)
245,972
246,562
Billings in excess of costs and estimated
earnings ($471,199 and $480,839 related to VIEs)
978,505
975,812
Accrued expenses and other current
liabilities ($3,147 and $5,082 related to VIEs)
171,604
179,523
Total current liabilities
1,934,247
1,967,527
LONG-TERM DEBT, less current
maturities, net of unamortized discount and debt issuance costs
totaling $13,136 and $13,980
914,454
888,154
OTHER LONG-TERM LIABILITIES
238,370
245,135
TOTAL LIABILITIES
3,087,071
3,100,816
COMMITMENTS AND CONTINGENCIES
EQUITY
Stockholders' equity:
Preferred stock - authorized 1,000,000
shares ($1 par value), none issued
—
—
Common stock - authorized 112,500,000
shares ($1 par value), issued and outstanding 51,644,903 and
51,521,336 shares
51,645
51,521
Additional paid-in capital
1,142,081
1,140,933
Retained earnings
255,105
304,301
Accumulated other comprehensive loss
(45,310
)
(47,037
)
Total stockholders' equity
1,403,521
1,449,718
Noncontrolling interests
(13,814
)
(7,734
)
TOTAL EQUITY
1,389,707
1,441,984
TOTAL LIABILITIES AND EQUITY
$
4,476,778
$
4,542,800
Tutor Perini
Corporation
Condensed Consolidated
Statements of Cash Flows
Unaudited
Three Months Ended March
31,
(in thousands)
2023
2022
Cash Flows from Operating
Activities:
Net loss
$
(48,929
)
$
(18,813
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
9,849
14,733
Amortization of intangible assets
559
5,505
Share-based compensation expense
3,071
3,417
Change in debt discounts and deferred debt
issuance costs
1,004
901
Deferred income taxes
(86,265
)
(52
)
Gain on sale of property and equipment
(4,975
)
(132
)
Changes in other components of working
capital
148,182
112,448
Other long-term liabilities
(2,256
)
2,489
Other, net
1,088
251
NET CASH PROVIDED BY OPERATING
ACTIVITIES
21,328
120,747
Cash Flows from Investing
Activities:
Acquisition of property and equipment
(17,796
)
(12,028
)
Proceeds from sale of property and
equipment
6,540
1,434
Investments in securities
(386
)
(4,657
)
Proceeds from maturities and sales of
investments in securities
4,755
383
NET CASH USED IN INVESTING
ACTIVITIES
(6,887
)
(14,868
)
Cash Flows from Financing
Activities:
Proceeds from debt
259,500
284,552
Repayment of debt
(238,101
)
(275,910
)
Cash payments related to share-based
compensation
(123
)
(1,009
)
Distributions paid to noncontrolling
interests
(8,500
)
(7,500
)
Contributions from noncontrolling
interests
2,000
3,961
Debt issuance, extinguishment and
modification costs
(407
)
—
NET CASH PROVIDED BY FINANCING
ACTIVITIES
14,369
4,094
Net increase in cash, cash equivalents
and restricted cash
28,810
109,973
Cash, cash equivalents and restricted
cash at beginning of period
273,831
211,396
Cash, cash equivalents and restricted
cash at end of period
$
302,641
$
321,369
Tutor Perini
Corporation
Backlog Information
Unaudited
(in millions)
Backlog at
December 31, 2022
New Awards in the
Three Months Ended
March 31, 2023(a)
Revenue Recognized in
the
Three Months Ended
March 31, 2023
Backlog at
March 31, 2023
Civil
$
4,416.3
$
379.1
$
(349.9
)
$
4,445.5
Building
2,223.6
233.5
(229.6
)
2,227.5
Specialty Contractors
1,289.2
154.1
(196.8
)
1,246.5
Total
$
7,929.1
$
766.7
$
(776.3
)
$
7,919.5
_____________________________________________________
(a)
New awards consist of the
original contract price of projects added to our backlog plus or
minus subsequent changes to the estimated total contract price of
existing contracts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005414/en/
Tutor Perini Corporation Jorge Casado, 818-362-8391 Vice
President, Investor Relations & Corporate Communications
www.tutorperini.com
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