LOS ANGELES--(BUSINESS WIRE)--Tutor Perini Corporation (NYSE: TPC), a leading civil, building and specialty construction company, today reported results for the three months ended September 30, 2017. Revenue for the third quarter of 2017 was $1.2 billion compared to $1.3 billion for the third quarter of last year, as various Civil and Building segment projects are nearing completion and newer projects, particularly in the Civil segment, are earlier in their project life cycle and are not yet generating the higher levels of revenue that are expected later. Revenue for the third quarter of 2017 was also impacted by certain delays in the timing of new awards and project execution activities for previously awarded projects, which have shifted the timing of respective revenue contributions to 2018. Income from construction operations was $49.1 million for the third quarter of 2017 compared to $60.9 million for the comparable period last year. Net income attributable to Tutor Perini Corporation for the third quarter of 2017 was $23.6 million, or $0.47 per diluted share, compared to $28.8 million, or $0.57 per diluted share for the third quarter of 2016. Both income from construction operations and net income attributable to Tutor Perini Corporation were affected by the reduced volume.
Backlog as of September 30, 2017 was $7.5 billion, up 12% year-over-year and up 20% compared to the backlog as of December 31, 2016. Civil segment backlog climbed 54% year-over-year to $4.3 billion, a new record. New awards and adjustments to contracts in process totaled $1.1 billion in the third quarter of 2017 and $4.8 billion in the first nine months of 2017, well outpacing revenue for the nine-month period. The Civil segment was the major contributor to the new award activity during the first nine months of 2017, with civil awards comprising more than half of all new awards through September 30, 2017. Significant new awards in the third quarter of 2017 included a joint-venture tunnel project for a hydroelectric generating station in British Columbia, Canada, valued at $274 million, an electrical subcontract worth $154 million for a mass-transit project in California, a joint-venture bridge project in Minnesota, for which the Company’s portion is valued at $90 million, a U.S. embassy renovation project in Uruguay valued at $87 million, a military training range project in Guam worth $78 million, approximately $65 million for various smaller electrical projects in the southern United States, $52 million for three new mechanical projects in New York and $49 million of early scope tasks for a new technology office building in California, which is anticipated to be worth approximately $500 million once the remaining funding is released.
The Company generated $36.5 million of operating cash in the third quarter of 2017 and expects operating cash to be even stronger in the fourth quarter of 2017.
“We have continued to experience certain delays in the timing of new awards and project execution activities for previously awarded projects, which resulted in revenue and profit shortfalls in the quarter. On the positive side, we achieved improved operating margins for the quarter in both our Building and Specialty Contractors segments while maintaining good margin performance in our Civil segment,” said Ronald Tutor, Chairman and Chief Executive Officer. Tutor continued, “We also had solid operating cash flow, as well as good new award bookings that resulted in stable backlog for the quarter. We continue to see an unprecedented and growing volume of prospective opportunities ahead, especially in our higher-margin Civil segment, with several large project award decisions expected in the near future. Consequently, our long-term outlook for growth and improved profitability remains very favorable.”
Outlook and Guidance
Based on the current backlog and market outlook, the Company is updating its guidance for 2017, with revenue now expected to be approximately $5.0 billion and diluted earnings per share (EPS) now expected in the range of $1.75 to $1.90.
Third Quarter Conference Call
