TPC - Earnings call transcript Q2 2022 | Tutor Perini Corporation

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Operator

Good day, ladies and gentlemen. And welcome to the Tutor Perini Corporation Second Quarter 2022 Earnings Conference Call. My name is Rob, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following management prepared remarks, we will be opening the call for a question-and-answer session.

conference being this purposes for reminder, Instructions]. [Operator a call recorded is replay As I the will your time, this At turn today, host conference Mr. for to over Relations. Jorge of Vice Investor Casado, President Please proceed.

Jorge Casado

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

There we on discuss forward-looking information. statements, making our remind an management's Before trends be assessment is I we existing everyone that that results are based risk will will results, during current of today's our call, differ could inherent which and actual materially.

filed our obligation risk and XXXX today. such statements, XX, which as You turn disclosures can other The contribute will Form otherwise, a filed update potentially whether events we that information, you, no and than the to new in over find company to in XX-K, Ronald looking earlier Thank as our I about future we law. factors forward Tutor. the February of result could to Form or call now on required by assumes differences that XX-Q

Ronald Tutor

Jorge. Thanks, thank morning, us. for Good joining and you

cash As an totaling XXXX, second quarter, highlight under of largely of collections $XXX significant change orders. have disputes as and of combined of of certain for for Tutor-Saliba we results we that of year, resolution in since delivered the The anticipating that we probably the with will produced quarter six cash I when are XXXX. the the greater which generation negotiated strong months as driven first just this million $XX generated million through the quarter, remainder our well Perini to by full at this course still and seen mixed the and is in of cash released add record in successfully approved our cash first already of than you the for last earnings operating amount positive any generate year continue is merger morning, cash we of XXXX. was Unlike we operating certain XXXX. very the quarter from operating

backlogs adjustments helped our second $X.X contract backlog second highlight and quarter quarter, during and billion awards results. to booked the new growth of were achieve solid awards which New We XX%. us of year-over-year of another

awards, backlog detail diluted XX% flow. Our unfavorable orders, continue awarded for change you Consequently, opportunities a settlements of legal orders change reduced regarding impacted later. the stands for our of a a in new these factors, adjustments, the claims, quarter resolving at major make cash the Unfortunately, had as quarter to potential unexpected in and on our backlog second our which of several XXXX. to progress unapproved several including And some the reversal $X.X positive disappointment obvious June well and continue is and earnings partial we our have earnings XXXX. now moment. earnings year-to-date, Despite will next a impact well quarter project profits in comprised to of loss due quarter. of judgment will some quarter impacts per of nearly and these in form bit reported bodes previously the as second claims share details revenue of lower $X.X current in provide we Gary, margin higher damages compared $X.XX certain our volume over billion the of work, in negatively major the to We would of a which second certain for years. civil our billion by were and

to disputes settlements The the better of or be our which on have difficult for decided The this it generating certain for reliably these third into Over withdraw the at even to negatively new will in spite and timing issue have a to visibility earnings we recession. guidance quarter time very significant to cash. announcement. uncertainty our magnitude the impact settlements, I'm what we will and to current time potential the the we we expected of Consequently, next this attempting earnings XX expect year. remainder for have positively demand earnings that to projects. can related concerns makes settlement XXXX our to over encouraged predict by potential of to while the XX be we of guidance once and this strong significant experience outcome environment days, services, discussions continue in expect major settle inflationary

jobs to resilient is flow. even and bill, promoting in of business invest to civil means years’ period which very a in as This long more downturns, Our passage benefits. as has been is such economic infrastructure bolstering historically particular last today during beginning certainly civil even governments project tend true given of for to more the and term owners funding infrastructure is during

second in $X.X contract the included; significant other an in million Alaska $XX Speed for Rail; several million of an The booked mass we facilities improvement funding High million project respectively. $XX million in in housing million housing; educational at wharf an military and California $XX million awards additional and projects and facility new of $XXX As million project awards $XX military billion $XX in Guam, on and two California; including the adjustments transit quarter. of most $XXX I changes mentioned,

waiting for lanes very addition within an expect Maryland I XX Partners, have $X in two which comprise In which AirTrain imminent project, to replacement and Maryland to and Newark large days announcements billion $X announcement decisions two an that we weeks. opportunities, perspective project Accelerate announcement million expect for express the owners’ two projects namely, the on

