Tutor Perini sees bluer skies ahead, with hopes for a return to profitability in 2025 after reporting another loss for the year.
Despite recent market concerns about the Trump administration’s new tariffs and scrutiny of federal spending, the company doesn’t expect to be negatively impacted by those moves, CEO and President Gary Smalley said in a Feb. 27 earnings call, his first since assuming the top position.
“We do not, repeat, do not, anticipate any significant impacts to our business related to these factors. From a funding perspective, we do not see the risk of any of our major projects being canceled, delayed or defunded at this time,” Smalley said.
The firm frequently buys up materials such as steel and concrete, as well as large equipment like tunnel boring machines, at the onset of projects, which mitigates the risk of future price increases, according to Smalley.
“Many of our contracts have Buy American provisions to promote the use of domestic products, and many have allowances or escalation clauses that can protect us from certain unforeseen cost increases, including those associated with new tariffs,” Smalley added.
Priorities for new CEO
In his new role, Smalley said that he will be focused on making Tutor Perini the construction employer of choice, returning the firm to profitability and quickly resolving lawsuits, which have dragged down its bottom line in recent years.
“We expect to continue making substantial progress this year and next year in resolving and collecting on the remainder of our legacy disputes, about a dozen or so that are significant,” Smalley said.
As executive chairman, former longtime CEO Ron Tutor will stay on to advise the leadership team and provide guidance on the resolution of the firm’s remaining legacy legal disputes. He will also review the cost estimates and provide his input as to the bidding strategy for the major projects that Tutor Perini will pursue over the next couple of years, Smalley said.
“Ron is currently helping drive the setup of the major projects that we have already been awarded over the last several months,” Smalley said. “The importance of proper project setup of these mega-projects cannot be understated, because it is the first key step toward the successful execution of this work.”
By the numbers
Tutor Perini reported a loss of $79.4 million in the fourth quarter, greater than its $47.5 million loss in Q4 2023. For all of 2024, it reported a loss of $163.7 million, a bit less than its $171.2 million loss in 2023.
Its bottom line was negatively impacted by unfavorable adjustments on various projects, primarily due to changes in estimates that resulted from judgments, settlements and resolutions of certain legacy claims and unapproved change orders, said CFO Ryan Soroka on the call.
In particular, its civil segment took a hit from a $102 million charge in the third quarter from an “unexpected adverse arbitration decision” related to a completed California bridge project, per Soroka. Tutor Perini is appealing the decision.
The firm reported revenues of $1.07 billion, up 4.5% compared to $1.02 billion in Q4 2023. For the full year, it saw revenue of $4.33 billion, an increase of 11.5% from $3.88 billion in 2023, primarily due to increased project execution activities on certain building and civil segment projects, according to Soroka.
Backlog stood at $18.7 billion at the end of 2024, up 84% year over year. That number was driven by $12.8 billion worth of new awards and contract adjustments in 2024, according to the firm.
“All in all, we believe that our balance sheet is now healthier than it has ever been,” Soroka said.
With a flush backlog, the firm has been able to negotiate favorable terms on its contracts, said Smalley.
“With $18.7 billion in backlog, we certainly can be more selective than we have been in the past,” Smalley said. “This new work that we've been booking, it's better contractual terms than we used to have.”
Big projects on tap
Tutor Perini won several billion-dollar-plus awards in the past quarter, including:
- The $3.76 billion Manhattan jail project in New York.
- The $1.66 billion City Center Guideway and Stations project in Honolulu.
- A $1.4 billion health care campus project in California.
- The $1.18 billion Newark AirTrain replacement project in New Jersey.
- $1.1 billion Kensico Eastview Connection tunnel project in New York.
Tutor Perini’s Los Angeles-area headquarters escaped the recent wildfires that burned through large swathes of the city in January, according to Smalley.
“While our operations were not impacted, a few of our employees unfortunately lost their homes to the fires and are now dealing with the challenges of relocating and rebuilding,” Smalley said. “We are committed to assisting our local community and the recovery, and expect to participate in some of the debris removal activities.”
Tutor Perini might also take on some rebuilding work in Ukraine, according to Ron Tutor.
“If the U.S. government participates in the rebuilding of Ukraine after the war is over, we believe our PMSI group is extremely well positioned to participate in that effort, having had significant experience in both Iraq and Afghanistan in post-war repairs,” Tutor said.