The Company will host a conference call at 2:00 PM Pacific Time on Thursday, November 9, 2017, to discuss the third quarter 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. To listen to the webcast, please visit the Company's website at least 15 minutes prior to the start of the call to register and to download and install any necessary software. 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 clients 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 the planning and scheduling of the 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 clients 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 and Section 21E of the Securities Exchange Act of 1934, 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, the Company’s ability to win new contracts and convert backlog into revenue; the Company's ability to successfully and timely complete construction projects; increased competition and failure to secure new contracts; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings and the timing of related collections; the potential delay, suspension, termination or reduction in scope of construction projects; the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the availability of borrowed funds on terms acceptable to the Company; failure to meet our obligations under our debt agreements; the ability to retain certain members of management; the ability to obtain surety bonds to secure the Company’s performance under certain construction contracts; possible labor disputes or work stoppages within the construction industry; changes in federal and state appropriations for infrastructure projects and the impact of changing economic conditions on federal, state and local funding for infrastructure projects; possible changes or developments in international or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances; failure to comply with laws and regulations related to government contracts; actions taken or not taken by third parties, including the Company’s customers, suppliers, business partners and competitors and legislative, regulatory, judicial and other governmental authorities and officials; impairments of our goodwill or other indefinite-lived intangible assets; possible systems and information technology disruptions; the impact of inclement weather conditions on projects; 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, 2016 filed with the Securities and Exchange Commission on February 23, 2017. 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||
(in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Revenue | $ | 1,199,505 | $ | 1,332,978 | $ | 3,564,140 | $ | 3,726,477 | |||||||||||
Cost of operations | (1,081,254 | ) | (1,208,310 | ) | (3,240,332 | ) | (3,386,947 | ) | |||||||||||
Gross profit | 118,251 | 124,668 | 323,808 | 339,530 | |||||||||||||||
General and administrative expenses | (69,179 | ) | (63,749 | ) | (203,674 | ) | (189,660 | ) | |||||||||||
INCOME FROM CONSTRUCTION OPERATIONS | 49,072 | 60,919 | 120,134 | 149,870 | |||||||||||||||
Other income, net | 967 | 2,048 | 42,373 | 5,214 | |||||||||||||||
Interest expense | (15,643 | ) | (15,041 | ) | (53,726 | ) | (44,655 | ) | |||||||||||
INCOME BEFORE INCOME TAXES | 34,396 | 47,926 | 108,781 | 110,429 | |||||||||||||||
Provision for income taxes | (9,096 | ) | (19,125 | ) | (37,084 | ) | (44,868 | ) | |||||||||||
NET INCOME | 25,300 | 28,801 | 71,697 | 65,561 | |||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1,716 | ) | — | (4,253 | ) | — | |||||||||||||
NET INCOME ATTRIBUTABLE TO TUTOR PERINI CORPORATION | $ | 23,584 | $ | 28,801 | $ | 67,444 | $ | 65,561 | |||||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.47 | $ | 0.59 | $ | 1.36 | $ | 1.33 | |||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.47 | $ | 0.57 | $ | 1.33 | $ | 1.32 | |||||||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: |
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BASIC | 49,775 | 49,185 | 49,602 | 49,132 | |||||||||||||||
DILUTED | 50,587 | 50,100 | 50,768 | 49,649 | |||||||||||||||
Tutor Perini Corporation | ||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Reportable Segments | ||||||||||||||||||||||||
Specialty | Consolidated | |||||||||||||||||||||||
(in thousands) | Civil | Building | Contractors | Total | Corporate | Total | ||||||||||||||||||
Three Months Ended September 30, 2017 |
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Total revenue | $ | 458,487 | $ | 500,420 | $ | 310,137 | $ | 1,269,044 | $ | — | $ | 1,269,044 | ||||||||||||
Elimination of intersegment revenue | (62,667 | ) | (6,872 | ) | — | (69,539 | ) | — | (69,539 | ) | ||||||||||||||
Revenue from external customers | $ | 395,820 | $ | 493,548 | $ | 310,137 | $ | 1,199,505 | $ | — | $ | 1,199,505 | ||||||||||||
Income from construction operations | $ | 38,144 | $ | 14,058 | $ | 14,575 | $ | 66,777 | $ | (17,705 | ) | (a) | $ | 49,072 | ||||||||||
Capital expenditures | $ | 1,248 | $ | 36 | $ | 81 | $ | 1,365 | $ | 164 | $ | 1,529 | ||||||||||||
Depreciation and amortization (b) | $ | 5,213 | $ | 502 | $ | 1,166 | $ | 6,881 | $ | 2,824 | $ | 9,705 | ||||||||||||
