Tutor Perini Corporation’s TPC earnings plunged nearly 31% year over year to 41 cents in the second quarter of 2015 from 59 cents in the year-ago quarter. Earnings also trailed the Zacks Consensus Estimate of 53 cents.
Earnings in the quarter were negatively affected by a loss on the Hudson Yards 52-story Tower C concrete project, which had an impact of 17 cents per share. This was the first major loss for Tutor Perini on a fixed-price contract in the past 20 years. In addition, decreased activity this year on the Alaskan Way Viaduct project led to the decline in net income. Including the loss, earnings in the quarter stood at 24 cents, down 59% from 59 cents in the year-ago quarter.
Operational Update
Tutor Perini’s total revenue went up 21% year over year to $1.31 billion, outpacing the Zacks Consensus Estimate of $1.24 billion. The most significant revenue drivers in the quarter were increased activity in the New York area on the JFK runway reconstruction project, the MTA East Side Access CM006 project, the Hudson Yards platform, and various electrical and mechanical projects, as well as increased activity on various bridge projects in the Midwest, the Scarlet Pearl Casino Resort in Mississippi, two confidential technology building projects in California, and the San Diego Courthouse project also in California.
However, prolonged delay on the Alaskan Way Viaduct project in Seattle associated with tunnel boring machine repairs and a slow start to the California High-Speed Rail project, had a negative impact on revenues.
Tutor Perini witnessed revenue increase in all of its segments in the reported quarter. Building segment revenues rose to $534 million, increasing 37% year over year. Civil segment reported 21% year-over-year rise in revenues to $451 million while Specialty Contractors posted an increase of 2% to $327 million from $322 million in the year-ago quarter.
Cost of sales went up 27% year over year to $1.21 billion. Gross profit declined 24% year over year to $98.6 million. Gross margin contracted 440 basis points (bps) to 7.5%.
General and administrative expenses increased 6% year over year to $67.7 million. Operating profit was at $30.9 million, decreasing around 53% from $65.4 million in the year-ago quarter. Operating margin fell 360 bps year over year to 2.4% in the quarter.
Financial Updates
Tutor Perini ended the quarter with cash and cash equivalents of $107 million compared with $136 million at 2014-end. Cash used during the first half of 2015 was $31.8 million compared with $61.4 million in the prior-year period. Long-term debt, excluding the current portion, was $807 million as of Jun 30, 2015 compared with $784 million as of Dec 31, 2014.
Backlog and Pending Orders
Total backlog on Jun 30, 2015, was $7.75 billion, a 0.5% decline from $7.79 billion reported on Mar 31, 2015. New awards and adjustments to contracts in process totaled approximately $1.27 billion in the second quarter of 2015.
In the quarter, significant additions to backlog included $455 million of initial funding for a technology research and development facility project and $72 million of incremental funding for a biotechnology facility project, both in California, and three electrical projects totaling $97 million in New York.
Outlook
Tutor Perini maintained its revenues outlook in the range of $5–$5.5 billion for 2015. However, accounting for the loss on the Hudson Yards Tower C concrete project and delays on the Alaskan Way Viaduct project, Tutor Perini trimmed its 2015 earnings guidance to a range of $1.90 to $2.10 from the prior range of $2.20 to $2.50
Sylmar, CA-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 carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Dycom Industries Inc. DY, Chicago Bridge & Iron Company N.V. CBI and EMCOR Group Inc. EME. While Dycom sports a Zacks Rank #1 (Strong buy), Chicago Bridge and EMCOR hold 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
Be the first to comment