Tutor Perini Corporation (TPC) reported adjusted earnings (excluding discrete items) of 32 cents per share for second-quarter 2013, doubling from the year-ago adjusted earnings of 16 cents per share. The improvement was driven by increased revenues from stepped-up activity and contribution from higher-margin pipeline work in the Midwest. The results however missed the Zacks Consensus Estimate of 36 cents.
Reported profit for the quarter was $15.5 million (or 32 cents a share), a turnaround from a loss of $348.4 million (or $7.35 per share) recorded a year ago. The year-ago quarter’s results include impairment charges of $7.51 per share. No such item was recorded in the reported quarter.
Total revenue improved 7% year over year to $1,053 million, surpassing the Zacks Consensus Estimate of $1,035 million. The year-over-year improvement was driven by activity in new hospitality and gaming projects in California, Arizona and Nevada, work performed in New York in relation to the damage caused by Hurricane Sandy, and increased activity in a tunnel project in Washington.
Barring Management Services, revenues improved across all segments, led by Building with a 27% increase to $422 million, followed by Civil with a 1.5% rise to $332 million and Specialty Contractors with a 2.9% gain to $284 million. Management Services suffered a 29% decline to $45.7 million.
Cost of sales increased 5% to $947 million from $898 million in the year-ago quarter. Gross profit rose 21.7% year over year to $105.9 million. Gross margin improved 120 basis points (bps) to 10%.
General and administrative expenses increased 2.8% year over year to $66 million. Operating profit was $39 million, a rebound from a loss of $354 million in the year-ago quarter.
As of Jun 30, 2013, cash and cash equivalents were $142.7 million versus $168 million as of Dec 31, 2012. Cash from operating activities was an outflow of $38.6 million for the first half of 2013 compared with $31.8 million in the prior-year period.
Long-term debt, excluding current portion, amounted to $675.6 million as of Jun 30, 2013, compared with $669 million as of Dec 31, 2012. The debt-to-capitalization ratio increased to 39.8% as of Jun 30, 2013, from 39% as of Dec 31, 2012.
Backlog and Pending Orders
Total backlog as of Jun 30, 2013, was $6.6 billion, up 12% year-over-year, highest since 2008. The growth was mainly driven by $1.3 billion of new awards in the Civil segment. Backlog increased in the Building, Civil and Specialty Contractors segments, offset by a decline in the Management Services segment. Additions to backlog worth mentioning during the quarter include the San Francisco Central Subway construction project, valued at $840 million and a significant number of projects in New York, worth around $600 million.
Tutor Perini retained its earnings guidance for 2013 which is expected in the band of $1.65–$1.90 per share. Revenue guidance was also reiterated at $4.5–$5 billion.
Tutor Perini expects the third quarter to be benefited by new awards, bookings and a strong backlog. The company continues to win complex, civil and building projects. Its civil market is also likely to remain strong.
The Civil segment will deliver strong results as the tunneling work on the Alaskan Viaduct has commenced full-scale. The San Francisco subway started in July and the $840 million contract is well underway.
Additionally, Tutor Perini expects Civil revenue volumes to increase consecutively in the third and fourth quarters and significantly in 2014, driven by the $1 billion California High-Speed Rail joint venture project. Building segments and margins are also expected to grow over the next several quarters, driven primarily by the additional phases of the Hudson Yards projects.
Sylmar, Calif.-based Tutor Perini Corporation is a leading civil and building construction company offering diversified general contracting and design-build services to private clients and public agencies globally.
Tutor Perini currently retains a Zacks Rank #3 (Hold).
One of Tutor Perini’s peers Chicago Bridge & Iron Company N.V. (CBI) reported second-quarter adjusted earnings of $1.04 per share, in line with the Zacks Consensus Estimate. Adjusted net income was up 38.6% year over year on the back of strong project activities and a robust backlog.
Other stocks in the building and heavy construction industry with a favorable Zacks rank are MasTec, Inc. (MTZ) and Primoris Services Corporation (PRIM). Both carry a Zacks Rank #2 (Buy).
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