Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Second Quarter 2023 Earnings Conference Call. My name is Doug and I will be your coordinator for today. All participants are currently in a listen-only mode.

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

As a reminder this conference call is being recorded for replay purposes. Instructions] [Operator

turn Casado, to Relations. Vice now today host Please conference Jorge Mr. President the will your over for proceed. I of Investor

Jorge Casado

With are and on Executive CEO; Vice everyone, thank CFO. for Smalley, participation Hello, and you and Gary the Tutor, Ronald today. call President Chairman and your us

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

factors You due in can than The company find or on to that we and our whether required could obligation XX-Q, Form no events otherwise Form other assumes law. most contribute disclosures will differences filed update about XX-K, such our XX filing forward-looking we statements tomorrow risk new in March to XXXX. which as to future be potentially information, our recent which by

I the and now you turn to call Ronald will Thank Tutor. over

Ronald Tutor

Thanks, day us. all you Jorge. for and Good joining thank

quarter results were as and well as flow. second operating strong by cash growth, solid backlog revenue highlighted Our

Our in remaining. certain that transit was mass civil significant contributions projects consolidated to from segment up XX% year-over-year work revenue had California due

our major Our beyond is quarterly believe are to that two COVID. inflection beginning this our an we followed And to impacts. and most revenue years revenue business growth year-over-year more now than point we quarter normalize of declines attributable COVID has reached

large almost which prevented been the lower large have two-plus and range projects of preferred the temporarily had major four were of we halted bids and As in civil we projects awards $XX of the discussed the COVID at past, years bidder. billion, valued award in

stronger not modest see expected beginning be capture XXXX, remainder another be first are the awarded will of with we these awarded mid-XXXX. half the contracts. same expected now this continue all year in growth We revenue XXXX so projects not projects to higher were construction the multiple of much the of of should have opportunity growth believe we rebid large in to we in and to as XXXX Most in over of them year phase are entering us next and that -- if that will

Our was second quarter operating XXXX. and since flow the solid Tutor-Saliba in the cash XXXX cash $XX six Perini million, million, Corporation our any the of operating results six the months highest a $XX of first second flow to bringing for months of for merger year

we second million of be $XXX operating significant We collect remain cash last exceed cash disputes resolve confident the half or negotiation we in and flow record that will will of even amounts this stronger either year expect that to the be and as our litigation XXXX year. generation cash long-standing it by for our various generated

quarter mentioned the could we generation position use and to on refinancing be reduce this dispute much anticipated last to year. ourselves year, a As magnitude debt and We next our cash cash timing of our depending resolutions favorably plan early stronger. for this

in other $XXX including California. of Islands we International adjustments XX% the up $XXX Airport the is which and compared and And $X.X that be Jail Brooklyn billion care strong same performed was and $X new last the expected billion The Our contract quarter to Black a nearly million by project, year. Mariana our by also increased more billion, of growth Specialty of work project Northern Construction's million of award to backlog for quarter driven $XX.X health Tinian includes large new design-build billion mechanical $XXX than awards electrical second to the backlog million funding Sletten booked at Rudolph additional in $X Contractors and segment. project

from quarter strong in a very earnings the further which challenges second an but address some particularly will we in moment. experienced had a group, specialty segment, From Gary our perspective, and contractors our performance civil in continuous contributions

loss Overall, noncontrolling $X.XX we after pretax reported diluted consolidated second adjusting quarter million a per with interest. of a share $XX and for the loss of ended

pipeline have to including the various numerous large continue Pacific. locations, a with We full project across bidding Western and opportunities Guam

all billion Some has of include line for The be the estimated opportunities in significant our more decision January owner facility will a made as time that of indicated $X and a Queens which in. award. with proposals

plus projects projects, including $XXX we in the October, Douglass well bidding Bridge busy million communications Maryland, train the be Fulton and Amtrak York In billion control River New Frederick in Connecticut $XXX tunnel the will numerous as million on $X as line Replacements.