award San Roadways New project the projects US and October for which the for to JFK $X share later other expect billion jail the There bid Raritan Center the the Department Bridge week, people our bidder light Transportation third we York, back rail of ’XX. XXXX; to are We Los the which East have again, the quarter are first put and Port quarter dock this Design Fernando project which for billion the was and of Hawaii a the automated Raritan the capture apparent billion and ‘XX; we dry of billion further New in competition River of project, is bids announced various $XXX for preparing example asked million of we new for first which for into of Angeles quarter including; Brooklyn anticipate and Last it two and an XXXX of the large of Inglewood Ground bid in City have in and low an project major only MTA, the New extension contract in $X.X the are mover, fourth limited were in of XXXX; the year of Replacement are Navy, Jersey. bidders Bridge XXXX, seeing the in first the we this award York that $X.X for in $X.X the River quarter other We shipyard often hopefully year. for a billion should project we -- pursuing. quarter for propose Construction, which the $X projects

be selected in major in initial by and contract Sletten preferred week, contractor project customers campus award awarded The last to by we After a be the initial it’s of this the preliminary its backlog one anticipate pre-construction as XXXX. new will will represent $XXX of completed, notified large Rudolph California. fourth addition, million that approximately it work modest been general only is hospital and was In booking the quarter rather as early work. approximately subsequent stage

on follow are with We’re we shortly to also written the notification on project bidder informed low this a East the week significant civil that very Coast.

regarding information XX this next will days. providing project We be in further provide the

Finally, will the collectively we quarter. at be gaming awarded in we pending, other fourth projects over in believe still valued million awards including $X that now have new two California,

Gary Smalley

million. $XXX

Ronald Tutor

$XXX various that our record million, second unfortunate year-to-date our overshadowed cash impacts negative by earnings. excuse growth me. and quarter to It strong the and backlog were flow is

we and anticipate over the these are by should concluded XXXX. over past, with in majority we of that, we the which the continuing progress disputes, end next However, the which And to Thank collecting the be call substantial quarters. stated cash And further growth in backlog the resolving encouraged two turn of I've I'll you. Gary. are by

Gary Smalley

morning, you, Ron. Good Thank everyone.

on of collection was strong And first $XX quarter by average since will by our operating Like more negatively flow year cash last factors before be and claims million operating in certain strong slightly financial operating begin the cash should first this cash months the second review continues noted the our that during of cash quarter XXXX. months compared cash XX of that other the six results, the We of result unapproved our has to third operating the this activity, than excellent. $XX cash. orders last positive. current second by our more year I'll just Therefore, the was we for continued cash our the operating since be the six our far finally, Considering Even we that of quarter flow some best I first XXXX generated generated Operating of of our quarter quarter, months operating the generation in cash XXXX. XXXX since $XXX earnings. of cash been the million cash on impressive, flow balance these commentary us. year. quarter of This cash quarter year. six previously the quarter, any years for It results. impacted any of second resolution The is any merger have Then quarter for merger to operating including including use driven cash sheet. full for highlight XXXX during million was the operating nearly have change discussing flow same $XX that our improved operating required million, result for best for usage operating of largely

execution for of strong generation as continued the operating on cash activities expect various based other projected XXXX, claims change collections, both of next project well the orders. cash as outstanding year We resolution from and and remainder

$XXX quarter last projects year compared The gears revenue $XXX for for and million $XXX from revenue The reduced was million Civil completion, project $XXX to impact certain building execution or segment was revenue follow $XXX new certain of $X.X the run and the Specialty the newer million, offset that the segment notably which lower nearing Next, $XXX discussed the segment XXXX increased larger, billion of for partially have in attributable civil reflected was that impacted decline words, our compared contractors impact. down during be items on Building XXXX believe would let's for most and projects, activities million. $XXX last COVID-XX same bidding revenue various the all we was segments and projects. of the by we prior quarter. our revenue delayed completed of pandemic, year. the shift to for which quarter the to Revenue other of compared discuss current earnings. of if also three our as activities comparable In million are revenue and to second million of not revenue past, activities second on much quarter year. in awards was on partly million XXXX. rate COVID-XX

