TPC Tutor Perini Corporation

• Diluted earnings per share (EPS) of $2.92 for 2017 (including a tax benefit of $1.05 related to the Tax Cuts and Jobs Act of 2017), compared to $1.92 for 2016
• Diluted EPS of $1.60 for Q4 2017 (including $1.05 related to the above tax benefit), compared to $0.60 for Q4 2016
• Cash flow from operations of $163.6 million for 2017 – a record annual result for the Company
• Consolidated backlog of $7.3 billion, up 17% compared to $6.2 billion at December 31, 2016

Tutor Perini Corporation (the “Company”) (NYSE: TPC), a leading civil, building and specialty construction company, today reported results for the fourth quarter and year ended December 31, 2017. Revenue was $1.2 billion and $4.8 billion for the fourth quarter and full year, respectively, compared to $1.2 billion and $5.0 billion for the comparable periods in 2016. Income from construction operations was $59.3 million and $179.5 million for the fourth quarter and full year, respectively, compared to $52.1 million and $201.9 million for the comparable periods in 2016. The increase in income from construction operations for the fourth quarter of 2017 was largely due to contributions from certain higher-margin Civil projects. Income from construction operations in 2017 was adversely affected by unfavorable adjustments on certain mechanical projects in the Specialty Contractors segment.

Net income attributable to the Company for the fourth quarter and full year 2017 increased substantially to $80.9 million, or $1.60 per diluted share, and $148.4 million, or $2.92 per diluted share, respectively, compared to $30.3 million, or $0.60 per diluted share, and $95.8 million, or $1.92 per diluted share, for the comparable periods in 2016. Net income for the fourth quarter and full year 2017 included a tax benefit of $53.3 million, or $1.05 per diluted share, which primarily resulted from the remeasurement of the Company’s net deferred tax liabilities due to the recently enacted Tax Cuts and Jobs Act of 2017. Net income for full year 2017 was also favorably impacted by a gain of $37 million, or $0.43 per diluted share, on a legal settlement that was recorded in other income earlier in the year.

The Company generated operating cash of $163.6 million in 2017, which established a new record for annual operating cash generation. Operating cash exceeded net income in 2017 for a second consecutive year. The Company anticipates that cash generation will continue to be strong in 2018 and that cash flow from operations will again exceed net income for the year.

Backlog as of December 31, 2017, was $7.3 billion, up 17% compared to $6.2 billion as of December 31, 2016. New awards and adjustments to contracts in progress during the fourth quarter and full year 2017 were $1.0 billion and $5.8 billion, respectively, compared to $0.8 billion and $3.7 billion for the same periods last year. The Civil segment was the major contributor to new award activity in 2017, and both the Civil and Building segments are expected to drive backlog growth in 2018. The Company has previously announced certain sizeable new projects that are expected to be booked as new awards in the first quarter of 2018, including the $1.41 billion Newark Airport Terminal One Design-Build project and a $172 million mechanical project at the Baruch Houses complex in New York.

“We had an excellent year of new awards that grew our backlog significantly. In addition, our continued intense focus on improved working capital management enabled us to generate record operating cash in 2017,” remarked Ronald Tutor, Chairman and Chief Executive Officer. Tutor continued, “The Civil segment performed particularly well, growing its backlog by 54% in 2017 and finishing with a 12.0% operating margin for the year. Our large current backlog and volume of prospective opportunities together with our expectation for improved profitability in the Specialty Contractors segment provides us with confidence for even better operating results in 2018.”

Outlook and Guidance

The Company anticipates continued strong demand across various end markets. Revenue growth in 2018 is expected to be driven by higher volume of work in the Civil and Building segments, while increased operating income is expected to result from consistent operating margins in the Civil and Building segments and a higher operating margin in the Specialty Contractors segment. In addition, the lower effective tax rate resulting from recent tax reform together with reduced interest expense should positively benefit the Company’s 2018 results.

For 2018, the Company is establishing its initial EPS guidance at a range of $1.90 to $2.30 per diluted share. The Company’s results are anticipated to be weighted towards the second half of 2018 due to the seasonality of the business.