decision We proposal New opportunities Great fourth project on Inglewood near-term bidding year. Southern York, billion California the Lakestone. also and include Amtrak $X.X in this rehab the Other the the in million larger million East mover quarter $XXX for both Frontier-Kemper's the River people expect $XXX tunnel later in

is will capture Honolulu project. bid Rail of I'd first bidder XXXX, quarter improved you now that follow to years expected the that billion in substantially next were XX the backlog to these on providing remind all significant we which ago we To We significant be the Transit Project, foundation over for which XX low $X two that to will of revenue growth profitability. our once a share grow anticipate again, future months, and continue projects and

continues about rates, the data a of projections diminishing recession. effects concerns the resilient, to Recent of the US works with economy in the public supports particularly of and strong area despite higher be that threats and inflation our interest

of can Some be law. investments to funding strength in the by attributed this infrastructure infrastructure toward bipartisan

our as to public is over years. I period expected are next profitability. of remains services growing extremely the owners continue will we flows substantial the future that focused civil growth on reiterate funding successfully our Demand our to for driver and which will increase and of to our business strong be

Various to major negotiation litigation guidance the which exist year-to-date financial various of resolution provide in combined XXXX. play risks result have Based to quarter. with in not uncertainties are second of for half respect we decisions, the our with to and the fourth on results in year, conclude both decided new the dispute

to of might that There is effective year, some to also tax give several the a There positive offset our for income make related pause. occur. feel us events degree additional which this any negative year. later Needless to wide rate could that to of appropriate outcomes it transpire are we cause to the potential balance could that range statement a say, don't

to with will review that, the to Thank I financial you. the call And over results. Gary turn

Gary Smalley

and Thank some modeling afternoon our on by start well everyone. by will for including some flow, sheet, as our assumptions. as cash comments results I followed you, discussing quarter the second Ron good balance

generated the mentioned, $XX $XX of six of operating only of solid year's behind cash first million best million for the cash operating first any period. performance equivalent the for XXXX since which last is the merger second and Ron a the we quarter months of XXXX, result second months As in the six in XXXX and year

Our project of operating cash to with driven activities We execution collections compared that associated certain the activities few remain again negotiations in cash flow was cash XXXX to past deliver confident by the quarters. including for that settlement outstanding from strong resolution concluded stronger disputes. operating collection both projected other various XXXX due and will collections we

for to $XXX quarter compared the up the of segment segment the due I last over Civil second California. in was mentioned. was XXXX, a revenue from billion, quarter increase of certain up mass by civil transit to the same mass transit contributions million, second period to compared projects XX% XX% $X driven the quarter just strong XXXX for projects second year, the with just Revenue in

$XXX an Specialty was the Building on increased in segment segment revenue The down partially Building was increase year-over-year. nearing due changes primarily the on The adjustments, up XX% on project Oklahoma Contractors million, $XXX project reduced revenue certain in of Florida, and that New revenue transportation million, project was as component project due the projects a offset Specialty with same technology the nearing well estimates activities other to reduced certain the educational as on Arkansas that for activities a project and of contributions XX% adverse in project offset positive electrical are by unapproved Northeast and Arizona. segment segment Northeast execution legal activities was principally facilities from requests projects decrease facility ruling both partially completion. in in in change recovery non-cash were expected Contractors California execution and by to to project certain due for York, change on California, which in on that unfavorable is associated completion, execution an the

for XXXX $X million of loss quarter second $XX construction we from of operations of of last compared the to reported year. income the same quarter operations for construction Overall, a million from

contributions strong million from Civil from and segment were year delivered dominated Our a by second quarter which results margin very operations profit by profit of very – for XX%. of strong segment, operating $XXX a construction income strong this the

due segment million one was mass mentioned of favorable contributions Civil adjustments California, of transit $XX from including in strong projects performance. performance to those the on quarter's on This solid improved based projects previously

Northeast, posting however, $XX in of Florida quarter, were million totaled in the good posted for individually million and growth for due revenue the immaterial aggregate. despite $XX on The quarter, projects Building adjustments California to that certain loss primarily the about segment second the a unfavorable but

mentioned a non-cash transportation Northeast, the expected $XX York unapproved The attributable Specialty ruling on damages change as in from changes to well an in of the court no change the adverse $XX resulted million electrical as a million project estimates of the largely scope operations were I the for non-cash associated was $XX second delay in due from facilities requests construction project certain of on and with just clause. for as posted of in loss That charge Contractors the segment New recovery unfavorable million quarter. on that to adjustments that educational the in mechanical

the the of $X XXXX year. for the the year million XXXX second with Term to of for the Loan for increase year same quarter our of second was second of same rates million expense quarter by $XX XXXX. $X compared million last the million million quarter of to income $XX and expense to $XX borrowing on in compared this compared quarter G&A higher Other revolver. B $XX was driven for Corporate million Interest was quarter last

in for pretax the associated effective tax of X.X% $XX of rate rate We expense tax second resulted tax of with last in quarter XX.X%, benefit $XXX,XXX a an prior effective million loss year quarter tax million income $XXX which a of of and period. a an to the of compared an from had the year income negative slight

for each effective reduce tax tax pretax that effective full normally the would benefits loss, results When for loss impact we the tax large rate the Our quarter the or we for compared when that the tax when year. the pretax benefits are are forecasted the benefits rate. on rate is year. disproportionately of forecast depends a report instead magnified Also pretax to profits increase the income