Three Months Ended September 30, 2016 |
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Total revenue | $ | 506,100 | $ | 560,795 | $ | 331,613 | $ | 1,398,508 | $ | — | $ | 1,398,508 | ||||||||||||
Elimination of intersegment revenue | (47,277 | ) | (18,253 | ) | — | (65,530 | ) | — | (65,530 | ) | ||||||||||||||
Revenue from external customers | $ | 458,823 | $ | 542,542 | $ | 331,613 | $ | 1,332,978 | $ | — | $ | 1,332,978 | ||||||||||||
Income from construction operations | $ | 50,307 | $ | 13,296 | $ | 11,084 | $ | 74,687 | $ | (13,768 | ) | (a) | $ | 60,919 | ||||||||||
Capital expenditures | $ | 1,342 | $ | 79 | $ | 54 | $ | 1,475 | $ | 117 | $ | 1,592 | ||||||||||||
Depreciation and amortization (b) | $ | 12,669 | $ | 541 | $ | 1,243 | $ | 14,453 | $ | 2,886 | $ | 17,339 | ||||||||||||
Reportable Segments | ||||||||||||||||||||||||
Specialty | Consolidated | |||||||||||||||||||||||
(in thousands) | Civil | Building | Contractors | Total | Corporate | Total | ||||||||||||||||||
Nine Months Ended September 30, 2017 |
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Total revenue | $ | 1,363,850 | $ | 1,520,356 | $ | 907,690 | $ | 3,791,896 | $ | — | $ | 3,791,896 | ||||||||||||
Elimination of intersegment revenue | (190,873 | ) | (36,883 | ) | — | (227,756 | ) | — | (227,756 | ) | ||||||||||||||
Revenue from external customers | $ | 1,172,977 | $ | 1,483,473 | $ | 907,690 | $ | 3,564,140 | $ | — | $ | 3,564,140 | ||||||||||||
Income from construction operations | $ | 128,176 | $ | 25,035 | $ | 15,330 | $ | 168,541 | $ | (48,407 | ) | (a) | $ | 120,134 | ||||||||||
Capital expenditures | $ | 8,665 | $ | 184 | $ | 374 | $ | 9,223 | $ | 489 | $ | 9,712 | ||||||||||||
Depreciation and amortization (b) | $ | 26,767 | $ | 1,533 | $ | 3,551 | $ | 31,851 | $ | 8,612 | $ | 40,463 | ||||||||||||
Nine Months Ended September 30, 2016 |
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Total revenue | $ | 1,378,531 | $ | 1,594,946 | $ | 932,288 | $ | 3,905,765 | $ | — | $ | 3,905,765 | ||||||||||||
Elimination of intersegment revenue | (118,143 | ) | (61,145 | ) | — | (179,288 | ) | — | (179,288 | ) | ||||||||||||||
Revenue from external customers | $ | 1,260,388 | $ | 1,533,801 | $ | 932,288 | $ | 3,726,477 | $ | — | $ | 3,726,477 | ||||||||||||
Income from construction operations | $ | 129,028 | $ | 38,969 | $ | 25,910 | $ | 193,907 | $ | (44,037 | ) | (a) | $ | 149,870 | ||||||||||
Capital expenditures | $ | 8,499 | $ | 381 | $ | 798 | $ | 9,678 | $ | 595 | $ | 10,273 | ||||||||||||
Depreciation and amortization (b) | $ | 33,200 | $ | 1,647 | $ | 3,811 | $ | 38,658 | $ | 8,637 | $ | 47,295 | ||||||||||||
(a) |
Consists primarily of corporate general and administrative expenses. |
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(b) |
Depreciation and amortization is included in income from construction operations. |
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Tutor Perini Corporation | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
Unaudited | ||||||||||
(in thousands, except share and per share amounts) | September 30, 2017 | December 31, 2016 | ||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents ($79,111 and $0 related to variable interest entities ("VIEs")) | $ | 221,878 | $ | 146,103 | ||||||
Restricted cash | 17,424 | 50,504 | ||||||||
Restricted investments | 48,775 | — | ||||||||
Accounts receivable ("AR") including retainage of $574,710 and $569,391 (AR of $36,317 and $0 related to VIEs) | 1,857,870 | 1,743,300 | ||||||||
Costs and estimated earnings in excess of billings | 902,312 | 831,826 | ||||||||
Other current assets | 70,781 | 66,023 | ||||||||
Total current assets | 3,119,040 | 2,837,756 | ||||||||
Property and equipment, net of accumulated depreciation
of $345,546 and $313,783 |
447,588 | 477,626 | ||||||||
Goodwill | 585,006 | 585,006 | ||||||||
Intangible assets, net | 90,340 | 92,997 | ||||||||
Other assets | 40,811 | 45,235 | ||||||||
TOTAL ASSETS | $ | 4,282,785 | $ | 4,038,620 | ||||||
LIABILITIES AND EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Current maturities of long-term debt | $ | 30,951 | $ | 85,890 | ||||||
Accounts payable ("AP") including retainage of $267,110 and $258,294 (AP of $4,826 and $0 related to VIEs) | 949,675 | 994,016 | ||||||||
Billings in excess of costs and estimated earnings ($91,750 and $0 related to VIEs) | 403,635 | 331,112 | ||||||||
Accrued expenses and other current liabilities | 124,385 | 107,925 | ||||||||
Total current liabilities | 1,508,646 | 1,518,943 | ||||||||
Long-term debt, less current maturities, net of unamortized
discounts and debt issuance costs totaling $54,699 and $56,072 |