Fourth Quarter Conference Call

The Company will host a conference call at 2:00 PM Pacific Time on Tuesday, February 27, 2018, to discuss the fourth quarter and full year 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 the Company’s website at www.tutorperini.com. To listen to the webcast, please visit the Company's website at least 15 minutes prior to the start of the call to register and to download and install any necessary software. 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 the planning and scheduling of the 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 and Section 21E of the Securities Exchange Act of 1934, 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, the Company’s ability to win new contracts and convert backlog into revenue; the Company's ability to successfully and timely complete construction projects; increased competition and failure to secure new contracts; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings and the timing of related collections; the potential delay, suspension, termination or reduction in scope of construction projects; the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the availability of borrowed funds on terms acceptable to the Company; failure to meet our obligations under our debt agreements; the ability to retain certain members of management; the ability to obtain surety bonds to secure the Company’s performance under certain construction contracts; possible labor disputes or work stoppages within the construction industry; changes in federal and state appropriations for infrastructure projects and the impact of changing economic conditions on federal, state and local funding for infrastructure projects; possible changes or developments in international or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances; failure to comply with laws and regulations related to government contracts; actions taken or not taken by third parties, including the Company’s customers, suppliers, business partners and competitors and legislative, regulatory, judicial and other governmental authorities and officials; impairments of our goodwill or other indefinite-lived intangible assets; possible systems and information technology disruptions; the impact of inclement weather conditions on projects; 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, 2017, filed with the Securities and Exchange Commission on February 27, 2018. 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.

                        Tutor Perini Corporation Consolidated Statements of Operations   Quarter Ended December 31, Year Ended December 31, (in thousands, except per share data) 2017 2016 2017 2016 REVENUE $ 1,193,068 $ 1,246,599 $ 4,757,208 $ 4,973,076 COST OF OPERATIONS   (1,062,472 )   (1,128,939 )   (4,302,803 )   (4,515,886 ) GROSS PROFIT 130,596 117,660 454,405 457,190 General and administrative expenses   (71,253 )   (65,610 )   (274,928 )   (255,270 ) INCOME FROM CONSTRUCTION OPERATIONS 59,343 52,050 179,477 201,920 Other income, net 1,508 1,763 43,882 6,977 Interest expense   (15,658 )   (15,128 )   (69,384 )   (59,782 ) INCOME BEFORE INCOME TAXES 45,193 38,685 153,975 149,115 Income tax benefit (provision)   37,654     (8,425 )   569     (53,293 ) NET INCOME 82,847 30,260 154,544 95,822 LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1,909 )   —     (6,162 )   —   NET INCOME ATTRIBUTABLE TO TUTOR PERINI CORPORATION $ 80,938   $ 30,260   $ 148,382   $ 95,822   BASIC EARNINGS PER COMMON SHARE $ 1.63   $ 0.62   $ 2.99   $ 1.95   DILUTED EARNINGS PER COMMON SHARE $ 1.60   $ 0.60   $ 2.92   $ 1.92   WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: BASIC   49,781     49,202     49,647     49,150   DILUTED   50,732     50,507     50,759     49,864                                         Tutor Perini Corporation Segment Information   Reportable Segments Specialty Consolidated (in thousands) Civil Building Contractors Total Corporate Total Quarter Ended December 31, 2017 Total revenue $ 492,314 $ 462,501 $ 306,018 $ 1,260,833 $ — $ 1,260,833 Elimination of intersegment revenue   (63,116 )   (4,649 )   —   (67,765 )   —     (67,765 ) Revenue from external customers $ 429,198 $ 457,852 $ 306,018 $ 1,193,068 $ — $ 1,193,068 Income from construction operations $ 64,031 $ 9,164 $ 3,608 $ 76,803 $ (17,460 ) (a) $ 59,343 Capital expenditures $ 19,029 $ 83 $ 347 $ 19,459 $ 1,109 $ 20,568 Depreciation and amortization(b) $ 7,000 $ 488 $ 1,148 $ 8,636 $ 2,831 $ 11,467   Quarter Ended December 31, 2016 Total revenue $ 452,327 $ 551,801 $ 301,983 $ 1,306,111 $ — $ 1,306,111 Elimination of intersegment revenue   (43,751 )   (15,761 )   —   (59,512 )   —     (59,512 ) Revenue from external customers $ 408,576 $ 536,040 $ 301,983 $ 1,246,599 $ — $ 1,246,599 Income from construction operations $ 43,640 $ 12,596 $ 11,999 $ 68,235 $ (16,185 ) (a) $ 52,050 Capital expenditures $ 5,043 $ 135 $ 208 $ 5,386 $ 85 $ 5,471 Depreciation and amortization(b) $ 15,361 $ 538 $ 1,224 $ 17,123 $ 2,883 $ 20,006   Reportable Segments Specialty Consolidated (in thousands) Civil Building Contractors Total Corporate Total Year Ended December 31, 2017 Total revenue $ 1,856,164 $ 1,982,857 $ 1,213,708 $ 5,052,729 $ — $ 5,052,729 Elimination of intersegment revenue   (253,989 )   (41,532 )   —   (295,521 )   —     (295,521 ) Revenue from external customers $ 1,602,175 $ 1,941,325 $ 1,213,708 $ 4,757,208 $ — $ 4,757,208 Income from construction operations $ 192,207 $ 34,199 $ 18,938 $ 245,344 $ (65,867 ) (a) $ 179,477 Capital expenditures $ 27,694 $ 267 $ 721 $ 28,682 $ 1,598 $ 30,280 Depreciation and amortization(b) $ 33,767 $ 2,021 $ 4,699 $ 40,487 $ 11,443 $ 51,930   Year Ended December 31, 2016 Total revenue $ 1,830,857 $ 2,146,747 $ 1,234,272 $ 5,211,876 $ — $ 5,211,876 Elimination of intersegment revenue   (161,894 )   (76,906 )   —   (238,800 )   —     (238,800 ) Revenue from external customers $ 1,668,963 $ 2,069,841 $ 1,234,272 $ 4,973,076 $ — $ 4,973,076 Income from construction operations $ 172,668 $ 51,564 $ 37,908 $ 262,140 $ (60,220 ) (a) $ 201,920 Capital expenditures $ 13,541 $ 516 $ 1,005 $ 15,062 $ 681 $ 15,743 Depreciation and amortization(b) $ 48,561 $ 2,186 $ 5,035 $ 55,782 $ 11,520 $ 67,302  