In because cases pretax as provision. the benefit for we're the forecasted to decrease tax the occurs where reporting annual that expected up for the we have losses or align year or period true volatility year progresses, with the tax expense to

through as rates lower year, or higher in this quarter-to-quarter. increase normal So rates you we may from see continue volatility the than

the Net million the was per I Perini second or loss share compared loss the $X.XX to of a Civil from loss quarter Tutor income of to earlier in to in mentioned $XX Tutor due for was quarter loss of again primarily our XXXX of quarter smaller or of a The in factors attributable share drove various group. current attributable to $XX the second operations the construction million loss a per Perini net that $X.XX second XXXX.

of balance compared sheet, XXXX. million June of XX, or as XX, December to our $XXX was million our X% debt for net our down $XX as debt net As XXXX,

XX, we're future. be June continue the under of we expect our agreement credit compliance compliance As in XXXX in to covenants in and with to the

quarter well Our of quarter for within the the for X.XX:X lien net leverage limit first second the of was X:X. ratio XXXX

quarter reminder the the to leverage of a for each year for thereafter. As will step X.XX:X this X.X:X down ratio quarter third and

of will half disputes. of of our of cash. generation primary this magnitude continue more near-term expect year reduction focus various and it year use still collections even debt. the will of timing in cash the remains our significant cash this The We anticipated when the second reduce we determine much with and to associated for remainder resolutions over much Debt by of excess how

XXXX, and and We provision continue B revolver our needed confident maturities of able that Term to our the debt be of and refinance by springing January remain to as early will be mindful Loan next maturity in year. very we we

to now million purposes. I anticipated you Finally, XXXX $XXX approximately XXXX $X with and amortization assumptions will $XXX of is be expense depreciation still to is a million million in for between some $XX of for $XX million. million. be Depreciation update expected amortization on modeling to G&A and

is will million expense $XX million now noncash. approximately $X be Interest be which expected of to about

income tax weighted interest now XX% million to I approximately effective expected average expect non-controlling and last Our indicated is compared rate to to million forecast XX% the be diluted be continue for $XX now for XXXX. million quarter. and $XX we outstanding between $XX to XX% shares XXXX to We

now million to be expenditures of capital project-related. million $XX Lastly, are expected Thank to you. is approximately most which $XX

With call that, I'll back Ron. turn the to over

Ronald Tutor

growth Thanks, driven projects To by certain the in in Gary. quarter California. revenue contributions civil we mass recap, had second strong from transit

operations anticipate as from in up $XX backlog We $XX.X to the disputed As once and the previously at XX%. solid again conclude will that to grew stated, our the process much million I at of matters second resolve continue the date, in repeat the million I we quarter generated cash stronger balance to litigation year. and $XX this year of hand and billion

bidding significant said major competition. delivering amount earnings. over We improved Our of at and pipeline a with in limited as anticipate continues very best work to we've grow significantly over

owed I we've and and earnings improved we we we improved that. resolve they're question the long-duration end and second over conclude as delivering these and read capital without brought anticipate results change all year the half long. year of me so an litigations beyond Let disputes financial -- and to and collect been next for this significantly

the various projects continue civil that strong large over to several and our sustained from ongoing contributions earnings to contribute continue the years. expect next profit will We

offset in extent group. segment our continuous second I and lesser our Civil that building Contractors largely would by to in quarter. our also Specialty profit strong add delivered very a it losses segment the Unfortunately, was

the you. With call to operator over Thank that, I'll questions. turn for the

Operator

the [Operator line Instructions] Rygiel from Alex first Riley B. of Our Securities. Thank you. question comes with

Alex Rygiel

recent do questions you Thank market the by this you. Were of here. gentlemen. not into its the yet? other funding awards start of way And the Good evening, IRA any to initiatives? A of kind couple or federal quick recent if see work funded money

Ronald Tutor

a in dictating Well, as city owners We're direct the funded the about be in we New their they is infrastructure first our and York things next but significant us year. don't this part is Brooklyn judges getting they've the four a with hear funds we been hit on hit will that's the up state Rykers to billion-dollar-plus in that three and quarter the commitment funds. No, prisons -- bill. of funding to convinced replaced of getting marketplace that and and and of to frankly all financing Ron. yet funding drawing think civil and has market. contact federal And major -- funding appear jobs But more or propose for we're be second

been just effect So very an slow it's it's having happening.

