Tutor Perini Reports Fourth Quarter and Full Year 2019 Results

Tutor Perini Corporation (the “Company”) (NYSE: TPC), a leading civil, building and specialty construction company, reported results today for the fourth quarter and year ended December 31, 2019. As previously disclosed in the Company’s earnings release for the second quarter of 2019, the Company’s results for 2019 were impacted by a pre-tax, non-cash goodwill impairment charge of $379.9 million.

Revenue for the fourth quarter and full year of 2019 was $1.2 billion and $4.5 billion, respectively, both of which are comparable to revenue for the same periods last year. Revenue for both periods of 2019 was favorably impacted by higher volume on certain Civil segment projects but was mostly offset by a $123.9 million revenue impact associated with the SR 99 charge addressed below. Despite the SR 99 revenue reduction, Civil segment revenue increased 12% in 2019.

As previously disclosed in a Current Report on Form 8-K filed on December 20, 2019, the Company recognized in the fourth quarter of 2019 an after-tax charge of $119.4 million (an impact of $2.38 per diluted share) as a result of an adverse jury verdict in the case related to construction of the Alaskan Way Viaduct Replacement Project (“SR 99”) by a joint venture for which the Company holds a 45% share as a minority partner. Including the impact of this charge, net loss attributable to the Company for the fourth quarter of 2019 was $86.1 million, or a $1.71 loss per diluted share (“LPS”), compared to net income attributable to the Company of $49.4 million, or $0.98 of earnings per diluted share (“EPS”), for the fourth quarter of 2018. For 2019, including the after-tax goodwill impairment charge of $330.5 million (an impact of $6.58 per diluted share), net loss attributable to the Company was $387.7 million, or a $7.72 LPS, compared to net income attributable to the Company of $83.4 million, or $1.66 of EPS, for 2018. For 2019, adjusted net loss attributable to the Company and adjusted LPS, which are non-GAAP financial measures and exclude the impact of the impairment charge (but include the impact of the SR 99 charge), were $57.2 million and $1.14, respectively. Non-GAAP financial measures are reconciled to the most nearly comparable GAAP financial measures in the financial tables below. Aside from the impact of the charges mentioned above, the decrease in EPS for 2019 was principally due to net unfavorable adjustments on certain projects in the Specialty Contractors segment (none of which were individually material), which impacted gross profit for 2019 by $41.5 million, mostly offset by a gain of $37.8 million resulting from the Company increasing its ownership interest in a Civil segment joint venture.

The Company generated $25.2 million and $136.5 million of operating cash for the fourth quarter and full year of 2019, respectively, compared to $56.2 million and $21.4 million for the same periods last year. Cash generation was particularly strong in the second half of 2019, driven mostly by improved working capital management, as well as collections associated with certain dispute resolutions, during that period. The Company anticipates that substantial cash collections pertaining to additional expected dispute resolutions over the coming year, combined with significant project cash flows from large projects that are ramping up, will contribute to continued strong operating cash flow.

Backlog was at a near-record level of $11.2 billion as of December 31, 2019, an increase of 21% compared to $9.3 billion as of December 31, 2018. New awards and adjustments to contracts in process totaled $1.5 billion in the fourth quarter of 2019. Significant new awards and contract adjustments in the fourth quarter included the $432 million Division 20 Portal Widening and Turnback Facility in California; more than $375 million for various electrical and mechanical projects; the $263 million Miami-Dade County Courthouse in Florida; the $79 million APEX technology and life science building and $79 million Cal State East Bay Library, both in California; and the $50 million 10th Avenue Historic Bridge Rehabilitation project in Minnesota. Backlog is expected to continue to grow in 2020, driven by strong customer demand reflected in a significantly large volume of identified new project opportunities for which the Company expects to compete.

Outlook and Guidance

“Though I am not happy with the charges we were required to take in 2019, particularly with the unfavorable SR 99 jury verdict and the underperformance of our Specialty Contractors group, I am encouraged by our strong operating cash generation and backlog growth for the year,” said Ronald Tutor, Chairman and Chief Executive Officer. “Our focus in 2020 will be on delivering revenue and earnings growth from our near-record backlog and improving our operating performance in the Specialty Contractors group. We will also pursue various new high-margin project opportunities and continue to make progress in resolving and collecting our unbilled receivables.”