We likely and it higher The specialty $XX projects from we operations as meaningfully would more a to be revenue. million. ultimately be million the from accelerate XXXX. for quarter $XX We the civil loss same revenue see currently into small quarter and income of stands of very backlog loss reported would $XX start revenue to our As same see to contractor fourth the construction backlog construction quarter segment larger by second and and a last more operations quarter year. operations of believe a converting to million $XX reported where million. than that operations loss more growth had that building XXXX significantly of last The of construction the newer compared segment year we early for reported contribute of a should from earnings, loss segment comparable construction from of

that factors second impacted this negatively Ron year our were by As mentioned, our reduced quarter significantly several results. earnings

The second extended a largest remains than accounted completion. Despite margin which that project lower XXXX in took Northeast nearing quarter an for the project remediation and of now. work, them $XX.X specialty before. labor contractor of unfavorable of adjustment we for million project loan reduction project the the earnings is was in second inefficiencies unforeseen the a cost at the this electrical with review associated This closeout segment, a component XXXX. for on diluted unfavorable the in for just negative quarter of supervision $X.XX transportation charge in per project quarter, the project profitable share adjustment profit Let's the on impact associated issues,

received in unexpected awarded specialty also of $X.XX partial million award that related in project important damages an to quarter second New in the adjustment dispute due favorable of the quarter. contractor favor in XXXX legal to segment. $XX.X reversal ruling a for a in our the It or unfavorable same during second us recorded second of that previously to to electrical last time. had we EPS completed a York resulted We been court the legal trial $X.XX included that an note quarter to that related an EPS the year's benefit by at is Consequently,

time believe we courts this received for when decision. the that matter, we So the right it first favorable the got

that our in As to such, we prevail. we will intend ruling ultimately latest the appeal optimistic

per with quarter segment settlement with of the and for the disputed earnings a the pertaining the was completed on $X.XX in which second expected successful in Maryland, long a in XXXX quarter project share accounted project the earnings an for some mass negatively a for California. the unfavorable matters segment associated negative cash million reached third additional Also impact an of for In the negotiation temporary quarter. a in orders addition, on of impacting civil impact in owner a further resulted in civil second settlement change $XX.X with -- to we of reduction transit quarter,

a the lower work last the lower quarter percentage project, profit for margin. and margin overall carried project's explained approved same project risk than quarter therefore the As of was the in additional

the profit overall As for in will be margin for percentage total that the of of profit this decrease project's settlement and orders, of a decline the recognized profit as project's cumulative a with even recognizing for dollars project result, ultimately project in the approval change increased project though the in million percentage completion the the the slightly. the slight small we the order an The $XX this a resulted percentage of second quarter. in margin in declined combination result change in decrease

months For million. the impact six the first XXXX, $XX of was

the we negotiated year, temporary only But quarters share per total recognized quarters. second be to last the in profit and quarter It the summary, overall first for quarters. that they first cumulative the orders $X.XX is orders that change treatment earnings profit negative life will was in accounting both two increased in earnings in since change for successfully the impact these and are significant second resulted successful the the in but So remaining reverse important $X.XX the the both note the themselves corrections two for in of negative project, for the over and quarters of negotiations earnings change to reductions project. the for in of the the for to orders current

due the negatively Finally, impacted associated XXXX our lower with were COVID of quarter revenue volume much on impacts the earlier. of earnings of that by mentioned lower the to the I with profits for second lower follow

comparable tax by the Interest income the due tax of to for income quarter,. of second debt XX.X% $XX million, income the loss. higher partially XX.X% rate year. tax second pretax impact for issuance through quarter compared caused the for for last was are reporting second this the not tax adjustments the for our balance year, quarter the tax $XX company, $X.XX periods XXXX the million quarter responsibility million what federal XXXX quarter negative second performance compared for compared or to And on this of convertible as income that and earnings effective quarter have non-controlling taxes tax per benefit income attributable and low of we prior net of for the expense was was rate. discounted to absence notes the the The the catalyst year, principally the year, quarter Ron the attributable borrowing tax a in the year of to rate of or that quarter loss for corresponding second $XX net on primarily million generated benefits state quarter were repaid to higher of offset quarter. losses, To benefits income tax Net XXXX the to amortization pre-tax the for for expense In tax effective income benefits that which of earnings compared various benefit magnifies quarter loss for Moving of on of a earlier. projected quarter revolver which the year. down this tax of the last mentioned second relatively said to second for reiterate benefits. was costs average attributable lower reflects The earnings the costs same share $X.XX effective XXXX. interest I the tax on. the quarter a XX% as $XX The the loss -- $XX last of impact per under increases the effective $XX decrease were tax increases compared The well of year. last rate the The it to income from share Tutor the the rate second million to was benefit pretax million year of because Perini of of of tax for

