Tutor Perini (TPC) Misses on Q3 Earnings and Revenues
Tutor Perini Corporation’s TPC earnings plunged nearly 33% year over year to 68 cents in the third quarter of 2015 from $1.02 reported in the year-ago quarter. Earnings were also below the Zacks Consensus Estimate of 70 cents. Improved performance of various projects, including the New York runway reconstruction project, was offset by unfavorable adjustments associated with a number of electrical projects in New York as well as lower contributions from certain higher-margin civil projects.
In the reported quarter, Tutor Perini recorded a non-cash pre-tax charge of $23.9 million or 28 cents per share for an adverse appellate court decision filed on Nov 9, 2015. This was in connection to a long-standing litigation matter, in which the company assumed liability for a minority interest in a joint venture as part of an acquisition in 2011. Including the impact of this charge, earnings in the quarter stood at 40 cents, down 45% from 73 cents in the year-ago quarter.
Operational Update
Tutor Perini’s total revenue went up 7% year over year to $1.341 billion. However, the figure fell short of the Zacks Consensus Estimate of $1.379 billion. The most significant revenue drivers in the quarter were increased activity related to various building projects in California, a runway reconstruction project in New York and electrical projects at Hudson Yards. NY. However lower activity related to electrical projects at the World Trade Center and mechanical projects at the United Nations in New York, as well as various smaller electrical projects in the southern U.S. had a negative impact on revenues.
The Building segment revenues rose to $475 million, increasing 15% from the year-ago period. The Civil segment reported a 12% year-over-year rise in revenues to $540 million, while Specialty Contractors posted a 9% decline to $325 million from $356 million reported in the year-ago quarter.
Cost of sales went up 12% year over year to $1.24 billion. Gross profit declined 29% year over year to $100 million. Gross margin contracted 380 basis points (bps) to 7.5%.
General and administrative expenses decreased 13% year over year to $61 million. Operating profit was $62 million, down around 11% from $70 million reported in the year-ago quarter. Operating margin fell 90 bps year over year to 4.7% in the quarter.
Financial Updates
Tutor Perini ended the quarter with cash and cash equivalents of $97 million compared with $136 million at 2014-end. Cash from operating activities during the first nine months of 2015 was $20.7 million compared with case usage of $143 million in the prior-year comparable period. Long-term debt, excluding the current portion, was $746 million as of Sep 30, 2015 compared with $784 million as of Dec 31, 2014.
Backlog and Pending Orders
Total backlog on Sep 30, 2015 was $7.5 billion, reflecting a 3.2% decline from $7.75 billion reported on Jun 30, 2015. New awards and adjustments to contracts in process totaled approximately $1.1 billion in the third quarter of 2015.
In the quarter, significant additions to backlog included additional funding of $346 million for a technology research and development facility project in California, bringing the total value of the project to approximately $800 million; an electrical subcontract for an office building at Hudson Yards in New York valued at $72 million; additional funding of $69 million for a multi-unit residential project in Florida; and a highway project in Maryland valued at $60 million.
Outlook
Tutor Perini has maintained its revenue outlook in the range of $5–$5.5 billion for 2015. The company is, however, re-evaluating its previous 2015 earnings guidance of $1.90–$2.10 per share. Tutor Perini will provide an update in the near future, taking into account the litigation-related charge, year-to-date results and the outlook for the remainder of the year.
Sylmar, CA-based Tutor Perini Corporation is a leading civil and building construction company that offers diversified general contracting and design-build services to private clients and public agencies globally.
Tutor Perini currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the sector include Dycom Industries Inc. DY, Jiangsu Expressway Co. Ltd. JEXYY and Zhejiang Expressway Co. Ltd. ZHEXY. While Dycom sports a Zacks Rank #1 (Strong Buy), Jiangsu Expressway and Zhejiang Expressway carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TUTOR PERINI CP (TPC): Free Stock Analysis Report
ZHEJIANG EXPRES (ZHEXY): Free Stock Analysis Report
DYCOM INDS (DY): Free Stock Analysis Report
JIANSU EXPWY CO (JEXYY): Free Stock Analysis Report
To read this article on Zacks.com click here.