855,325 | 673,629 | ||||||||
Deferred income taxes | 132,335 | 131,007 | ||||||||
Other long-term liabilities | 155,553 | 162,018 | ||||||||
TOTAL LIABILITIES | 2,651,859 | 2,485,597 | ||||||||
CONTINGENCIES AND COMMITMENTS | ||||||||||
EQUITY: | ||||||||||
Stockholders' Equity | ||||||||||
Preferred stock – authorized 1,000,000 shares ($1 par value),
none issued |
— | — | ||||||||
Common stock - authorized 75,000,000 shares ($1 par value),
issued and outstanding 49,781,010 and 49,211,353 shares |
49,781 | 49,211 | ||||||||
Additional paid-in capital | 1,080,371 | 1,075,600 | ||||||||
Retained earnings | 541,069 | 473,625 | ||||||||
Accumulated other comprehensive loss | (43,298 | ) | (45,413 | ) | ||||||
Total Stockholders' Equity | 1,627,923 | 1,553,023 | ||||||||
Noncontrolling interests | 3,003 | — | ||||||||
TOTAL EQUITY | 1,630,926 | 1,553,023 | ||||||||
TOTAL LIABILITIES AND EQUITY | $ | 4,282,785 | $ | 4,038,620 | ||||||
Tutor Perini Corporation | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
Unaudited | ||||||||||
Nine Months Ended September 30, | ||||||||||
(in thousands) | 2017 | 2016 | ||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 71,697 | $ | 65,561 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation | 37,806 | 44,638 | ||||||||
Amortization of intangible assets | 2,657 | 2,657 | ||||||||
Share-based compensation expense | 16,057 | 10,109 | ||||||||
Excess income tax benefit from share-based compensation | — | (10 | ) | |||||||
Change in debt discounts and deferred debt issuance costs | 14,725 | 7,124 | ||||||||
Deferred income taxes | 642 | (8,636 | ) | |||||||
(Gain) loss on sale of property and equipment | (376 | ) | 300 | |||||||
Other long-term liabilities | (2,876 | ) | (8,555 | ) | ||||||
Other | 4,785 | (353 | ) | |||||||
Changes in other components of working capital | (143,213 | ) | (18,669 | ) | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,904 | 94,166 | ||||||||
Cash flows from investing activities: | ||||||||||
Acquisition of property and equipment excluding financed purchases | (9,712 | ) | (10,273 | ) | ||||||
Proceeds from sale of property and equipment | 1,440 | 1,139 | ||||||||
Investments in securities restricted in use | (48,657 | ) | — | |||||||
Change in restricted cash | 33,080 | (2,872 | ) | |||||||
NET CASH USED IN INVESTING ACTIVITIES | (23,849 | ) | (12,006 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from issuance of convertible notes | — | 200,000 | ||||||||
Proceeds from debt | 1,991,457 | 1,003,092 | ||||||||
Repayment of debt | (1,866,072 | ) | (1,174,679 | ) | ||||||
Excess income tax benefit from share-based compensation | — | 10 | ||||||||
Issuance of common stock and effect of cashless exercise | (11,147 | ) | (423 | ) | ||||||
Distributions paid to noncontrolling interests | (2,500 | ) | — | |||||||
Contributions from noncontrolling interests | 1,250 | — | ||||||||
Debt issuance and extinguishment costs | (15,268 | ) | (14,868 | ) | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 97,720 | 13,132 | ||||||||
Net increase in cash and cash equivalents | 75,775 | 95,292 | ||||||||
Cash and cash equivalents at beginning of period | 146,103 | 75,452 | ||||||||
Cash and cash equivalents at end of period | $ | 221,878 | $ | 170,744 | ||||||
Tutor Perini Corporation | |||||||||||||||||
Backlog Information | |||||||||||||||||
Unaudited | |||||||||||||||||
Revenue | |||||||||||||||||
New Awards in the | Recognized in the | ||||||||||||||||
Backlog at | Three Months Ended | Three Months Ended | Backlog at | ||||||||||||||
(in millions) | June 30, 2017 | September 30, 2017(a) | September 30, 2017 | September 30, 2017 | |||||||||||||
Civil | $ | 4,240.6 | $ | 462.6 | $ | (395.8 | ) | $ | 4,307.4 | ||||||||
Building | 1,808.4 | 283.9 | (493.6 | ) | 1,598.7 | ||||||||||||
Specialty Contractors | 1,511.5 | 394.2 | (310.1 | ) | 1,595.6 | ||||||||||||
Total | $ | 7,560.5 | $ | 1,140.7 | $ | (1,199.5 | ) | $ | 7,501.7 | ||||||||
Revenue | |||||||||||||||||
New Awards in the | Recognized in the | ||||||||||||||||
Backlog at | Nine Months Ended | Nine Months Ended | Backlog at | ||||||||||||||
(in millions) | December 31, 2016 | September 30, 2017(a) | September 30, 2017 | September 30, 2017 | |||||||||||||
Civil | $ | 2,672.1 | $ | 2,808.3 | $ | (1,173.0 | ) | $ | 4,307.4 | ||||||||
Building | 1,981.2 | 1,101.0 | (1,483.5 | ) | 1,598.7 | ||||||||||||
Specialty Contractors | 1,573.8 | 929.4 | (907.6 | ) | 1,595.6 | ||||||||||||
Total | $ | 6,227.1 | $ | 4,838.7 | $ | (3,564.1 | ) | $ | 7,501.7 | ||||||||
(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. | ||