by of are orders certain with we continue impact resolving will the and year, on a had earnings made change we cash unapproved settlements which progress have our flow. to positive in disappointed this the performance have are encouraged While we have claims, and

down debt to continue that of and We compliance million future. June XX, as as XX, XXXX. limits anticipate December within compared sheet, As will case our covenant for our foreseeable be $XXX debt XXXX the million, $XXX in the of remain balance to net XX% our was

As major the disputes could positively are they due these will time. have, related over certain so, withdrawing to guidance month this attempting Ron the settlement significant mentioned earlier, we projects potential or outcome impacts be uncertainty negatively, the at financial settle the we of for next or on discussions to and to our XXXX

of now potential there the outcome is to expect We of this significant our settlements, and year. opportunity announcement. timing loss Thank new generate the excellent that. into which of -- any that an earnings guidance expect have continue in greater the however, potential quarter once these to the settlements we third for you. cash have potential call by quarter net The magnitude our with short Ron. back visibility over And we issue third of time expect will turn to is Regardless operating any we upside term. a to to to the I settlements,

Ronald Tutor

Thank months recap, operating the $XX million expecting year a far million excess. previous quarter, everyone of level $XXX in our to To be you, as cash In nearly generated six significant knows of we record above have costs of million. the full Gary. many solid operating cash operating are and through of first the of in record year words, so our annual we cash $XXX

to which system, I expect and the emphasis or analyzed that to trial XXXX. settlements majority on collections of and still end resolves, we XXXX end half through a only those of time-to-time of have have Despite it’s mediations, of going always either continue We handful adjudicated cash, continue resolved with my their hiccup second predictable, will totally not of the belief with significant be ongoing it negotiations. for dates, all resolve the XXXX. legal a into of dates by XXXX with being from the be the particular the whether And

I'm for a a collecting the backlog consistently year up add in that, and with call the year given share Thank and statements in you. earnings new by backlog sizeable stream going questions. the preliminary look awards. our over on the short next more to significantly proposal year to obvious the made could belief In operator over And in the two cash turn return year, an solid by addition, of we of term. steady that XX% that is driven percent to end major forward I'll we We per And beyond with October. one focus as in third to

Operator

line Fisher is [Operator you And first with question Instructions]. Steven our the UBS. from of Thank

Steven Fisher

more So claims we're I half the building know of in guidance least there much for confidently withdrawing the factor just civil normalized and you the half impacted in to uncertain, going about that thinking is for these as you ranges settlements a see Are to the how by year? and be but performance could well. uncertainty second the operational of how be half second the second and curious margin that's back you at

Ronald Tutor

second held we you that most the we if of stages quarter we're significance of the Well, repeated. guidance even there uncertain to end for final And are that that very individual as our losses, events have if of not analysis in settle claims The our look be two might large negotiations. we'll significant or at should reason that is matter. yet how

far million decided the and -- as told significant judge, So the the come on final that we And of XX in court an down it then for lost couldn't we in resolve a to issue. the appeal And as court the had groups back should and more in $XX unbelievable, a judgment to lost award days. XX appellate the with judgment. project gave remanded that lawsuit, certain and one received see they the a aspects, I leveling operations. same should next the big a a us conclude write Civil operations, that to specialty most itself award back

it wrong, everything in of second quarter repeats none but could went wrong itself. So that go the

those clean our downs the costs better. only and those to around is take And this next be However, write mark do of any we excess. the are half up question if costs I And enormity excess and the and emphasize, continue will to what second of Sometimes year, we year going collections? collected. we

of a months. and it first you're six But worse. to the money are just we do taste in we're we seeing due, determined Sometimes the collect

Steven Fisher

you're So it like sounds not…

Gary Smalley

and to from one things wanted thing through I went segment. Ron just went just to those as segment Steve, indicate

that reversal that talking sure want was Just understand partial we're to in specialty. make you that that that about

Steven Fisher

Yes.