(a)

   

Consists primarily of corporate general and administrative expenses.

(b)

Depreciation and amortization is included in income from construction operations.

                            Tutor Perini Corporation Condensed Consolidated Balance Sheets   As of December 31, (in thousands, except share and per share amounts) 2017 2016 ASSETS CURRENT ASSETS: Cash, including cash equivalents of $1,481 and $15,302 ($53,067 and $0 related to VIEs) $ 192,868 $ 146,103 Restricted cash 4,780 50,504 Restricted investments 53,014 — Accounts receivable, including retainage of $535,939 and $569,391 (AR of $42,413 and $0 related to VIEs) 1,801,656 1,743,300 Costs and estimated earnings in excess of billings 932,758 831,826 Other current assets   89,316     66,023   Total current assets 3,074,392 2,837,756  

Property and equipment, net of accumulated depreciation of $359,188 and $313,783 ($11,641 and $0 related to VIEs)

467,499 477,626 Goodwill 585,006 585,006 Intangible assets, net 89,454 92,997 Other assets   47,772     45,235   TOTAL ASSETS $ 4,264,123   $ 4,038,620     LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 30,748 $ 85,890 Accounts payable, including retainage of $261,820 and $258,294 (AP of $19,243 and $0 related to VIEs) 961,791 994,016 Billings in excess of costs and estimated earnings ($120,952 and $0 related to VIEs) 456,869 331,112 Accrued expenses and other current liabilities   132,438     107,925   Total current liabilities 1,581,846 1,518,943  

LONG-TERM DEBT, less current maturities, net of unamortized discounts and debt issuance costs totaling $45,631 and $56,072

