Tutor Perini’s losses narrow on improved revenue
- Los Angeles-based contractor Tutor Perini reported a $37.5 million loss in the second quarter of 2023 last week, compared to a loss of $63 million a year earlier, on improved revenue of $1.02 billion, a 19% increase from the same period in 2022, according to a news release.
- The company attributed the red ink to difficulties in its building and specialty contractor units, where it lost $14 million and $70 million, respectively, due to unfavorable adjustments and changes in estimates and expected recovery of unapproved change orders.
- On the positive side, the major infrastructure contractor said backlog was higher at $10.9 billion, up 27% from the $8.5 billion it recorded for Q2 2022, on the heels of it winning a $2.95 billion jail contract in New York City. The contractor also said it was starting to see funds from the Infrastructure Investment and Jobs Act flow to public project owners.
Despite momentum on revenue and backlog, the firm did not provide updated financial guidance going forward, as it said it would last quarter. It cited its results year to date and what it characterized as “continued uncertainties that could cause a wide range of results in the second half of 2023,” according to the release.
The company has struggled in recent quarters as awards were put on hold during COVID-19, when it saw approximately $10 billion in projects get mothballed. At the same time, the firm has had a string of unfavorable legal rulings that have adversely impacted its results.
In the most recent quarter, the firm pointed to hurdles in its specialty contractors’ unit putting a drag on its numbers.
“From an earnings perspective, we had a very strong performance and contributions in the second quarter from our civil segment, but experienced some continuous challenges particularly in our specialty contractors group,” said Ron Tutor, the firm’s chairman and CEO, during an earnings call last week.
Tutor said those losses were primarily due to the firm’s mechanical and electrical unit in New York City, which he characterized as “an incredibly difficult place to work with a legal system that essentially protects public agencies and is very difficult and challenging for contractors.”
On the other hand, he said the business climate had reduced the number of competitors in the New York CIty market, with Tutor Perini among the few remaining contractors still submitting bids there, which has improved its pricing and contract negotiation power.
“We’ve reached a point where as one of only maybe two players in town that can do a major job, we’re increasing our prices and demanding contract changes which we have forced through,” Tutor said.
Tutor also said the firm is putting the challenges of COVID behind it, when several major contracts on which it was the low or preferred bidder were placed on hold. He said those jobs, including the $2 billion Honolulu Rail Transit Project, were starting to be rebid.
Other opportunities in the company’s bidding pipeline, where the firm has either submitted a bid or plans to, include:
- An approximately $3 billion Queens, New York, jail, with an award announcement expected in January.
- The $1 billion-plus MARC and Amtrak Frederick Douglas tunnel in Maryland.
- The approximately $500 million Fulton Line subway signal-control replacement project in New York City.
- The $500 million Amtrak Connecticut River Bridge Replacement in Southern Connecticut.
- The $1.5 billion Inglewood people mover project in Southern California.
- The $500 million Amtrak East River tunnel rehab in New York City.
“We anticipate that once again, we will capture a significant share of these projects and continue to grow our backlog substantially over the next 12 to 18 months, providing that foundation for significant future revenue growth and improved profitability,” Tutor said.
Tutor also said the firm is beginning to see funds from the Infrastructure Investment and Jobs Act reach potential clients, and anticipates more robust activity going forward.
“We’re in contact with three or four of our major billion-dollar-plus civil jobs that appear to be getting funding and will hit the marketplace for us to propose on in first and second quarter next year,” Tutor said. “So it’s having an effect, it’s just been very slow happening.”