like you're thinking least I the not So civil the half second and sounds confidence degree about has kind normalized impact. the had discouraging in margins year specialty us more like it in should of and sounds the other guess in building. that from of of at we year, some it normalized low second have of right? some Is ongoing challenges, half I this but volume know than

Ronald Tutor

the year two Well, And revenue nothing over civil million from their bidding. thing, years, other I result, this back operations years has dwindled XX of add potentially had $XXX a the their as Because group virtually, we've the million don't the COVID, $XXX there's and anticipate where $XXX to year. a east months, to excellent million been to delivered backlog dwindled in us consistently of profits. and last results

had So profit no that basically on the coast work. dwindled delivery And has their It's to has the east fact it's operation. nothing. no reflection

Jersey stopped virtually New and as did Pennsylvania. York New

all waiting that, word and given going not are projects have sizeable it. if to that a very we However, we are get portion, two on we're enormous of we confident

So days, next years next that well New would for of learn come for to York. the to in we'll XX the which bode XX course

So the just a things of lot in queue.

Steven Fisher

to some does these be ensure of uncertainty lot but able I'm in And today have a there, for just that uncertainty planning very then terms costs bids a it to continue inflationary to be higher. to of those going follow-up environment. of move profitability like to you programs going pursuing inflation how in are over of these and And years, curious are capture you're multiple the you're that projects? as on large seem that kind Clearly,

Ronald Tutor

we position the both because of waiting take refused the the With escalation, in projects owners -- enormous. escalation out escalation And steel so invariably, risk escalation, be tender award will it they our projects to both you simply from dollar results, least derives negotiated escalation have negotiation or involve bid. so at to to would The we much of of where quoted we clauses take our is before And multimillion responsible. agreed being be times fuel. large a clauses contract the very of are that contingencies a take notice fuel or or asphalt control, risk the

risk. it, negotiating or in if position. that doesn't take will two won't that there's very you the we only We deliver not and assume put when them don't job, that And a risk bid bidders

the we've transfer and plus risk been all to able billion on we So jobs, to these to that owners that to be. continue insist dollar has

Operator

Our next of B. the Rygiel question from with Alex line comes Riley.

Alex Rygiel

Gary, pressures understand can you couple help the inflationary next on margins the quarters? over us

Gary Smalley

to then those projects try -- we're that, type unsuccessful Ron's well are that there cover in as putting escalation do sure medium, have on we mega projects things. the being to there that we're these to right as comment we'll in well, we on those make say, Based to project -- bid, the clauses, on that that we try do as contingency smaller much

should the impacted think significantly not Alex. by margins we So inflation, that be

Alex Rygiel

Ron, collection then target the year? half And cash could a of in for provide the you second

Ronald Tutor

many be significant. specific, very I'd be not trivial. be but it so It'll will factors is because there involved,

Alex Rygiel

been significant a cash the the have to characterize half flow period? collection you of year Would first

Ronald Tutor

it entire the big in was last six we years, the it if XX months biggest the -- year, was Well, have the significant. cash had I'd for flow an call

Gary Smalley

cleaning these significant the to and we Ron and Alex, is know quarter, fall. as this are some about broaden up will will that horizon, unbuilds so order It's talked the what through when these and take activities in collections progress agree litigation unpredictable certain of arbitration settlements totally. of ongoing place you cash what I'd Ron through timing saying. with I if But reiterate year exactly next certain year.

next that's what and now collect go where going we cap is market our or and year that's even cap, market year over that if to exceeds our and If you you least our look at believe, half, you say are we a the firmly year at next cash maybe expectation.

because So of these actually for an to to don't to we some close in to a the uncertainty again, way longer of that's long it with or volatility you to another give the But scale on of look how respect estimate term a some want term. at takes provide type shorter over it items.

Operator

from Thielman Brent line question Davidson. D.A. Next is the with of

Brent Thielman

been My guys. Thanks Best questions asked. luck. of have

Operator

time additional questions, for this I with further to floor At you. Thank to back no management turn would like remarks. the

Ronald Tutor

questions we've next to everyone. quarter. had, you the Hopefully, and you you we'll talk Thank whatever answered

Operator

This concludes today's conference.

disconnect time, we and lines your may for thank this you You your at participation.

Tutor Perini (TPC) 5 Aug 222022 Q2 Earnings call transcript