The Company anticipates strong revenue growth across all segments in 2020 and substantially improved operating margin in the Specialty Contractors segment. For 2020, the Company is establishing its initial EPS guidance at a range of $1.80 to $2.10. As in previous years, earnings in 2020 are expected to be weighted more heavily in the second half of the year due to the anticipated timing of large project activities, as well as typical business seasonality.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented under generally accepted accounting principles in the United States (“GAAP”), we are presenting certain non-GAAP financial measures. We are providing these non-GAAP financial measures to disclose additional information to facilitate the comparison of past and present operations, and they are among the indicators management uses as a basis for evaluating the Company’s financial performance as well as for forecasting future periods. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our business operating results, including underlying trends.

These non-GAAP financial measures, which exclude the non-cash goodwill impairment charge (as well as the tax benefit associated with this charge), include adjusted net income (loss) attributable to Tutor Perini Corporation and adjusted diluted earnings (loss) per common share. These non-GAAP financial measures are not intended to replace the presentation of our financial results in accordance with GAAP, and they may not be comparable to other similarly titled non-GAAP financial measures presented by other companies. Reconciliations of these non-GAAP financial measures to the most nearly comparable GAAP financial measures are presented below. For the year ended December 31, 2018, there are no non-GAAP financial measures presented or included in the reconciliation tables below because the non-GAAP financial measures, as defined by the Company, do not differ from GAAP results in those periods, as the only adjustment occurred in 2019.

Fourth Quarter Conference Call

The Company will host a conference call at 2:00 PM Pacific Time on Wednesday, February 26, 2020, to discuss the fourth quarter and full year 2019 results. To participate in the conference call, please dial 877-407-8293 five to ten minutes prior to the scheduled time. International callers should dial +1-201-689-8349.

The conference call will be webcast live over the Internet and can be accessed by all interested parties on Tutor Perini's website at www.tutorperini.com. For those unable to participate during the live call, the webcast will be available for replay shortly after the call on the website.

About Tutor Perini Corporation

Tutor Perini Corporation is a leading civil, building and specialty construction company offering diversified general contracting and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets by executing large, complex projects on time and within budget, while adhering to strict quality control measures. We offer general contracting, pre-construction planning and comprehensive project management services, including planning and scheduling of manpower, equipment, materials and subcontractors required for a project. We also offer self-performed construction services including site work, concrete forming and placement, steel erection, electrical, mechanical, plumbing and heating, ventilation and air conditioning (HVAC). We are known for our major complex building project commitments, as well as our capacity to perform large and complex transportation and heavy civil construction for government agencies and private clients throughout the world.

Forward-Looking Statements

The statements contained in this release, including those set forth in the section “Outlook and Guidance,” that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future and statements regarding future guidance or estimates and non-historical performance. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. While the Company’s expectations, beliefs and projections are expressed in good faith and the Company believes there is a reasonable basis for them, there can be no assurance that future developments affecting the Company will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: revisions of estimates of contract risks, revenue or costs, the timing of new awards or the pace of project execution, which may result in losses or lower than anticipated profit; unfavorable outcomes of existing or future litigation or dispute resolution proceedings against clients (project owners, developers, general contractors, etc.), subcontractors or suppliers, as well as failure to promptly recover significant working capital invested in projects subject to such matters; the requirement to perform extra, or change order, work resulting in disputes or claims or adversely affecting our working capital, profits and cash flows; risks and other uncertainties associated with assumptions and estimates used to prepare financial statements; inability to retain key members of our management, to hire and retain personnel required to complete projects or implement succession plans for key officers; failure to meet contractual schedule requirements, which could result in higher costs and reduced profits or, in some cases, exposure to financial liability for liquidated damages and/or damages to customers; a significant slowdown or decline in economic conditions; failure to meet our obligations under our debt agreements; the impact of inclement weather conditions on projects; failure of our joint venture partners to perform their venture obligations, which could impose additional financial and performance obligations on us, resulting in reduced profits or losses; client cancellations of, or reductions in scope under, contracts reported in our backlog; decreases in the level of government spending for infrastructure and other public projects; increased competition and failure to secure new contracts; impairment of our goodwill or other indefinite-lived intangible assets; possible systems and information technology interruptions, including due to cyberattack, systems failures or other similar events; failure to comply with laws and regulations related to government contracts; the potential dilutive impact of our Convertible Notes in our diluted EPS calculation; economic, political and other risks, including civil unrest, security issues, labor conditions, corruption and other unforeseeable events in countries where we do business, resulting in unanticipated losses; adverse health events, such as an epidemic or pandemic, could adversely affect our business; downgrades in our credit ratings could have a material adverse effect on our business and financial condition; uncertainty from the expected discontinuance of the London Interbank Offered Rate and transition to any other interest rate benchmark; conversion of our outstanding Convertible Notes that could dilute ownership interests of existing stockholders and could adversely affect the market price of our common stock; and other risks and uncertainties discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 26, 2020 and in other reports that we file with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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