Alex Rygiel

of lot of relates reported dispute year to kind settlements. then helpful. has That's with it earnings the And been obviously tough a Ron this as a

of into to in of or Any your in sort you're that mentioned this way XXXX concludes. You've concludes bracket hoping XXXX? you kind -- that, mind are it could it slip hopeful

Ronald Tutor

during and way there'll bad XXXX. anything. I money disputes are be these or it a XXXX litigation of claims settling still go into court any XXXX No, years And long-standing stood if claims be small COVID. which or point three they'll one is affect good don't the there that trying collect that all for end won't think to has going us collecting I and to that Every place or of where adjudicated CIE of -- through be dates And I expect and next our it's money. of that mediations XX% just to most take verdicts. expect and litigating other, will one win of through and we're and our cases the that's them what year,

Gary Smalley

Ron if I could add Alex. this. Hi,

not the our favorably a that, everyone always these We've isn't not a we remind But and perhaps history to recent take want litigate the have of in arbitrate time. history write-downs lot prevailing and months Just reported. a we history of things. do to we've got quite what when

are arbitrated. coming results. being had in forward but are in So of not look we've just results, we're to litigated having And that positive that that up positions the to the last… negative looking forward We some fact

Ronald Tutor

of only litigation. Other and to No, still that the the something meant I we said we're right, don't place and have And you're number avoid cash what trying the if we history in because won to a many to of contrary when absolutely is been excess settle has the I And Gary. we elect isn't to infer, our get cases litigations booked. words we successful. what

Gary Smalley

I there negative just the anyway. outcomes masked understood was sure question, but even had last the said. results we've they've to it that larger positive Ron, nothing been on by was so just -- so, want and year but based you Yes, in or make some

Alex Rygiel

Thank you.

Operator

Our proceed Please line UBS. with next of question the question. comes from Steven with your Fisher

Steven Fisher

Thanks. Good afternoon.

Ronald Tutor

Hi, Steven.

Steven Fisher

Hi.

give half adjudicated, just of guess think, of year? talk you second CIE sense terms us it adjudicated maybe just think is on do you better is Ron how of being you that -- claims right? before much probably are what's be much over. half of can in aggregate have I yes, you'll said the the you books of And the be I the putting this this So all in probably And the amount Ron how a the to better adjudicating? just But of in year, talk in second XX%

Ronald Tutor

do. I'd say, in should mind of just neighborhood million Well, say, more. in quickly I'd my that's the $XXX what going what was resolve, I to up adding

Steven Fisher

of I And were guess your still the That's the the your quarter but ago? I of this I'm expected the months year, what last just you And curious for think kind are I plan changed of just had rest reinstate versus what what you kind uncertainties quarter. know curious mind helpful. -- guidance Okay. -- to three

Ronald Tutor

The in will that that we lawsuit into as decided as we although And could that be be there's I I would for forward inappropriate. will discussed believe a results am have tries win to three-panel We following the year. over November such $XXX going even million be predict else try and optimistic it compares arbitration. the to it lawsuit swing to in well a and nothing if

Steven Fisher

Okay.

Gary Smalley

that's also. rate know could be or And is a -- of I hard the rate about the for part to based I so In what was it down this the a us add Steve to our then and will for for big what that the tax my the loss because -- the tax tax rate if going shrinks on talking forecast remarks, it's year, just impact on the what tax because with have you is on loss that is we as rate math. of we if it's first follow that be half the whittle impact magnified, year

it But just more so makes difficult. volatile more it

a we'd just could Ron comfortable consolidated an besides chance an so pre-tax range there's with makes So EPS predicting, to that we us much the what -- have of volatility estimate. mentioned income. say, it rate it tax impossible give But better with feel to for let's really almost

