Lack of new contract awards hurts Tutor Perini’s turnover
By Neil Gerrard20 March 2023
US construction contractor Tutor Perini has blamed a lack of major new contract awards over the last three years for an 18% drop in revenue in 2022.
In its full-year results, Tutor Perini revealed that turnover for 2022 had fallen to $3.8 billion. It said that the lack of new contracts, was primarily caused by delays to new projects amid the Covid-19 pandemic.
This prevented it from replacing revenue associated with certain projects that were completed or nearing completion, it claimed.
It said, “The impact of the pandemic, combined with certain political and other factors, resulted in the company not being awarded certain civil segment projects totalling more than $10 billion despite having been the low or preferred bidder.”
It is now expecting most of those projects to be re-bid in 2023 or 2024.
It also cited delays to certain mass-transit projects in California and the unfavourable impact of project adjustments for the fall in revenue. However, increased activity on newer civil and building segments in California and the Midwest partially offset the decline.
Meanwhile, Tutor Perini made a loss from construction operations in 2022 of $204.8 million. That was a reversal on the $226.8 million profit it made in 2021.
The company said, “The decrease was primarily due to the net unfavourable impact of various project adjustments related to adverse legal judgments or decisions; settlements; and changes in estimates for project charges, net of positive impacts from improved productivity and efficiencies on certain projects, which collectively totalled $330.1 million in 2022.”
It also saw temporary negative project adjustments totalling $119.7 million due to increases in unapproved work on various projects. And the company noted the negotiation of lower margin (and lower risk) change orders on a civil mass-transit project in California.
Its total backlog of contracts was $7.9 billion as at 31 December 2022, compared to $8.2 billion as of 31 December 2021.
New awards in 2022 totalled $3.5 billion, the largest of which were $466 million of additional funding for a mass-transit project in California, the $260 million Eagle Mountain woodfibre gas pipeline project in British Columbia, Canada, and $211 million of additional funding for two educational projects in California.
Ronald Tutor, chairman and chief executive officer, said, “Our results included record operating cash flow despite a continued lack of large new civil segment awards due, in part, to impacts of the Covid-19 pandemic and customer budgetary constraints. We currently have significant pending awards that are not yet reflected in our backlog, but, if successfully awarded, are expected to increase current backlog by more than $3 billion later this year.
“A combination of adverse legal judgments, settlements and other charges negatively impacted our earnings across all segments in 2022, particularly the Specialty Contractors segment. We believe that the strategic changes we made in 2022 will result in improved operational and financial performance for our Specialty Contractors business units in New York. We look forward to delivering revenue growth and profitability in 2023, as well as continued strong operating cash and robust new award bookings that should position us favourably for a return to greater profitability over the next several years.”