Dive Brief:
- Los Angeles-based contractor Tutor Perini posted a loss of $63 million, or $1.23 per share for the second quarter Friday, widely missing analysts’ expectations for profits of 41 cents per share, according to stock tracking site Seeking Alpha.
- Revenue fell to $0.9 billion, a 25% decline from the $1.2 billion the company showed a year ago. Analysts had expected revenue of $1.1 billion.
- The company withdrew its financial guidance for the rest of the year, and said it would issue new guidance once it had greater visibility, but that it expects to post a net loss for 2022.
Dive Insight:
The company said the lower revenue was due to reduced project execution, as well as the lingering impacts of the COVID-19 pandemic. It attributed its overall loss to a range of factors, including unfavorable project adjustments, claims and change orders, and an unexpected reversal of previously awarded legal damages.
On its conference call with Wall Street analysts following the results' release, CEO Ron Tutor acknowledged the poor performance, but characterized it as a one-off event.
"Everything that could go wrong in the second quarter went wrong, but none of it repeats itself," Tutor said. "I continue to emphasize the second half of this year and next year we are going to clean up our costs."
Last quarter, after posting a loss of $21.6 million, the company reiterated its full-year guidance for profits of $1.15 to $1.60 per share, which surprised analysts at the time.
“Given that you’re reiterating 2022 guidance, you’re by default significantly raising guidance for the remainder of the year,” said Alex Rygiel, an analyst with B. Riley Financial, during the firm’s first quarter conference call in May. “So my question here is, what’s changed to give you that confidence?”
At that time, Tutor responded that the firm had entered the year with plenty of cash on hand, and anticipated collecting even more in the months ahead. “To be blunt, we had a significant reserve set up for 2022,” Tutor said.
But that reserve didn’t help it during the second quarter.
"Sometimes we do better, sometimes we do worse, but we're determined to collect the money we're due," Tutor said Friday. "Despite our obvious disappointment in these earnings for the quarter and the year to date, we continue to make major progress."
There were two positives in the report: Tutor Perini’s backlog, or projects it has won but hasn’t yet started, increased 14% to $8.5 billion during the second quarter of 2022, compared to $7.5 billion as of June 30, 2021.
And it generated $58 million in cash from operating activities, compared to using $84.6 million in cash a year earlier. Combined with positive cash flow from the first quarter of 2022, that contributed $178.7 million in cash for the first six months of 2022, the largest amount the company has generated during the first six months of any year since 2008.
The firm detailed some of the Q2 awards that led to its increased backlog, including:
- $293 million of additional funding for a mass-transit project in California.
- $95 million for an educational facility project in California.
- $85 million for a military housing project in Alaska.
- $313 million from four military projects in Guam.
Seattle ruling
On June 14, Tutor Perini lost an appeal for a dispute regarding its Alaskan Way Viaduct tunneling project in Seattle, which it is working on via a joint venture with Dragados USA.
In its 10-Q filing Friday, Tutor Perini said the result was $57.2 million in damages awarded to Washington State Department of Transportation, for which the JV would be responsible if further appeals fail. Tutor Perini said its share was approximately 45%, or $25.7 million.
The JV petitioned the Washington State Supreme Court for a discretionary review of the ruling, which is still pending, according to its 10-Q.
Editor’s note: This story has been updated to include comments from the conference call.