705,528 673,629 Deferred income taxes 108,504 131,007 Other long-term liabilities   163,465     162,018   TOTAL LIABILITIES   2,559,343     2,485,597     CONTINGENCIES AND COMMITMENTS   EQUITY: Stockholders' equity Preferred stock – authorized 1,000,000 shares ($1 par value), none issued — —

Common stock – authorized 75,000,000 shares ($1 par value), issued and outstanding 49,781,010 and 49,211,353 shares

49,781 49,211 Additional paid-in capital 1,084,205 1,075,600 Retained earnings 622,007 473,625 Accumulated other comprehensive loss   (42,718 )   (45,413 ) Total stockholders' equity 1,713,275 1,553,023 Noncontrolling interests   (8,495 )   —   TOTAL EQUITY   1,704,780     1,553,023     TOTAL LIABILITIES AND EQUITY $ 4,264,123   $ 4,038,620                                 Tutor Perini Corporation Consolidated Statements of Cash Flows   Year Ended December 31, (in thousands) 2017 2016 Cash flows from operating activities: Net income $ 154,544 $ 95,822 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 48,387 63,759 Amortization of intangible assets 3,543 3,543 Share-based compensation expense 21,174 13,423 Excess income tax benefit from share-based compensation — (269 ) Change in debt discounts and deferred debt issuance costs 17,595 10,968 Deferred income taxes (23,096 ) (10,169 ) Loss (gain) on sale of property and equipment 1,131 453 Changes in other components of working capital (60,214 ) (90,530 ) Other long-term liabilities 3,656 28,210 Other, net   (3,170 )   (1,874 ) NET CASH PROVIDED BY OPERATING ACTIVITIES   163,550     113,336     Cash flows from investing activities: Acquisition of property and equipment (30,280 ) (15,743 ) Proceeds from sale of property and equipment 2,744 1,899 Investments in securities, restricted (54,504 ) — Investments in securities (6,463 ) — Proceeds from maturities of investments 1,370 — Change in restricted cash   45,724     (4,651 ) NET CASH USED IN INVESTING ACTIVITIES   (41,409 )   (18,495 )   Cash flows from financing activities: Proceeds from debt 2,161,384 1,353,895 Repayment of debt (2,195,068 ) (1,562,684 ) Debt issuance and extinguishment costs (15,266 ) (15,086 ) Issuance of convertible notes — 200,000 Cash payments related to share-based compensation (11,769 ) (584 ) Excess income tax benefit from share-based compensation — 269 Distributions paid to noncontrolling interests (17,499 ) — Contributions from noncontrolling interests   2,842     —   NET CASH USED IN FINANCING ACTIVITIES   (75,376 )   (24,190 )   Net increase in cash and cash equivalents 46,765 70,651 Cash and cash equivalents at beginning of year   146,103     75,452   Cash and cash equivalents at end of year $ 192,868   $ 146,103                         Tutor Perini Corporation Backlog Information Unaudited       Revenue New Awards in the Recognized in the Backlog at Quarter Ended Quarter Ended Backlog at (in millions) September 30, 2017 December 31, 2017(a) December 31, 2017 December 31, 2017 Civil $ 4,307.4 $ 240.0 $ (429.2 ) $ 4,118.2 Building 1,598.7 560.6 (457.9 ) 1,701.4 Specialty Contractors   1,595.6   174.2   (306.0 )   1,463.8 Total $ 7,501.7 $ 974.8 $ (1,193.1 ) $ 7,283.4   Revenue New Awards in the Recognized in the Backlog at Year Ended Year Ended Backlog at (in millions) December 31, 2016 December 31, 2017(a) December 31, 2017 December 31, 2017 Civil $ 2,672.1 $ 3,048.3 $ (1,602.2 ) $ 4,118.2 Building 1,981.2 1,661.5 (1,941.3 ) 1,701.4 Specialty Contractors   1,573.8   1,103.7   (1,213.7 )   1,463.8 Total $ 6,227.1 $ 5,813.5 $ (4,757.2 ) $ 7,283.4  

(a)

   

New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts.

 

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Tutor Perini CorporationJorge Casado, 818-362-8391Vice President, Investor Relations & Corporate Communicationswww.tutorperini.com