Dive Brief:
- 2021 was a year of mixed financial numbers for the country’s second-largest contractor. Reston, Virginia-based Bechtel saw year-over-year revenue remain flat, while its backlog revenue decreased but the amount of new work on the books rose, according to the company’s annual report released late last month.
- Bechtel reported $17.5 billion in revenue, a slight decrease from $17.6 billion in 2020. Backlog revenue fell 13.7% year over year to $27.8 billion. However, new work booked last year was at $8.5 billion, up from $7.1 billion in 2020.
- Bechtel CFO Keith Hennessey was positive overall about the company’s performance, telling Construction Dive that the company’s 2021 revenue and profitability were “better than [its] expectations.”
Dive Insight:
The privately owned firm shared its yearly performance report amid a harsh economic climate that includes snarled supply chains, a pandemic and rising inflation.
Bechtel’s pipeline has been bolstered by large projects, including the Cutlass Solar Project in Fort Bend, Texas, which Bechtel announced in 2021, and the NEOM megacity in Saudi Arabia, which Bechtel announced in 2020.
Nevertheless, the company’s backlog revenue numbers are down $10.5 billion from two years ago, when it hit $38.3 billion. Hennessey said that the drop was a result of two factors — that the company’s backlog over the past few years was abnormally large to begin with and is now leveling, and that the company wasn’t necessarily “chasing” work.
“We've always been focused on what markets for what customers can really deliver value. And if those markets and customers are seeing strong capital spending, then we can really deliver [and] compete,” Hennessey said.
When asked how this philosophy interacts with an increase in new work booked, Hennessey pointed to annually renewed contracts that count toward new work, along with larger project renewals such as NEOM and Cutlass Solar.
Despite the success, Hennessey acknowledged that industrywide problems, such as supply chain issues and inflation, are continuing to plague construction this year. However, Hennessey said that the company is handling the issues well. Despite high commodity prices, Bechtel is working to avoid large problems in part by choosing projects in which the owner shares risk.
“We're very focused on delivering value to our customers, but we also think owners need to share some of these risks at times,” Hennessey said.
Many large public construction firms recently reported similar challenges in their first quarter earnings. Contractors such as Granite and Tutor Perini reported losses in Q1, and some company executives said they are waiting to see what effect geopolitical headwinds and skyrocketing materials prices will have on their businesses.