Steven Fisher

you -- reasonably in Okay. refinance able Thanks, to over you in the of a be get then year? lending order yourself discussions sense collect to early to much to the of with debt part cash have of position had groups next Gary. kind And a put need in to how

Gary Smalley

It's at Steve, the Yes, various really this that take minimum one. Ron, to -- improved a right Also not what really what flow of were significantly a need more a we've is bonds, they're ago. for we've positive. Yes. groups. they're the but talked answer there's the a at from they That's to pricing performance. I'll is function what short XX%. the certainly, heard. improved quarter better, And so now okay, trading Cash we have generation our

then If some big in our a improvement part. a bright made we that. sign. that was progress Getting continue there We is to leverage see down certainly

year of if we the So continue a be better well we rest to we we're earnings the course, side, of the for getting, maybe doing on think advice we're to on what we're positioned. believe the that going based little do

outstanding in should and to settlement And also that Ron then activity, the we us that other of litigation with certainly cash come helpful. be arbitration for another that bump expect give litigation mentioned that the should some

Steven Fisher

at be this in your point? some and Okay. affected is are the And environment just Has to that? sort settlements? that the guess all civil that and I'm on, your at you surety like What's curious bond the at of status construction particularly does of by capacity? legal plenty it can such talk area. capacity leverage that cash things where sounds of to bid the about there of And I What's collections been going the moment? stand surety

Ronald Tutor

unlike Well, worth, our continuing get we the in to significant flows markets, exceeds which is billion, sureties have are public the civil the a basic work, net our and $X.X look very because at better what which which performance equity capacity, cash major we're our pursuing. positive and

and I is So to it's the sureties disputes collections very in a which challenging place write-downs, very disappointing the -- and and have in New predominantly York, work, to XXX% support. kind been add are as a might very the be these

this have to standpoint. and we the because worth, continue from At capacity of earnings, we least write-downs and the is a a supportive of speak, look as as which we irregardless a pursue lack be surety to all substantial net major they work, we what very

CIEs everything's to back but takes. norm out it get these to it under simply doesn't So and mean whatever fine from we have the got

Steven Fisher

this through still any us pursue. business Okay. you business. direction. a that lots And wonder makes can when sense give into it's and to to the Obviously, and hard if how right that sense you in see just with anything performance outside, just what plans But I business a might underlying to the there. give of us differently from what's flow help the to there. -- Because that of might if you moving the it's the backlog on parts a that is sense have that do is going then just lastly, moving in us specialty maybe and be could of

Ronald Tutor

me let so with business, the the you don't bad. the Specialty Well, good clarify throw in

an operation group Specialty make Fisk operates Fisk of Fisk entities and California, Electric, have that called which after and year never separate in of two that We money year in Texas lose.

Nagelbush loses. in that mechanical have never We Florida South called company Mechanical a

have in -- of see, operation there. our with the of group and problem has half electrical the the losses most which Specialty New big group. Specialty the We isn't It's reference CIE. you entire to goes York our And the City, in mechanical generated respect to the group

an difficult place to York agencies is that protects is work challenging system legal public contractors. with difficult New and essentially incredibly for very and a

the However, most of our in our peers nobody decision as of there's that York a created they work. left big result, don't. a dismal And that New state bid performance than at can have those

changes through. a reached which players have where demanding can increasing maybe we contract prices one our we've and forced major do of point as we're job, So two only in that a town

have do in any Our reduced Specialty emanated, future allowed not size. only being New of with at for time agencies York been And least have to in in to group of are developers our Civil their group problems business and bidding contractors the any the near where direct. support other all these of or fraction a

under control. our it probably and will of they function was support their say revenue us XX% what four interim in only just ago, the is let's continue to years So to

out it they basis these negative will has of all challenging. at then their to bluntly of issues we're dramatically they've best only it been up, reduced getting work been cleaning in the put on performance, if which all hopes back resolved. So far of so grow the be and And

Steven Fisher

much, very you Thank Ronald.

Operator

to Mr. Tutor for further back to hand remarks. no I'd questions call in There the like are closing queue. the

Ronald Tutor

Thank and you forward corner, to turn call. this the miserable Thank us. you. everybody bearing We'll next with I look

Operator

and you this gentlemen, Thank conclude your does for today's teleconference. Ladies participation.

your disconnect and may time this wonderful have lines You day. at a

Tutor Perini (TPC) 3 Aug 232023 Q2 Earnings call transcript